On Internet Business

How not to launch an e-business

Posted by Michael under Business Growth, customer service, Entrepreneur Resources, Leadership, Online Retail, Social Media

A recent article at Inc. suggests that the easiest way to launch an e-business is not to have a great business plan but buy a website through a broker on which to launch it. I’d like to suggest that ‘easy’ is not a good route to business growth and that buying somebody else’s mistake is an unlikely way to achieve success.

Inc. suggested Ebiz brokers and eBay as the best places to find sites. There are more established locations to find sites for sale such as Flippa and Dalton’s Weekly

Looking at the ecommerce section of business brokers sites can also show up potential opportunities. UK brokers include:

Knightsbridge
Avondale.

Even if you can find a good site (and if they were going concerns with a good customer base why would they be on the open market, rather than brokering a goodwill deal with a competitor who can see their value?), there are inherent risks in this approach:

1.    The observable traffic on a site you purchase may have no value or even a negative value, if it’s not convertible
2.    Search engine rankings are fragile and Google, in particular is tough – if there are hidden dangers in the site you buy (cloaking, embedded automatic content generators, black hat blogging), stripping them out is costly and even when they’re gone, you’ll find yourself penalised by the Google algorithm
3.    The seller wont always give you the full story – it’s all very well asking questions but it’s quite another thing to get honest answers: when e-commerce fails, very few site owners are willing to own up to their mistakes in front of a buyer, even if they recognise them.

There aren’t any shortcuts to starting a successful online business. The business fundamentals have to be right

•    Products
•    Pricing
•    Promotion
•    Reaching the right customer base
•    Customer service.

If any of these are less than excellent, online customers find out quicker than any others, and spread their disillusion faster and wider than any others, using social media to inform a wide audience about your failure. They may be low barriers to entry in setting up an ecommerce business but without a clear strategy and unique selling proposition why will customers buy from a new online business?

If the fundamentals of the business are right, services like Volusion can help build a scalable online business. Volusion is an all in one software solution which already powers 30,000 online stores. It takes a lot of the headaches out of starting an online and, unlike many other solutions, it is targeted at UK merchants.

However if your aim is build the best possible online experience for your customers, starting from scratch with a bespoke website may not be the cheapest or easiest option but in the long run it still might be the best one.

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Real-Time Marketing and PR: How to Instantly Engage Your Market, Connect with Customers, and Create Products that Grow Your Business Now

Posted by Michael under Business Growth, customer service, Entrepreneur Resources, Leadership, Social Media

This book is an exploration of value and speed. It’s like an equation in business physics – the businesses that learn to deliver value faster than others are the ones that gain market share and loyalty. Speed added to value provides competitive advantage in the internet age.

So how does it work?

Some people struggle with the insight and anecdote based approach that David Meerman Scott uses to take the reader through how people, and organisations, have coped (or failed) in using real-time opportunities to engage with the real world, in real time, by offering value rather than relying on a pre-determined PR formula.

From the Amazon reviews about it, there are people who complain about the anecdotal style Meerman Scott uses: that he doesn’t provide enough empirical detail; that the metrics just aren’t in the book.  And that’s precisely the problem that this book sets out to solve. You can’t operate in real time using a manual. You can’t know what’s going to come at you, and you can’t guess in advance how the world is going to change around you, and in relation to you.

A perfect example, and the most famous, is the ‘United Breaks Guitars’ saga. A musician whose guitar was broken by United Airlines became so disgusted by the way the different airports passed responsibility for his claim to each other, that he wrote a song about it and made a video. That video went viral on YouTube. Two associated businesses: Taylor Guitars and Carlton Cases, seized the real time opportunity to publicise the value of their products in relation to the video and gained market share as a result. United Airlines apparently lost $180 million by failing to respond to the story.

In a blog interview David Meerman Scott made a key point about the brutality of real-time marketing, “Losing control is the toughest principle. You have to let people talk about your organization in the way that they want to talk about it. You can’t complain that they didn’t use your key words”.

In other words, to succeed, a business has to take part in a real-time conversation, not control it, and that requires leadership.

So how does a business use social media, crowdsourcing, videos, mobile devices, media alerts and so on to deliver value in real time?

Meerman Scott offers a range of tactics to help organisations speed up their information gathering and shorten their response time, but over and over he makes the point that what successful real-time marketing requires is a new mind-set that accepts that action is outward facing and fast, not inward looking and risk-assessment based.There are many examples of how other businesses learned to listen to more voices, act more swiftly, make rapid course adjustments and demonstrate their core values in both success, and failure.  He also talks about how to drive real-time customer value through an organisation with zeal and enthusiasm.

The examples recognise the need for speed and agility, while helping readers to understand when process applies and when it needs to take a back seat to swift communication. Moving quickly at the right time is prioritised in customer-facing business areas, while ensuring core values remain integral to decision-making is seen as part of the strategic function of a management team committed to integrity of response when under pressure.

There are many obvious tips that businesses still ignore – Meerman Scott says a business should respond in the same medium that the challenge arrived in. So United Airlines should have made a video apologising to the musician and loaded it on YouTube. Insisting on using ‘formal channels’ means not being heard by the same audience who get to hear the bad stuff about your brand, company or product, so all efforts are wasted because you’re talking to people who hadn’t heard about the problem (but have now you’ve pointed it out) and ignoring those who had heard about it. In other words, you’re damaging your own brand.

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Business Awards – in pursuit of excellence

Posted by Michael under awards, Business Growth, Entrepreneur Resources, Leadership, Social Media

From the Growing Business Awards through to the Queens Awards for Enterprise, taking in everything from awards for green business through to fast growth, social media use, family businesses or digital innovation, there are awards programmes that expose businesses to a rigorous analysis and reward those who ‘win’.

But what of those who don’t? Is it worth entering if you don’t scoop the top prize?

Yes, it is. For three reasons:

1.    The evaluation used by the judges helps a business to measure itself against the current and anticipated challenges in each category area. For a new enterprise in particular, but for businesses generally, this is an exposure to the likely threats to business growth as identified by international experts in that area of business – working through that assessment ‘future-proofs’ a business better than it could do alone.
2.    The scrutiny of your business will highlight weaknesses or areas of underdevelopment that could be holding the organisation back, so it gets a heavyweight consultancy on the impediments to business growth.
3.    Being exposed to a peer group of acknowledged leaders allows for sharing of information, networking and bench-marking – whether a business wins or loses the category, there are always new ideas, better systems or solutions to problems to absorb and utilise.

What’s also starting to emerge is that businesses that don’t get this kind of external competition may actually spin into hyper-competitive behaviour and poor decision-making. Donald C Langevoort’s study: Organizational Psychology of Hyper-Competition: Corporate Irresponsibility and the Lessons of Enron – suggests that when a culture of healthy competition isn’t properly established inside and outside an organisation, spiralling risk-taking can become ‘natural’ and, like subprime lending, it becomes normal for certain kinds of business to look at competition alone, not at the bottom line that being competitive delivers.

So the value of nominating your business for an award is not just about being the winner, it’s also an opportunity to learn from the best, to look at the future, and to see potential problems clearly and evidence from organisational psychology shows that a strong business thrives on organised, recognised and validated competitive structures.

Awards courtesy of Schipulites

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Seven Deadly Sins of Entrepreneurs

Posted by Michael under Business Growth, Entrepreneur Resources, Leadership

Many start-ups fail to thrive for reasons that couldn’t have been factored into the business plan but it’s equally true that the same mistakes are seen over and over again in business and there’s a point where an individual has to look at themselves and decide whether the problems are external or internal. Identifying mistakes is one thing, but where an innate trait, characteristic or behaviour in the entrepreneur is what causes the difficulties, it can definitely be considered a ‘sin’.

1.    Self-sufficiency – some businesses work as solo enterprises but most need to be scalable and if you don’t know how you’re going to grow your business without cloning yourself, you have committed to a life of hard labour with an unappreciative boss: yourself! It’s a better idea to build enough margin into your pricing to allow you to hire or outsource all the aspects of business that you don’t need to be doing, so that you have more face time with clients and more time to focus on business growth, problem-solving and networking.
2.    Product worship – being product-driven is a fast road to failure. It really doesn’t matter how good your product is, if the customer doesn’t want it. The history of product development is littered with excellent products that didn’t make it, and less good products (in the technical sense) that become world-leaders. Know what the customer wants, what they need, and what it takes to get what they want and need to them – so don’t just know the customer, be savvy about distribution.
3.    Neglect – most often seen in terms of legality, neglect also extends into business plans, accounting and hiring. It can be crippling to a good venture to indulge in neglect. When somebody mentions to you that you really ought to be thinking about ‘X’, make a note of it and ensure that ‘X’ is on your to do list in the next 30 days. Sometimes ‘X’ turns out to be not a problem, but if it’s a legal blunder that comes back to bite you in a year’s time, or a financial misstep that leads you into decades of scrutiny from the revenue services, you will spend time and money solving a problem that never needed to exist.
4.    Picking a tiny target – this is a sin that most entrepreneurs commit at some point, but a good business plan should reveal the problem long before it damages a growing business. Basically, if you’ve picked too small a niche for your business, growth will cease very quickly, either because your competitors have cornered all the space or because you expand to fill the niche and then find there’s nowhere else to go. Of course you might be happy being the big fish in a very small puddle, but it’s better to know that’s your potential future before you jump in and muddy the water.
5.    Playing the equals game – this one doesn’t look like a sin at all, but it’s a business destroyer all the same. If you have business partners, particularly if your business is a technical one and you all contribute to the intellectual property, it’s tempting (and often seems fair) to have equal shares in the ownership. In the longer term though, it’s unlikely that you’ll all agree on all aspects of business direction: you might want to put in different amounts of time to running the business, often people disagree about who should be hired; getting outside funding can cause major arguments as partners fight about the constraints imposed by the funder … it’s a recipe for business death and it’s unnecessary as long as you’ve had the foresight to decide which one of you will have the authority to make the tough decisions – and of course, that individual needs to have sufficient investment in the business to stay motivated when taking the flack from the other partners!
6.    Time-is-right-ism. This one’s incredibly common, not so much in start-ups as in potential start-ups and it’s important to be aware that there are many wannabe entrepreneurs out there who never get a business off the ground because they want a guarantee of success. They hone and perfect their business plan, obsessively research the opposition and craft their pitch until it’s awesome –but they never get to deliver it because they are too scared. For true entrepreneurs the leap of faith is the launch pad, but for ‘when the time is right’ entrepreneurs, it’s the point when they stop dead. So if you’re introduced to somebody who seems like the perfect business partner and they already have the perfect business plan, do some research of your own – you may find they’ve been here before, again and again, and they just never quite get started ….
7.    Overpaying for market share. It’s a classic mistake and probably most businesses make it at some time but habitually spending too much on advertising or offering incentives is certain death to a business. The answer is simple. Perform a rigorous assessment of the potential return. Test your assessment thoroughly. Ensure that you are unlikely to spend more money getting customers than selling to them. Enshrine your assessment as a rule so that as the business grows, anybody who has authority to spend money on customer acquisition knows how to measure the cost of advertising, incentives or promotions against the potential return.

Image courtesy of Euii-Brain

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Radical reform of British business climate needed

Posted by Michael under Business Growth, Leadership

According to Simon Walker, who is taking over as Director General of the Institute of Directors, Britain has lost its competitive edge. Walker recently became the hero of the investment sector through his fierce attacks on the controversial Alternative Investment Fund Management directive which limits remuneration schemes for investment managers. His first comments as he prepares to step into his new role on 3 October suggest he will be similarly robust in attacking the UK’s statutory framework.

“We’ve taken the UK’s competitiveness for granted for too long and now find ourselves with an excessively high tax burden, an overregulated labour market and creaking transport and energy infrastructures,” he claims.

His past experience as CE of the British Private Equity and Venture Capital Association, and senior roles at Reuters and BA have given him an insight into the need for competitive environments and he says, “Britain has lost its competitive edge and radical reform is the only route to sustainable growth, stability and long-term job and wealth creation.”

In addition to business expertise, Walker has served as an adviser to the Queen and to Prime Minister John Major, so he knows how to run a campaign and how to lobby effectively. He aims to encourage the government strip out regulation so that businesses of all sizes can compete more freely in the global market and the IoD will produce a ‘wish-list’ for economic growth in the autumn.

Walker, who is often described as having ‘cleaned up the image’ of the private equity industry, is likely to be a popular choice with high tech industries, start-ups and those requiring growth funding – business areas that have struggled with the moribund global market and with getting swift investment decisions from British banks. His intention to campaign for lower business taxes and less regulation will certainly appeal to businesses of all sizes.

Institute of Directors by Mark Hillary

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Five tips for start-up leadership

Posted by Michael under Business Growth, Entrepreneur Resources, Leadership

Getting the right structure for business growth means establishing a leadership base before you need it so that as the organisation grows and you’re ready to take on employees, the operating system is equal to the demands of rapid growth:

1.    Vision – building your values into your vision seems essential, but for many entrepreneurs, taking their values for granted can lead to slippage if the business grows rapidly, and they are not able to ingrain their belief system and business ethics into each new employee. Make sure you have a vision document and that it lists values that you expect all employees to activate in their work day.
2.    Assessment – measuring the performance of individuals, and the organisation, against the vision and values is essential and can provide good guidance about the skills and activities that the company will need to integrate in years one to five of growth. This means there’s more opportunity to spot gaps in competence and to exploit opportunities.
3.    Enthusiasm – leaders have to lead and by embracing the core values of the organisation both emotionally and intellectually, an entrepreneur can drive and validate a company vision. It’s not enough to demand, leaders have to demonstrate: whether it’s excellent customer service or ruthless analysis of failing product lines, value-led behaviour comes from the top down.
4.    Goal orientation – the ability to articulate the outcomes a business, team or unit needs to achieve is crucial to creating an organisation that continually plans for, sets and achieves goals. Fuzzy business planning leads to diffuse outcomes and the inability to measure effectiveness at the key times when resources are allocated – for a start-up, getting resource allocation wrong can break an otherwise healthy business.
5.    Recognition – acknowledging success and creating the habit of generous and public recognition of outstanding performance, leads to a culture of excellence that can lead to exponential growth both in business and in the skills and capacities of individuals. Leaders can either turbo charge their teams or let them run at their own pace. Lance Armstrong in his autobiography It’s Not About the Bike suggests that leadership skills may be innate or learnt but that once they are established anywhere in a team, they become the main driver of performance, so a business leader who isn’t great at recognising and rewarding success needs a team member who can do that, or the whole organisation will suffer from sluggish development.

Lance Armstrong courtesy of AngusKingston

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The language of business

Posted by Michael under Business Growth, customer service, Leadership

Charlie Mullins has been looking at the way that employers are pilloried in ‘Horrible Bosses’ and making the point that many employees are ‘unprepared for the challenges of employment’ and that people find it difficult to deal with ‘tough face-to-face confrontations’.  So how does a boss get the message across?

Being straightforward is often seen as being ‘horrible’ or ‘critical’ in work situations and Mullins points out that technology doesn’t help. Many younger people are not used to direct communication and text rather than calling or send emails or ims rather than speaking face to face. This leads to indirect communication, passive information sharing and the inability to formulate responses to challenges in real time.

The problem is often made worse by company structures that hive off complaints into call centres or customer service departments that don’t interact with the rest of the organisation. It means that painful communications aren’t shared and the techniques for dealing with them aren’t spread through a company.

Some bosses are horrible, but Mullins seems to suggest many employees are incapable of telling the difference between tough talk and horrible treatment, and even if they could, they aren’t equipped to do anything constructive about it.

In the same week that Horrible Bosses premiered, a study by Judith Baxter (Aston University) examined the different way that men and women talk in business meetings. She found that in the boardroom, men and women who are effective tend to use similar language. When, as is almost always the case, women are a minority at director level, they tend to self-deprecating language like ‘you might already have tried this and it didn’t work out’ or ‘perhaps I’m being a bit dense but I don’t understand ….’ as the result of being ‘too aware’ of another person’s point of view.

There’s debate about whether this helps women build consensus for their viewpoint or whether it holds them back. What does seem clear is that language matters and that the ability to talk tough in business is a skill that we all need to develop – just as we need to learn to listen tough too.

Boardroom by Adrian Eden

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Raising funds for business ideas

Posted by Michael under Business Growth, Entrepreneur Resources, Leadership

Kickstarter’s platform has got a lot of attention recently, as it exposes different forms of innovation: there’s the creative ideas that are seeking funding, and then there’s the way that the ideas are being funded – Kickstarter is a testing ground for ways to raise funds. The ideas that don’t get funded might be bad ideas, or they might be approaching funding in bad ways. Every entrepreneur can learn from the Kickstarter successes – and failures!

Funder fatigue

Some Kickstarter projects have had fantastic funding success, but increasing levels of unhappiness on social networks show that the same potential funders are getting hit, again and again, for funding and that they are becoming fed up with unsophisticated approaches from the website.

The problem is that if a product can’t communicate its values well, it’s doomed to failure, whether it’s a new toaster, a new band or a new b2b service. By this logic, failed Kickstarter campaigns are all about failing to convert potential audience to actual backers and that comes back to the classic question – how do you close the deal?

What potential Kickstarter funders resent

Being hit again and again (nagging)

If you hit the same potential funders as everybody else, you are likely to fail. First, they are probably recoiling from somebody else’s botched proposal or wrapped up in somebody else’s successful pitch – neither scenario bodes well for your approach. Second, even if they haven’t heard from you before, they will have heard from many others, quite a few of whom are like you – you’re competing with everybody for a little bit of something.

Alternative – what about asking other funding sources? It’s difficult to find new funding opportunities, but if you do, you’re likely to find a more receptive audience and one that is judging your idea and you, with a fresh perspective. And if you can’t find fresh funders, maybe you haven’t researched at depth? Consider whether you can ask potential funders to point you towards other funders – sometimes that request for a referral, rather than funding, has the paradoxical effect of getting you an enthusiastic hearing.

Unrealistic funding objectives/Padding of funding

Your potential funders should, and probably do, have a very clear idea what it takes to get a project/idea/business off the ground. When a funding request contains unrealistic amounts or unclear objectives big red distress flares go up for both seasoned dragons and enthusiastic friends and family.

Alternative – don’t just research your idea, research similar ideas and the costs entailed in getting them off the ground. If you can demonstrate the need for expenditure and that you’ve pared the unnecessary out of your approach, you stand a fair chance of getting funded.

Begging (last minute pleas and drama as the deadline approaches)

While deadlines add energy to business-based funding appeals, they can also lead to histrionic behaviour. Emails begging people to give £10 or $20 because if ‘fifty of you do, I can still make my dream come true’ sap the goodwill of the donor and make a nonsense of the project. The minute you ask for charity, you’re admitting that your business idea is an empty well down which you’re asking people to throw their hard-earned cash.

Alternative – set up the last minute first. Approach your last-step donors and get a commitment from them that if you get 80% of the money, they will give the final few % in the last seven days. Don’t rely on this cushion though, instead try to raise 100% and give yourself the last 7 days to go back to agreed funders and show them that your project is oversubscribed: a year or couple of years down the line, you can call on that cushion to expand your business or even fund another business idea.

New approaches photo by Office Now

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Starting a business in a recession

Posted by Michael under Business Growth, Entrepreneur Resources, Leadership

A serial entrepreneur, Jenn Hauser, offers five tips to starting a new business over at Inc.com. A major insight into the entrepreneurial mind is the way that she constantly comes up with, and discards, business ideas – it’s not a ‘perfect idea for the rest of my business life’ approach but a constant thinking up and letting go of potential businesses.

Once an idea starts to take hold of her, she sets to work on it. But what does it mean to convert an idea to a viable start-up and how is it done? Her tips include:

1.    Take a step, any step – don’t allow an avalanche of planning to crash down on simple action. Whether you begin with sorting out financing, writing out a product description or checking out the competition, you’re making a start and any start leads organically into the process of business creation. It’s not so important where you begin, as that you begin.
2.    Keep it simple and forget perfect – here the message in the article is slightly confused, I think. What Hauser says is that you need to find the key point of the business idea and forget all the frills around the edges. It’s not always easy to pick out the key point though, and sometimes the frills are what makes all the difference – simplicity is great, as long as it doesn’t miss identifying the key advantage or USP that makes your business idea niche or viable if the marketplace is already crowded. Work out what’s key and forget perfection and you’ll have something to run with.
3.    Don’t reinvent the wheel – here Hauser is right on the money. Too many start-ups think they have to start everything from scratch. Look at what you can rent, lease, or use without starting from the ground up.
4.    Tell people you’re starting – of course, you don’t want to give away your great idea, concept or niche, but you don’t have to. You can simply talk about the process without talking about the ‘product’. As you talk to people you start to network – they know somebody who can help or who might be interested in what you’re doing. They offer their own experience, ask questions that help you refine your approach and maybe even suggest contacts or competitors for you to look at.
5.    Tell people what you need – Hauser suggests that when you’ve told people what you plan, you should tell them what you need – this is a good idea but it could, if you’re not careful, turn off your contacts. Don’t be needy. Say what you’ve already got before mentioning what would help. And remember that when somebody tells you what they are doing, you may be able to help them and should offer. Two way streets get more traffic!

It’s interesting to look at these start points in relation to a new study by the Kauffman Foundation that suggests American start-ups have fewer employees when they launch and stay smaller than before. ‘…businesses have been starting smaller and growing less for the last several years,’ said one of the researchers. It means that the job deficit is not being addressed by the start-ups in the way that it was before 2007 and that although the level of start-ups has held steady or even edged up since the recession, when including new employer businesses and newly self-employed workers, the research suggests it did not grow enough to generate the new jobs needed to support overall economic growth in the USA.

This may mean that more and more of us need to become entrepreneurs, running small enterprises even on a part-time basis, and that getting started may be the key to personal success and fulfilment as well as business and economic prosperity.

start-up diagram by dgray_xplane

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Six ways to benefit from the Bribery Act

Posted by Michael under Business Growth, Entrepreneur Resources, Leadership

From next month, British-based firms of every size will be facing the biggest shake-up in UK bribery law for over a century.

Whether you’re an SME or already a multinational, there are new forms of risk to assess and build into your business strategy. The most notable is a crime labelled ‘failure to prevent bribery’ which puts the onus on the business to prove that it has assessed the risk and implemented ‘adequate procedures’ to stop bribery being used within the company or by third parties acting on the company’s behalf. This crime leaves company open to fines that do not have a financial ceiling and also to the possibility of being barred from seeking government contracts.

While bribery may seem a remote issue to many firms, it’s important to recognise that the shape of the new legislation makes it a management concern and failure to implement good structures could lead to investigation and long-drawn-out interactions with the Serious Fraud Office or the Ministry of Justice. It’s also crucial to recognise that investigations are increasingly driven across national boundaries so a concern may be raised elsewhere in the world that is then acted on by a UK agency.

Dealing with the Bribery Act

Creating the right processes begins with business governance, and involves setting in place controls, ensuring there is a business culture of integrity and ensuring that individuals at the all levels in the organisation have been given training in values and behaviours that make the company averse to the risk of bribery.

1.    Start with a risk identification programme to find the areas of greatest risk
2.    Make sure you have a policy that is explicitly anit-bribery and that it is driven down from the top of the organisation to the bottom as part of induction, annual review and continuing professional development
3.    Create an anti-bribery champion at senior level who is able to challenge all levels of the organisation on their actions and their values. Resource this person effectively to carry out their role and create an annual reporting structure that is transparent to all areas of the business. A company intranet is a good way to do this.
4.    Check that existing contracts with consultants, directors and employees as well as outsourced areas all contain a clause prohibiting any form of bribery.
5.    Ensure HR can carry out good due diligence on new employees and that an effective form of due diligence is in place for partnerships, joint ventures and even funding sources.
6.    Give whistleblowers respect, anonymity and the chance to report concerns safely. Act on such concerns swiftly and with due concern for the anonymity of the person who raises them. Document the company’s actions in responding to concerns.

While such legislation can seem like a brake on business success, a good corporate strategy can use this kind of review to drive better understanding of values through the company, making integrity an aspiration, not a nuisance.

Image courtesy of images_of_money

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