BlogSmall business, Marketing, Promotion and Web Design

Having not posted for quite awhile I have accumulated a number of stories to tell. Today is one of them – or rather three similar stories about some decisions that web site owners are making and how it affects their business.

The Good
Imagine an online store that doesn’t sell anything. Yep, there are certain niches that – no matter how hard you try – will not sell as good as you think. This business owner is in one of them, provided he has a show room full of merchandise. The web site is a mere catalog with pricing. However, if you just take out the online checkout option – you suddenly don’t seem credible enough. It reads like “I’ve got all this great stuff from all over the web, but in real life I’ve got one dusty shelf“. So you have to make it look like you’ve got stuff ready to go – only to lure customers to the show room.

The good decision – figuring this stuff out and presenting the customers with the choice to buy stuff online, even though almost no one is really buying.

The Bad
This is a diverse category because you can drop pretty much every single major issue with your web site – from non-working contact form to eye-scratching design from 1980s to web sites that never finish to load because your friend’s son who put it together didn’t realize that cute kitten picture on a front page is 15MB BMP file. But rather than talk about these, easily addressable issues, I’d point to a really major one – not having any kind of web site. Imagine – there are businesses out there who decidedly go without web site at all. There are usually two main justifications – “we don’t need one” and “we don’t have money for it”. It’s almost like wishing for a win in a lotto without buying a single ticket. Aside from the fact that people prefer to shop from the convenience of their homes (less clients for you), there are more choices online that you will ever have in your inventory (again – less clients for you), you are also limiting yourself by not pitching to those who actually are interested in what you want to sell to them. With the average rent on any decent store around tens of thousands of dollars per month a budget web site would cost you a lot less than that. And, of course, there is the rationale that you can only save as much as the web site costs, but your earnings are really not limited.

The bad decision – not having a web site for your business. In fact – its the worst decision you can ever make.

The Ugly
One of the worst things you can do to your web site is keep relaunching it every few months on a new domain names. It’s not a secret anymore that your domain name equals your brand – twice true for small businesses. Of course, you can launch a new web site on a new domain name if you used to be GreatWidgetsOnline.com and you have just bought GreatWidgets.com – it’s not a major major change, but rather a welcome convenience. However, if you keep relaunching the site from GreatWidgetsWeSellHere.com to ThingamabobsOnlineRightHere.com to WhatchamacallitSalesForYou.com – it’s not really clear how you are going to attract the customers and keep them around. Even if there were some issues associated with your domain before – it’s easier to fix them than rebuild the whole thing from the scratch. Besides, even if there was some bad press – you can always use it to your advantage.

The ugly decision – keep relaunching business web site on different domain names in order to avoid issues associated with previous domain.

Today in college (I do this two nights every week, remember?) we had a guest speaker. She was telling us about a failed 20-year old family business that served big-name clients. There was a CEO, his niece – a brilliant sales person who worked there for 10 years and CEO’s 20-something son with MBA and lots of ambitions. The niece was asked for Excel spreadsheets with her sales numbers, but she wasn’t too bright about that. Her specialty was selling – not spreasheeting. Eventually, the pressure from stiff CFO, the MBA-flaunting kid and her CEO uncle for those damn spreadsheets and numbers got so heavy that she left the company and took half of their clients with her. Rule number one – don’t mess with your sales people.

I call this a Five Dollar Problem, and here’s why. I happen to know just this type of sales person – bright, ambitious and persuasive. As I say – she can sell you snow in a winter and you gonna come back with your whole family asking for more. But she’s not good with anything that has to do with numbers, including computers. In fact – she doesn’t know how to use one. Trust me on this one for I tried so many times – and as many times I’ve failed. Her usual response is: “I don’t need to know computers, I have my husband for that” (yes, I’m talking about my wife). So when she was working in one elaborate place she (along with other workers) had to punch in her time sheets, how much time did she spent with each clients and what procedure she performed, what product she sold and so on. The regular spreadsheeting, you know. While being the most computer illiterate lady in New York save Statue of Liberty, she immediately figured out the solution to her problem. She was paying 5 dollars every week to their receptionist – a really nice college girl, who did my wife’s time sheet in less than 5 minutes.

Business owner was happy – she got the numbers she needed. My wife was happy – she didn’t have to struggle with those “complicated computers” every weekend and could get home earlier. And the receptionist girl was happy – she got every Saturday lunch for free. All it took to solve this problem is 5 dollars. Thus a name – a Five Dollar Problem. Meaning – the cost of solving this problem is exactly five dollars.

It is exactly the same problem as our guest speaker had presented. The problem that delivered one of the major cracks in the foundation of a 20-year old business. But rather than being demotivated, as we all get when we ask to submit to spreadsheeting, she solved the problem in a classic win-win scenario. It definitely didn’t break a business, it didn’t cost the business half of the clients, it was just that – a Five Dollar Problem.

While my fascination with Google Wave is settling I want to go back to what this blog is all about – small business. It’s no secret that most of small businesses concentrate on surviving and becoming profitable. News are full of glamorous stories about glorious start-ups. In real life there are thousands of less known ventures and businesses that are alive and kicking – every day. Success of a small business is, indeed, in moving from failure to failure. As long as each failure results in small business owner learning valuable lesson.

We have recently completed a company analysis for $1.5M business. Scratch that. Recently we have completed an analysis of 10-year old successful company that had just found out they are worth well over a million dollars. They though their worth was around $200K and they treated their business as such. Problems we have uncovered and presented to the owners are not uncommon. Even more so, I would dare to say that most small business’ problems are falling under one of seven main categories:

1. Business owner/Leadership issues. Business owner may lack vision, being stuck in a day to day routine. Business owner may, on the other hand, have too broad a vision, trying to compete in all areas at once. Either way business looses.

2. Human Resources issues. Speaking of small business owners it is always hard for the owner to find a person they can trust. Money are tight, there’s never enough time so the owner is convinced that any new person will not be a good fit for the company. Maybe some time later. Being able to delegate solving secondary problems is a virtue not many small business owners possess.

3. Innovation issues. Most of the businesses are shy of innovation because they shy of money. Or so they think and so they say. In some cases it might be true. However in most cases innovation (not necessarily technological – it could be just a different approach to sales) is the ultimate source of  company’s strategic growth. Just because it was working before – doesn’t mean it will work the same in the future. But even if it will – would you rather make the same money or double that?

4. Marketing and sales issues. Most people create their business because they know how to do something, not how to sell it. They think once they start offering their services people will come. People will, indeed, come – to those who can sell to them. Not knowing how to market themselves, small business owners fail to capture their strategic share of market. Around 75 to 80% of business owners cannot price their services or goods properly.

5. Operations and logistics issues. This area is so broad that I would probably have to create another post just for that. Most small businesses fail to understand the importance of the fine-tuned operations. Maybe you spend too much time going to suppliers when for little extra money you can have them deliver to you – while you be making much more money rather than putting your business on hold. Or maybe your people are doing the double work by filing documents in both paper and electronic forms. Or maybe there is something else. Time is the most scarce resource that you have, and operations issues are the biggest time waster.

6. Legal issues. This is a can of worms of its own. Do you have all the licenses you need to run your business? Are you covered in all states and counties you operate? Do you have insurance that will cover you in case something happens? Have you filed all your tax reports on time? You may be surprised at how tricky these things can be.

7. Financial issues. This is the item most of business owners would have put first, so I am deliberately putting it last. You think you have money problem? You might be right. The reason for that is that you are having some of the issues from the list above on your hands. Either way you are not collecting enough sales, or your expenses are too high, or both. Unless, of course, your business model is flawed, but that’s whole another story.

So what is the outcome of the analysis that any small business should do? Identify the most flawed areas and fix them – one by one. Don’t wait, don’t put major things off – the larger the company the harder is it to change things there. So start early, move fast. Today is a good day for change.