Archive for

Establishing a Serious Online Business by Ditching the Search For a “Magic Bullet”

As hard as this may seem to believe, the internet is still in its infancy. Even though it has become woven into every aspect of our lives, it really has not been around that long. Consider that Google only arrived on the scene 10 years ago. Also consider that 50% of small businesses still do not even have an online presence. Many small businesses that have websites in realty have little more than on line business cards. They are simply are not knowledgeable about what the full functionality of a powerful web presence can do for them. Clearly, this will not stay this way much longer. Web 2.0 and social media is shortening the message. More and more small businesses are starting to get it. The ones who start taking action now will gain an enormous advantage over those who delay. They will be able to grab competitive key words and gain market shares in their niches. This will become harder and harder as it becomes more and more obvious that all small business needs to be on line.

Yes, a great window of opportunity exists right now for small business to outpace their competition on line, yet many small businesses are being slow to take action. What seems to be the reason behind this?
· It may seem strange to those who are Internet savvy, but many small business owners simply lack knowledge as to what to do.
· Small business owners are wearing too many hats and cannot find the time to do it themselves.
· In these economic times, a lot of fear exists. Small businesses are cutting costs.
· Many who are looking to get on line do not recognize that there are real steps to establish an online presence. They think ranking well in the search engines is either luck or the result of a “get rich quick” scheme.

Small businesses that let these obstacles stand in the way of getting on line will be in the unfortunate position of having to catch up. Those who start now will be in the lead and will be hard to catch.

So let’s examine each of these obstacles to taking action.

It is incumbent upon any small business owner to keep abreast of the latest trends in order to stay relevant in any given industry. No doubt about it, the pursuit of relevant industry knowledge is an important part of the small business equation. Knowledge is necessary to make informed decisions. It is not necessary to develop the expertise in order to implement the changes. Small business owners need to be working on their businesses not in them.

This leads us to the “wearing too many hats” obstacle. Small business owners who implement systems to automate business processes by using customer relationship management systems (CRM) for example will be better off. Doing this will allow them to find the time to seek knowledge and stay current in their industries. Professionals who already have the expertise to implement on line strategies are the most effective for getting the job done in terms of time, energy and money. There is no need to reinvent the wheel or add another hat on the small business head.

In these tough times, it does make sense to cut as many small business expenses as possible. But even in these tough times, it never makes sense to cut down on marketing. The only marketing that should ever be cut is that which is ineffective and not giving a decent ROI. In order to know this, marketing activities should be tracked. Small businesses who are hunkering down in fear and cutting marketing along with their prices are setting themselves up for a really tough climb back; assuming they survive at all. The fact that so many businesses are behaving this way means that those businesses that keep marketing will far outpace the pack. This applies to those who take action to market their businesses with a professional online presence. A professional web site that is optimized for user experience as well as search engine spiders will begin to generate traffic that converts prospects to customers. Money that is spent on building an online presence is really an investment in the business. Unlike money spent on print advertising which is destined to the trash or recycle bin, money spent on line builds a foundation that doesn’t go away.

Finally, small businesses need to understand that search engine optimization techniques (SEO), pay per click campaigns (PPC) and other search engine marketing strategies are legitimate and highly sophisticated. A lot of expertise is required to design a user friendly site that is optimized for a top notch search marketing campaign. Many of the required activities are very labor intensive. It is unreasonable to expect results overnight. Therefore, it must be recognized that there is no “magic bullet” solution for getting found on line. It certainly is not luck either. Any company that does appear on a page one search engine results page (SERP) has clearly done its homework. Since this is the case, clearly it makes sense for small businesses before their competition does. The sooner this happens, the better.

Are You Building Equity Or Income in Your Business?

When considering an exit from your business, you need to ask yourself whether you are focused on building an income stream within your business, or whether you are building equity in the business. The difference between these two opposing perspectives will reveal itself when your turn comes to exit your business.

An owner who builds their business for income has a job. An owner who builds their business for equity has an investment. One day someone other than yourself will be running your business. Will that successor be purchasing a job from you or an enterprise? Your eventual buyer or successor will likely be interested in knowing about the equity that you have built, not about the income that you have achieved within your business. And, as the exiting owner, you want to speak in terms of equity and not in terms of income. You see, income can vary according to the personal needs of the owner-operator. However, equity can be expanded and value can be driven into your business once your focus moves to an ‘equity driven’ model.

Technically, ‘equity’ is a Balance Sheet term which is equal to your assets less your liabilities; this would reveal your owner’s equity. However, we are not discussing the financial reporting within your business, we are discussing the manner in which you make operational decisions to increase the value of your business.

For example. Jim owns a distribution company and spends most of his time focusing on building strategic relationships to increase sales, as well as increasing the capacity of his business to distribute more products. Sounds simple enough. However, Jim’s mindset is towards conducting these activities so that he can take a larger salary and bonus at the end of the year. Again, to most reading this newsletter, that sounds like a very reasonable objective. But there is a problem, a very predictable and obvious problem once Jim is aware of it.

The problem is that Jim is not spending any time considering who would be doing his ‘job’ at the company in his absence. True, the company can run for a week or two as Jim takes his vacations. Perhaps the business could even sustain for a few months if Jim were to want time off or had a physical problem that prevented him from working – these instances alone would not materially affect Jim’s income. However Jim is not protecting the equity in his business with his decision making process. Jim’s equity, and hence his illiquid business wealth, is at risk because Jim has not focused on his business as an investment.

What Jim needs to do in this case is begin to ask the important and crystallizing questions that will define how he exits his business. Jim needs to know ‘who will run the business after him’. But in order to get to that point, Jim needs to have some idea as to what his exit options are and which one is optimal for his situation.

For example, Jim may want his management team to take over the business. Well, Jim’s succession plan will need to include specific action items and benchmarks for transferring responsibility within his firm. The decisions that Jim makes in his business today, will need to be aligned with his choice of exit in order to maximize the equity within his business for his personal needs. Jim should communicate with his management team his desire to transfer operational control and begin to put measures in place to start this shift. Jim should take his future rain-maker to the meetings with his strategic partners, take his financial person to the meeting with the bank, and allow his operational person to set policies and speak with authority to others in the organization.

When Jim begins to make these changes to his behavior and the manner in which the business is run, he starts to build on the equity in his business because he is treating the business more of an investment and less as a job. Jim’s role converts to that of an overseer of the activities within his organization, not the creator of those activities. As a result, over time Jim’s presence will no longer be critical to the proper running of the business.

At this point in time, the focus on the business – as an entity separate and distinct from Jim’s personal desire for more income – and the running of the business with a process in place- Jim is increasing the value of his business. Jim’s value is increased because all business valuation is a prophecy of future cash flows. Now Jim can more confidently state that his future cash flows are more secure because his management team has decision-making authority and Jim has protected the ongoing streams of income and cash flow against his own short-comings and/or mortality. As a consequence, the value of the business increases because a buyer or successor has a higher certainty as to the ability to achieve future cash flows in Jim’s absence.

Owners who fail to make these important decisions leave the value of their business in a very uncertain state. Unfortunately, far too many business owners today are in this position. Also, compounding this problem is the fact that these changes can take time (often times many years) to occur within an organization. Therefore, the time is NOW to begin this process.

Finding the Best Home Bases Business For You

Home bases businesses are as varied as their are people working them and they range from excellent business opportunities to real rip offs that have as their only intent of making the originator rich.  So, with all the options and all of the pitfalls out there how do you decide which one will work for you, your situation and your family?  How do you decide which one is the one that will allow you to make money and have fun while you do it?  Here are some tips that might help in making your decision.

First, home based businesses are a valid work/business option for the average American family that can’t afford to begin a business the old fashioned way.  The cost of beginning a business the traditional way can cost thousands or even millions in start up money while starting a home based business can be very reasonable ranging from a few dollars to a few hundred dollars. 

To begin your process of determining your best home based business options start by getting a pad and pen and begin to write down things about which you are passionate.  What are your hobbies, what are the things you like to do, what are the things that you are now invested in with your money, time and resources, what are the things you like to talk about the most?  When you have your list completed begin to prioritize them.  These are going to be a basis for deciding what you want to do for a home based business. 

There are a lot of different ways to make money from home.  You can work for your current or previous employer on a contract or consulting basis which is generally called “telecommuting” or you can find a business that you own and run that pays you for some kind of activity.  Basically in most businesses you trade time for money.  In a home based business you can find positions that will trade time for money or you can find businesses that give you money for your results.  Some examples of home based businesses are Affiliate Marketing Businesses, Direct Sales Businesses, Multi Level Marketing Businesses, Network Marketing Businesses and Webstore businesses.  Each of these have different values and benefits as well as start up costs and ongoing  operational costs. 

You can go to a seminar to find out how to set up a website and start an affiliate marketing business where you have your own website and drive traffic through your site to some other site and when the customer buys something from that site you get paid a commission.  People often end up spending several thousands of dollars for this approach but it can be very lucrative.  Direct sales businesses generally have a product that you are responsible for selling to your friends, neighbors and through website traffic.  The entry point in this business varies from product line and company to other product lines and companies.  As you can see each business model is different and has a different cost associated with it.

After you have created your passion/interest lists and you now know the types of home based business models you need to know why you want to develop a home bases business.  It might be to eliminate debt, to pay for a child’s education, to be able to survive the current economic downturn or any number of other reasons but regardless of your reason why, you must know your why.  It will keep you going when times are hard and you are not getting the results you want or need.

When I went through this process I found that my wife and I found that we needed and wanted to pay off our credit card debt and to pay off our house.  We wanted to be able to continue to fund our daughter’s college education, we want to travel and we want to provide for our financial future. We found that among our passions was shopping and saving.  I love to negotiate and she loves the result of my negotiating.  We know about coupons, discount shopping sites and all of the ways to get money back when you shop. 

When we evaluated all of the options we found a program that helped us to save money when we shop and helps us make money.  With this program we were able to make money without having to recruit others (which many home based business models are based on), there was a product that had intrinsic value and the entry point was very low.  Basically it met all of our interests and requirements and the return on our investment of time and money could be substantial.  The company had a complete, easy to follow marketing plan and there was a proven track record that the program could work when you worked it the right way. 

The internet is among your best resources for researching home based business opportunities but don’t be fooled because there are a few people out there that have something bad to say about a person involved in the business or the organization itself.  Everyone is going to make some enemies along the way.  Ask the person to whom you speak for references.  Ask for people that have done the business for a while and have been successful.  Ask for someone that is just starting out and ask them why they choose this business model.  Review the pay plan.  Can you make money with it?  Does it reward you for the things you are good at doing and want to do?  If you hate sales and you are going to have to do a lot of sales this is probably not the business for you.  If it’s mainly data input or sitting in front of a computer all day and you are a people person this is likely not the business for you.  But, once you have found the one that fits your interests, your passion and you know your why you are in a position to be very successful with a home based business.