On Internet Business

What bosses believe and why it matters

Posted by Michael under Business Growth, Leadership

Robert Sutton has been pondering what bosses believe at the Harvard Business Review, and he’s produced some thought-provoking articles that explore what a good boss does, and doesn’t, do. Here’s a digest of his research:

• He or she recognises that he or she has an imperfect understanding of how he is to work for, and that the way he or she does things is as important as the things he or she does. He or she also knows that his or her power over others can lead to imposing harsh behaviour on staff that he or she isn’t even aware of. Finding the balance between asserting ‘boss behaviour’ and less assertive behaviour is one of the key skills of a good boss.
• A good boss, according to Sutton, knows that it’s getting the boring everyday things right that leads to success, even if the media only focuses on success that comes through ‘breakthrough ideas’ or weird magical methods. Similarly, little wins are the key focus, as they allow the team to see progress every day – big ambitious goals are important but not a daily concern.
• Protecting staff from outside annoyances is one of the responsibilities of the good boss, as is knowing when he or she is going wrong and pulling themselves back from overconfidence that leads to a business nose-dive.
• Leadership tests are common, and one of the most important to the good boss is what happens in a business after somebody makes a mistake. Another crucial leadership test is the process that a boss goes through to destroy bad ideas, and to eliminate the many good ones that aren’t key to business success – in other words, in Sutton’s own language: bad is stronger than good. It is more important to eliminate the negative than to accentuate the positive.
• Perhaps one of the most interesting phrases he uses about the ‘good boss’ is “I aim to fight as if I am right, and listen as if I am wrong — and to teach my people to do the same thing” which is a fascinating concept, although it’s not clear how Sutton thinks fighting and listening come together in good leadership (perhaps he’s saving that for his book, due out in September).

Goals and why good bosses may ignore them

And he’s dug deeper into the topic in exploring Big Hairy Audacious Goals, those management objectives made famous by Jim Collins, which many managers believe are the only measure, and means, to business success. Sutton dares to argue otherwise, suggesting that while ambitious goal-setting is a key feature of effective leadership, the best bosses don’t use the BHAG as a daily tool because:

1. The goals are too obvious to need restatement (there’s no need to explore the big goal, but the subgoals along the way are worth assessing for clarity and commitment)
2. As a weapon they’re pretty blunt (BHAGs don’t allow daily successes, while breaking them down into the little steps along the way can let a team celebrate mini-successes on a regular basis as they move towards the big goal)
3. As a target they’re too big (it’s scary to be told to double your sales, for example, but breaking down that process into steps and talking it through removes fear and replaces it with a coherent outline to follow).

And I’d add a final thought from my own experience: I am accountable and responsible for the success and failure of my people. If someone in my team doesn’t achieve their objectives, more often than not it turns out they weren’t adequately set up to succeed.

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10 reasons to enter business awards (and 4 reasons not to )

Posted by Michael under awards, Business Growth

Many businesses never enter themselves for a business award during their existence but putting your company forward for an award can have business-improving outcomes, whether you win or lose:

Positives

1. Free advertising through press coverage – especially if you’re proactive about promoting your company through trade and regional press
2. Boosts staff morale
3. Impresses shareholders and potential investors – being willing to put your business up for scrutiny is a real confidence generator in the wider marketplace
4. Gains prestige and recognition from peers
5. Networking with fellow entrepreneurs (assuming you are shortlisted). The Japanese call this ‘virtuous circles’ – the chance to mix with other dynamic and success-oriented business leaders can really improve your own business acumen
6. Raises your business profile – publicity is good, PR is good, and the general impression that your business is a success permeates out from entering for an award, even if you’re not the lucky winner
7. Helps attract new customers – recognition and positive exposure can bring new clients to your door that you wouldn’t have reached any other way
8. Increases respect from existing customers – everybody likes to work with a winner!
9. Helps attract high quality new staff. Wouldn’t you rather work for a growing business than a stagnant one? And so would the brightest people around, so award entry can also lead to applications for jobs from the most talented people in your industry.
10. Motivation to increase business growth – thinking like a winner can lead to working like a winner, and one spin-off can be that everybody in your business accepts responsibility to grow, improve and advance the company.

It’s not all sunshine and roses though, the path through an awards process can be quite demanding, not just of time and money, but of commitment to the award system itself. Being aware of the downsides of entering for an award can help you decide if this is the right time for your company to make the effort.

Negatives

1. Financial costs to enter and participate – if you are shortlisted – can run into thousands of pounds
2. Time costs – the amount of work spent on creating a worthwhile award proposal has to be measured against the same time that could have been spent on generating additional sales.
3. Disclosure of strategy and financial information – this is a really tricky one and many businesses have concerns about being asked to supply sensitive information to unknown parties
4. Disappointment if you don’t win – while you, personally, may cope well with this, bear in mind that others in the business may react badly or even see it as a negative reflection on the worth of the business.

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The New Experts

Posted by Michael under Business Growth, Leadership

In May I had the great pleasure of hearing Robert ‘Bob’ H Bloom speak – since then, I’ve been lucky enough to read his excellent book, The New Experts.

The central premise of his book is that, owing to the internet, buyer behaviour has changed completely. It’s a detailed exploration of how the relationship between business and customer has changed and what makes consumers into the ‘new experts’

Essentially, internet-empowered buyers have four lethal weapons that they can use:

1. instant access to information about a potential purchase
2. almost unlimited choice
3. real-time comparison of price offerings
4. pleasure in ‘victory’ over the seller using the first three weapons

These four weapons mean that customers no longer have loyalty – they don’t care who they buy from or where the seller is located, as long as they ‘win’ the deal

Loyalty versus Preference

Loyalty was the behaviour of trusting a person or brand to provide a product that met the buyer’s needs at a reasonable price and Bloom says it is obsolete.

Customer preference has replaced loyalty and cuts into the buyer’s thinking at four decisive moments in the purchasing period

• the now-or-never moment
• the make-or-break moment
• the keep-or-lose moment
• the highly profitable multiplier moment.

How To Respond

Exceptional companies will master the behaviour of the New Experts and reward them by delivering the joy of victory that the buyer is coming to take for granted. This mastery will allow those companies to make greater profits at the expense of those who have been relying on a loyal customer base that is being eroded. Managing the expectations of the New Experts requires a company to have:

• Top down commitment to create an exceptional experience that generates customer preference.
• Total organisational alignment to ensure this happens.
• Reliable metrics to assure relentless improvement in customer conversion at every decisive moment.

Robert Bloom is worth listening to – he’s had a fantastic success in creating business growth, starting with a local advertising agency he turned into a successful national agency, then he moved on to creating growth strategies for some of the world’s largest companies and brands including BMW, l’Oreal, TGI Friday’s, Whirlpool, and T-Mobile.

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Big start-ups with small funding

Posted by Michael under Business Growth, Entrepreneur Resources

Y Combinator is venture capital with a difference. Founded by Paul Graham in 2005 it offers seed funding, advice and networking opportunities, largely to technology based start-ups in the USA.

Named after a theoretical functional programming concept, it believes that creation of businesses in the internet-based world is based less on money and more on networking and peer review to drive creativity and functionality.

It has funded nearly 120 start-ups, at an accelerating rate, from eight in 2005 to 26 in 2009. So successful is it that similar start-up/venture capital incubators have now been launched across America and in London too.

How Y Combinator works

People travel from across the USA to spend time at the three month program where they receive a tiny amount of funding and rub shoulders with a whole batch of other similarly funded entrepreneurs.

Y Combinator runs its programs out of Silicon Valley, providing heaven-sent opportunities for tech start-ups to rub shoulders with Silicon Millionairs.

Because it’s based in the USA, the start-ups have to be USA based, but that wouldn’t stop other nationalities taking part: as long as you can get a residence permit and live in the somewhat Spartan conditions the program offers, you just have to convince Graham, in ten minutes, that you deserve a place and you’re in.

What makes it different?

The Y Combinator program gives successful entrants some money, some space to work and crash (and rather bad food, by all accounts) and they then work night and day to get their product ready in three months. After Demo Day, when investors respond to each team’s three month residency output, Y Combinator takes around 6% in common stock of the companies that obtain funding from the wider venture capital community, although this varies from up to 10% and down to 1.5%

Companies Y Combinator has funded

Reddit; Loopt and Posterous are the household names, but there are a number of other bubbling-under ventures like Justin.tv that are ready to break through as big business any day

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How to set up an online store in minutes for next to nothing

Posted by Michael under Business Growth, Online Retail

Lifehacker recently explored how to set up an online shopfront, but how do their top five recommendations work out for UK based online retailers?

1. Sell Simply is as basic as it gets – sell through Twitter and pay a dollar! That’s all there is to it. You list your items for sale via Twitter, they are listed on Sell Simply, and Paypal takes care of the actual transaction. It’s basic, it’s easy, it’s ultimately portable and if you like life to be straightforward, this is the best system for you. Of course, if you want control, complexity, personalisation and presence, this is not going to be your shopfront of choice, but for those getting started or testing an idea, it’s a brilliantly simple route to commerce.

2. Big Cartel is easy to use. The process of store building is simple, mainly because there is a limited amount of stuff that you can change. The shopping cart system is easy too, although it’s tailored to artists and creative types, not mass volume sellers. The pricing structure is also simple: testing the water is free – load your basic store with five items and see how you go! If that flies, you can move into a ten dollar per month store or a twenty dollar per month store. Overall, Big Cartel is an excellent system, aimed at shopfronts that have around 100 pieces for sale (that’s 100 listings, not 100 actual items) and it’s very clean to use. Clean but not that customisable – there are elements you can play with, but one Big Cartel store is often quite a lot like another Big Cartel store and that could be good (easy for customers who are familiar with the system to navigate) or bad (making your unique offering look just like everybody else’s little business)

In terms of the process there are advantages and disadvantages: you will be paying in dollars and you have to inform yourself about what applies and doesn’t apply under USA law in relation to exportable items, but it’s a very simple process to operate the store and paying by the month means you know what you’ve let yourself in for – there’s no nasty surprises if you sell above your predicted volumes.

3. Shopify is another pay monthly storefront and shopping cart system – rather than a basic free model at the bottom of the scale, you get to try before you buy for a month, but then you’re into a monthly package ranging from $24 for 100 products through $59, $99 $249 to $699 per month for 50,000 products. There is also a transaction fee for every purchase made through your store which drops the higher your monthly fee package.

The advantages of Shopify? It’s totally customisable, you can play with every element of both HTML and CSS so if you want a totally unique shop, you get to either edit their templates or design your own from scratch. Downsides? Once again you’re paying in dollars, and this time you’re subject to Canadian law and that of the province of Ontario – probably not a problem for most vendors but there are pretty odd things you can’t sell online and it’s the vendors responsibility to ensure he or she is aware of the restrictions that might apply.

4. Etsy is a venue. It’s important to remember this, because it’s got some unusual and sometimes frustrating features. The good side is that if you’re a craft-based business, it’s designed with you in mind. Setting up your store is really easy but not very customisable. The fees are a little more complicated to understand: there’s a $0.20 listing fee for four months and a 3.5% transaction fee when the item sells. The complication is that there is a fee per quantity so one scarf in stock incurs a fee of $0.20 for four months but three scarves of the same pattern, once listed, cost you $0.60 for the same period, with the transaction fee applying when each one sells.

For the crafter/designer, Etsy has a major bonus feature: alchemy, where people list the item they want to have created for them and Etsy members bid for the work.

5. Self-Hosting – this was ranked three on Lifehacker, but is the most time (and potentially cost) consuming option. You need a web server, basic coding skills or a web person to hand, and some design appreciation too. There are cart systems you can install yourself into your own shopfront, so you don’t have to create a secured payment system unless you really want to.

This method gives you the most control and choice, but is also the most likely to cause frustration and delays in getting to trade. The advantage of the established shopfront systems is that users already know how to navigate them; by creating your own you may inadvertently set up something customers don’t enjoy or don’t have confidence in.

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Online retail up – general forecast down

Posted by Michael under Business Growth, Online Retail

The Capgemini index shows that online sales have remained robust, with the total online retail sector being up 13% on April 2009. There’s been a wobble for online travel – related in part to the ash cloud – and evidence that recession-aware shoppers are still keen to spend on their homes and gardens for summer.

In April 2010 online consumers spent 9% less than in March on travel, a growth that is slower than market average, but online clothing rocketed with a 21% spend increase compared to last year. Discounting of beers, wines and spirits in the last weeks of the April also caused a sharp rise, as consumers ordered in their booze for the early and late May bank holiday weekends and the World Cup.

Sales for retailers with both online and store locations are up 22% on 2009, compared to a sales increase by only 6% on the same month for those who have physical locations only.

So how does this sit with the report ‘Internet retail trends 2010: Ten actions for your business’? The report was compiled for Webloyalty, by Verdict, and it says that despite growing by 13.3% in 2009, online retail has been hard hit by the recession.

Key findings of the report

• Growth will be harder – easy successes have now peaked and future progress will be slower and harder won, with more switching of customer loyalty rather than new customers meaning that retailers should focus on maximising revenue online

• Acquiring new customers will become a challenge – maintaining existing customer loyalty and developing systems to create repeat business are likely to be key features of successful online retailing in the years ahead.

Does the index bear out the predictions?

It’s too difficult to tell how accurate the long term forecasting is yet, and supra-national issues like oil spills and ash clouds have unanticipated effects on retail (eg we can expect tent sails to rise as Brits who would have holidayed in Florida etc opt to remain home and avoid both disasters) but there does seem to be some evidence of a slow-down in new customer gain which could suggest that the most successful future online retailers will be those who hold onto their market share and persuade those customers who’ve bought once to buy again.

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Building a website quickly without technical skills

Posted by Michael under Business Growth, Online Retail

Every business needs a website, but what if you want to trial a business idea, or need multiple websites for cluster or boutique businesses, and have limited capital and time to put into this aspect of your concept?

Enter Yola (formerly synthasite), Intuit and Subhub – three solutions to the same problem.

What they offer

All three have a similar basic offering: a free service that allows you to bang together an off the shelf website template with your business’s individual details.

As the price rises, the offers become more complex and more tailored. At the interim level, Yola offers extra storage and a customisable domain name and at the premium level, a website designed for you is included along with more storage and space.

Intuit is not available as a .co.uk which is a shame, as its business package is a great deal for retail-based business options. The free package is very similar to Yola but the pay-based options included retail support and payroll: an all-in-one package that must make many .com, .net .org. biz and .info entrepreneurs very happy!

Subhub has a free trial that rises to ‘pro’ and ‘max’ and what’s interesting here is that the difference between these pay-for services is essentially a one-off design fee to create a tailored website for the ‘max’ option – the other service offerings remain pretty much the same.

What they cost

Yola is $49.95 per annum for silver level and $349 for premier.

Subhub is £49.97 per month for pro and then a further £597 for the website design plus a bit more storage for max.

Intuit costs $4.99 per month at the bottom of the scale, rising to almost as much as you are willing to pay, but a fully functioning retail site seems to come in at around $200-300 a year according to many users.

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Hiring the right people into your business

Posted by Michael under Business Growth

Choosing the right people to develop your business is essential and being able to make an objective and measurable assessment of a candidate’s skills and competencies is a vital part of ensuring the you get the best person for the job. But if you’re not expert in Human Relations and don’t have a degree in psychology this can seem like a daunting task. So the various companies that offer to undertake testing and provide results for you may be a real boon, but how do they work and what do they deliver?

PreVisor – Talent Measurement

PreVisor offers a range of services based around talent measurement that are intended to give an employer advance knowledge of any candidate’s readiness for the job they are to be offered immediately as well as providing indications as to their future potential. These services are delivered online and include:

• Assessments that take the form of a set of measurable results for nearly a thousand different aptitudes, types, jobs and situations.
• Interview Tools that customise an interview process and create a guidance system for the interviewer to follow in real time.
• Employee Resources that encourage your existing staff to upskill and achieve higher levels of certification.

They also offer tailored consultancy to meet your company’s individual needs.

Thomas International – solving your people puzzles

Thomas International says that it carries out more than a million assessments every year: measuring the personality, behaviour, aptitudes and abilities of people in the workplace – based in part on the theories of Emotional Intelligence testing, Thomas International’s online testing systems break down into three areas:

• Personality and behaviour
• Aptitude and ability
• Skills assessment and training

They also have consultants and trainers to help you get the best from their services.

Costs

Both companies have a sliding scale of charges, with the cheapest being an ‘off the shelf’ testing system that you apply yourself, while a customised testing regime, administered by their own trainers, costs considerably more.

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How to measure customer satisfaction and use it to grow your business

Posted by Michael under Business Growth

The Ultimate Question is answered by Net Promoter – a business tool that provides a simple and easy way to measure customer satisfaction in order to help grow your business.

What is a business’s net promoter score?

Net Promoter is a tool that tests and measures customer loyalty. It aims simplify the process of improving a business by easily measuring and communicating a company’s performance.

How do you calculate it?

You can find detailed information at the Net Promoter page, but simply put, there is a single aim for any company investing in the Net Promoter process – to create more ‘promoters’ and fewer detractors.

A Net Promoter score can be found by asking customers a single question. On a scale of 0 to 10 – How likely are you to recommend our company to a friend or colleague?’

The responses fall into three groups: Promoters (9-10), Passives (7-8) , and Detractors (0-6). To calculate the Net Promoter score, the percentage of Detractors is subtracted from the percentage of Promoters. A score of 75% or above is considered good.

Advantages to Net Promoter

The focus of creating more Promoters and fewer Detractors is claimed to be simple to understand and easy to act upon, compared to other, more complex and time-consuming systems that employees are supposed to use to determine how satisfied customers are with a company.

Potential issues with Net Promoter as a tool

Several commentators suggest that the Net Promoter score actually fails to distinguish between the roles of cause and effect and correlation. Correlation measures the association between two things while cause and effect measures the way that one thing influences the rate or incidence at which another thing happens. Hot weather causes people to have barbecues, at which they may drink more and thus have more accidents. The cause and effect is not between barbecues and driving, but between hot weather, drinking more alcohol because of a behaviour change, and driving. The association is between hot weather and barbecues is strong, but barbecues do not cause road accidents.

Recommendation (called promoter behaviour in the book) can be seen as an effect not a cause – it happens because something else (eg satisfactory experience) causes it to happen. However The Ultimate Question says that recommendation’s correlation with sales growth proves it drives growth. It’s not clear that this is the case and more investigation – preferably independently conducted – would be need to prove the exact relationship between these business elements.

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