Wednesday, December 10, 2008

Why Obama’s Infrastructure Spending Plan Won’t Work

In 2008 the U.S. actually spent $114 billion on infrastructure, following $102 billion in 2007. Infrastructure spending over the past five years for non-defense comes to nearly $500 billion. Did that do much for jobs and the economy? Did it prevent our recession? Therefore why should we believe that Obama’s proposed $500 Billion infrastructure plan will do anymore than history already shows. If the bailout mismanagement is anything to go by, we can only anticipate more of the same, since government has no clue as to how to run business. As Amity Shlaes documents in her book "The Forgotten Man," the economy limped along under FDR's stewardship in the 1930s. Many of the era's public-works projects were undertaken for political reasons as well as economic ones. Government crowded out private initiative and neglected policies to promote the private sector. Net private investment declined at times during the 1930s. If less people are going to work, what use are more bridges and trains? Government infrastructure spending doesn’t create new jobs for very long (mostly temporary jobs), takes time to implement (approvals, planning permits etc.) and is fraught with abuse, waste and mismanagement. And by the time the money is spent, the recession will have passed. Entrepreneurs and businesses will create jobs and bring back our economy. This holds true for the other economies of the Western World; the principles are the same. We should be looking to find creative ways to encourage investment. By slashing the corporate rate tax, means a business might indeed be able to save jobs and entrepreneurs and VC’s will jump back in and invest in start-ups. This is what has fueled our growth in the past. Potentially, billions of dollars could pour back into funding start-ups. Furthermore, cut tax rates for everyone and the consumer will be back. Raising tax rates on the higher income bracket is exactly the way to prolong and deepen this recession. So why should we believe Obama’s plan of change is anything more than growing government and increasing our national debt? Post your comments here or e-mail me at businessissuestoday@gmail.com

Friday, December 5, 2008

A Permanent Shift Between Old Media and New Media

While advertising spend is generally affected by a recession, the new digital economy is surprisingly holding up. Web companies are offering cheaper and more accountable ways for local companies to advertise to a local audience. These web companies are thriving at a time when the longtime dominators of that market - newspapers, radio stations and television outlets - are reeling from the stagnating economy. The radio industry which for long time was an affordable medium for local advertising, continues a downward slide in Ad sales For the second year running, it will have experienced negative growth by tripling station revenue losses to -7 percent, according to the estimates of BIA Advisory Services. Radio’s future relies heavily on its ability to embrace new media and mobile technologies and local advertisers. CitySearch for example is an international website but it offers the ability to search locally for restaurants, theatre etc. Citysearch CEO, Jay Herrati said the local online market has been growing at 17% to 20% annually, and he expects that to increase as advertisers become more comfortable with the complexities of digital media. Local advertisers are also turning to Google Inc.'s AdSense service, which can place their text ads on Web sites that specifically cater to their target audience. The cost to advertise online can be as little as $25 per month. Budgets are spent on a pay-for-performance basis. Only when a user clicks on that Ad, is the merchant charged roughly 25 cents per click. And never before has it been so easy to track consumer behavior and recognize trends. MySpace Ads (just launched in beta) offers this minimum pricing and can target your Ads by social network groups – not exactly local advertising, but yet another way for affordable and highly targeted advertising in an increasing digital age. Traditional media companies in print and broadcast have struggled for years with the rise of the Internet. Their future is viewed as increasingly uncertain as they have been unable to renew growth prospects with revenue generated online. The economic situation could actually be creating a permanent shift between old media and new media. Under increasing pressure to cut costs, retailers and small businesses are discovering the value of the Internet as a marketing tool for reaching a highly targeted audience while closely tracking their return on investment. On average, 60% of people now check out product reviews and pricing online before making a purchase. Businesses can no longer afford to not embrace digital advertising or be a part of the new digital world. Got a specific business question? Email me at businessissuestoday@gmail.com or comment on your experience.

Friday, November 28, 2008

Google Android – G1 – Making shopping for bargains easy

The HTC G1 from T-Mobile is the first smart phone with Google's new Android mobile platform. The coolest application that’s sure to attract holiday shoppers looking for the best bargains, is the bar code scanner feature. You could be at any store, see a product you want to buy (DVD, book, anything with a UPC barcode) and in just mere seconds you can check the lowest price online or in a store nearby. The G1 turns the camera into a UPC bar code scanner. Just point it at the barcode on the product packaging or label and up pops a menu with the cheapest prices for that exact same product. Here’s the best bit; if the product is cheaper at a local store, hit another icon and Google will pop up driving directions.....all in seconds. Very cool! The G1 is currently only available on T-Mobile but sure to be a ubiquitous feature on all phones in the future. Google’s competitive advantage is of course its integrated applications, from Android to the Google search to Google maps, all working together to produce a result to a search in just seconds. That’s a combination that is tough to match on say an iPhone, which would require Apple to make some strategic deal to have access to search and mapping. Post a comment or e-mail me at businessissuestoday@gmail.com

Thursday, November 20, 2008

Auto Industry - Bail Out Mania

While a Democrat-controlled Congress is trying to rationalize a new $25 billion bailout for the auto industry, at the Los Angeles auto show is a launch of a new electric car from Mercedes – the Mini ‘E’. In fact the gas version Mini has seen sales increase 30% year on year. There are clearly two auto industries in America: there’s American (Detroit) and foreign manufacturers. Could someone please rationalize why we are talking about bailing out Detroit for $25 B? For years, the American auto industry has struggled to keep up with foreign manufacturers like Toyota, Honda, Nissan, Mercedes, BMW and VW, all of whom are producing fuel efficient cars that the consumer wants to buy. These companies have managed their businesses well and are in touch with consumer wants and needs instead of foisting products on the market that consumers don’t really want. From what I remember in my Masters in Marketing, this is basic marketing theory. (We seem to have management at the helm of the Big Three who seem unaware of this.) So what went wrong? The Big Three have been in decline for years due to mismanagement, an inability to control unions and as a consequence, labor costs that are far higher than their competitors. The Big Three pay out an average of $30/hour more than their competitors, including pension and health care costs for hundreds of thousands of retirees, guaranteeing nearly full wages and benefits for workers who lose their jobs due to automation or plant closure. It supports more retirees than current workers. Furthermore, they have shifted production of certain models to Mexico and Ottowa. Again, why are American taxpayers bailing them out? The Big Three Auto CEO’s quite frankly need to be fired, not bailed out. Yes we feel for the thousands of workers, but this is not the way to help them. What happens when the $25 B runs out? You guessed it. Layoffs! Why, because no one wants to buy their cars. There are many creative things we can do to stimulate job growth and assist people willing to re-train or re-locate. Indeed, just imagine how many start-up companies could be formed with a fund of $25 B. How about 10,000 companies funded by start-up loans of $2.5 M with restrictions and help with retraining and locating to depressed areas? Yeah some will fail, but what if it gives birth to a few more Googles? The Government would actually make money and create a lot of jobs with a trickle effect into the local economies. I'm not necessarily advocating this, but it is an interesting idea of what could be done. Taxpayers should not be footing the bill for what is clearly a temporary fix. In all my years as a consultant to start-up firms, no company gets funded without a sound and solid business model (post dot com bust). The Big Three have not presented a new sound and workable business model. They do not deserve a bail out and we need a Congress that actually has some experience in business rather than public policies and welfare programs. At least they should be consulting with business savvy people. A Bail out won’t work this time because it didn’t in the economic downturn in the 1980’s when the British struggling auto industry was also making cars the public did not want. Margaret Thatcher threw $11 B at British Leyland and couldn’t save it, nor the British car industry. What makes anyone think this time it’s different? We need to allow the Big Three to re-structure as many companies do under Chapter 11 Bankruptcy. And if we end up with the Big Two, so be it! It’s time for Washington to wake up. President elect Obama needs real business expertise around him, as it’s going to be a long tough ride over the next few years. Post your opinion or email me at businessissuestoday@gmail.com

Tuesday, November 18, 2008

How Do You Measure the Success of a Campaign?

With a plethora of affordable options open to marketers these days, there is certainly no excuse to cut all marketing activities. And it has never been easier to measure the effectiveness and track customer responses. Here are some basic guidelines: 1. Set some guidelines What are you hoping to achieve once a potential customer lands on your page? Obviously the desired end result is a transaction, but capturing some participation also has a value in terms of future offers and communications, and even brand building. This is establishing a Success Metric so remember to have a call to action such as registering for future offers. 2. What’s it worth to you? There’s always a cost involved in converting a visitor to a sale. Set some realistic expectations and budgets i.e. what is the action worth to you? 3. Gathering data and trends Google Analytics is an excellent tool providing significant angles to slice and dice the tracking data. However, don’t forget the powerful use of a promotion code in tracking exactly what your prospect does and when. Try and conduct your tests one at a time to fully understand what works and what doesn’t. Multiple and simultaneous promotions create confusion in terms of analysis thus loosing the opportunity to establish some key metrics. 4. Don’t get overwhelmed Today, there is so much data that one can get paralyzed. You can measure everything down to the individual, but ask yourself if it’s necessary. Start by obtaining an overall picture and monitoring the changes to be able to spot a trend. Getting the whole picture will enable you to hone in and refine later. 5. The new digital era marketing is not so different 'Test and measure' used to be the mantra of good marketers. It just used to take a lot longer with direct mail and cost significantly more. With today’s web marketing opportunities, never has it been easier to try, test, learn, adjust and change in days instead of months. In a down economy, expect to react to changes; monitor your market, know your customer because their buying patterns also change much more than in good times. To stay ahead of the competition you must hone in on these minor changes and create campaigns accordingly. Got a comment, post here or email me at businessissuestoday@gmail.com

Friday, November 14, 2008

Obama’s Use of Technology in the Digital Age

There has been much speculation over the last week over who will be President Obama’s CTO. Eric Schmidt, CEO of Google has declined the position. In the meantime, thousands of people are continuing to use Barack Obama’s website to suggest and vote on ideas on various issues including the CTO position. The campaign has more than 10 million e-mail addresses. This was the first election campaign to successfully use the benefits of technology: cost-effectiveness, scalability, instantaneous communications, interactivity and personalization. The Internet has provided a way of engaging directly with an audience in a personal and interactive way, unlike traditional media in previous campaigns. More importantly, President Elect Obama is acutely aware of how best to engage the younger voters who obtain more information online than from TV. • Engaging a co-founder of Facebook was a smart move Initially Barack Obama’s campaign sought advice from the Internet pioneer and Netscape founder Marc Andreessen, the man who created the first web browser. Then he attracted Chris Hughes, 24, one of four founders of Facebook to leave his company in early 2007 to work in Chicago on Obama's new-media campaign. The use of social networks has revolutionized the Web as a political tool in both raising funds and organizing and mobilizing hundreds of thousands of supporters. During the election, the Obama campaign uploaded 1,800 videos, five times as many as the McCain camp. Obama also made active use of Twitter, a popular networking tool that lets users send short text messages, or 'tweets', to users' mobile phones. Users could upload their personal contacts to the site and send group e-mails to get out the vote. Or they could download a script and based on their address, get a calling list for their neighborhood. Users could also link to about 18 separate social networks. It was not about the technology but using it as a tool to connect emotionally to people, to create groups and communities. Communications was simple and yet personal. Anyone registering on Obama’s site, purchasing from the online store or donating to the campaign, received e-mails. Just after Obama’s acceptance speech, those same registered supporters received a thank you message in email and text format. Future political candidates cannot afford not to incorporate the use of the Web, social networks and mobile texting technology to connect and communicate with potential voters. • The new President will continue to utilize the Web in a new age of democracy “Obama aides and allies are preparing a major expansion of the White House communications operation, enabling them to reach out directly to the supporters they have collected over 21 months without having to go through the mainstream media," The WashingtonPost. Businesses can learn much from our new President. From small business to big business to entrepreneurial start-up, a digital marketing strategy can help you connect with your current customers and prospects. In a tight economy, there’s simply no excuse to not engage and start building a relationship. Got a question: post a comment or e-mail me at businessissues@gmail.com

Wednesday, November 12, 2008

Time to Repeal Sarbanes-Oxley?

This hastily passed Act post Enron has done nothing to prevent such collapses recurring and certainly has had no positive effect on the current economic situation. It is essentially just a massive tax on compliance at the worst possible time. The average company will now take 12 years before it can successfully issue an initial public offering (IPO) (up from 5 years pre-Sarbanes-Oxley) because they do not have enough capital to cover the estimated $4.36 million hidden tax in yearly compliance costs. It’s time for Congress to at least review this legislation. In the last five years, far fewer tech companies have made it to IPO or even been considered for an IPO in the U.S. markets. Furthermore, start-ups can't wait 12 years for an IPO; entrepreneurs could have created three companies in that time frame! As a result, the U.S. has become less competitive and many small companies have listed on the London markets. How is that good for America, especially in these times? • “In 2005, a report by the London Stock Exchange cited that about 38 percent of the international companies surveyed said they had considered issuing securities in the United States. Of those, 90 percent said the onerous demands of the new Sarbanes-Oxley corporate governance law had made London listing more attractive.” Tech firms in particular are not being encouraged to expand here in the U.S. where we now desperately need job creation. The tech industry is one of the most important sectors in our economy. It is technology that arguably got us out of the last major downturn in the early 90’s. • In the second quarter of 2008, there were no public offerings of Silicon Valley venture capital-backed companies, a phenomenon not seen since 1978. In the third quarter there was only one. If this draconian law is not repealed, then we could see Silicon Valley’s status as a hot-bed of innovation erode and see more and more of the future invented outside of the United States, taking much needed jobs overseas. President Elect Obama campaigned on “Change.” It’s time for change of the Sarbanes-Oxley law at the most critical time in our economy. Mr President Elect Obama, this is the easiest and quickest way to create jobs! Got a comment, please post or contact me for consulting at businessissues@gmail.com

Wednesday, November 5, 2008

Microsoft launches BizSpark - free software for start-ups

BizSpark is an effort aimed to provide startup software companies with access to current, full-featured versions of Microsoft tools with no upfront costs and minimal requirements. What a great offer in tough economic times! Free 3 year program It’s a way of cutting through the funding crisis and helping seed new business. As long as the business is less than three years old and $1m in annual revenues, it qualifies. BizSpark is a three year program which gives start-ups sufficient time to build a foundation for future growth and potentially save up to $10,000. Upon leaving the program or surpassing the revenue limit, the start-up pays Microsoft a $100 fee and transitions into a normal licensing agreement. Start-ups also get the chance to list for free in the online directory of start-ups (www.microsoftstartupzone.com). Strategic move by Microsoft On the other side of the coin, this is a good strategic move for Microsoft in response to Google pitching its hosted Apps offering. Where there are many choices and competing platforms for start-ups, this is a necessary move for Microsoft to stay in the game. To launch BizSpark, Microsoft has partnered with a number of investment and development groups, including the National Venture Capital Association, the European Business Angel Network, Indus Entrepreneurs and various economic development agencies globally.
How refreshing to see the free markets operating in an economic crisis without any government intervention!
Got a question or comment? Post here or email me at businessissuestoday.com

Monday, November 3, 2008

Social Media – Now Mainstream

New research from Forrester shows that 75% of Internet users now participate in some form of social networking, up from 56% in 2007. The number of people starting a social network profile increased 39% over 2007. Participants of Blogs, whether writing or contributing product reviews has also increased markedly. About 48% in this survey said they had read one. People are clearly becoming more comfortable about social networking participation and the companies that don’t use this tool are missing a substantial marketing opportunity. Social Media: What does this really mean? More and more people are looking at Blogs, about 50% more than in 2007. Therefore Blogs have become an important source of information and brands must embrace them to survive. What still remains difficult is measuring the effectiveness of social networks. It’s fairly easy to get a measure for people signing up to a Webinar, but how can you measure whether a Blog or video results in a sale? You can't! However, Investing in social media to engage customers can generate positive word of mouth, but determining how much real value you're getting for your money is difficult. When it comes to social media ROI (return on investment), metrics have proven to be somewhat elusive. In fact, according to survey data for the new Aberdeen benchmark report, "Social Media Marketing: The Latest Buzz on Word of Mouth," more than one-third (34 percent) of all companies indicated that a primary reason that they don't currently engage in social media marketing activities is because they lack suitable performance metrics for evaluating the results. (Traditional P.R. cannot be measured directly either but it’s still used!) That is not an excuse The effects of engaging in social networking can be measured by brand awareness studies and increases in customer engagement, usually calculated in terms of click-throughs, opt-ins, content downloads, registrations and various other calls to action. Brand advocacy or "likelihood to recommend" ranks as another top metric companies have adopted to measure the success of their social media marketing activities. In the end, there are myriad ways to measure ROI in social media. But can you afford not to be part of the Web 2.0 environment when customers have come to expect a certain level of accessibility to information from peer reviews? The answer is “no”. Social media has become a form of Customer Relationship Management (CRM) and it’s here to stay. Indeed, I would project that it will become even more important and instantaneous as mobile communications devices move toward universal wi-fi access. (But that’s another discussion.) Social media has become mainstream media. Embrace it to stay competitive and use it to learn valuable information about your customer, or get left behind. Got a question or comment, post here or email me at businessissuestoday.com

Wednesday, October 29, 2008

Now is the time to look at what you do and do it better

Making cut backs, conserving cash, re-working the burn rate to extend your survival time is all very prudent but, any company that intentionally pulls itself from the radar screen of their customers will be absent from customer decisions and referrals. By doing so, you create opportunity for your competitors to fill the void. There are always customers making decisions, so make sure that you’re part of the equation and process wherever they go for product information. Keeping customers engaged You have to think about keeping your customers engaged, even if their purchasing decisions are in a holding pattern temporarily. Those you engage will share it with peers. Such an ongoing process eventually strengthens and becomes a cycle. How do you do this? There has never been as good a time as in today’s Web 2.0 environment offering rich and inexpensive marketing tools. (We didn't have this in the last economic downturn.) Social Media, Interactive/Web, SEO, Blogs and PR. Let your customers be your advocacy group and give them the tools to contribute to the community building process. Help them translate your value proposition for different markets as well as enticing and compelling their peers to join them. Allow social media to become your guerrilla marketing and thereby conserve your cash. Remember, household brands took millions of dollars to build, such as Ebay, YouTube and Amazon and multitudes of enthusiasts to achieve global presence. You have to start engaging those who will get it, provide the spark, create global citizens and watch it grow. It takes focus and strategy to build presence over time. In the meantime, you might learn much from valuable customer feedback and your competitive advantages or deficiencies. Use this time to fix the deficiencies and stay on the radar screen so that when the economy starts picking up, which inevitably it will, you are already on that train!

Thursday, October 23, 2008

Start-ups: Spend every $ as if it were your last!

It’s time to get real so how can you maximize your budget? Some lay-offs will be inevitable as you strive to cut costs as raising funds becomes harder, but marketing is key to survival even though it's usually the first to go. Don’t throw the baby out with the bath water The typical reaction in a downturn is to fire the VP of Marketing, shut down the department and pass the function over to product development. This is a big mistake and will cost you more in the long run to rebuild your image, brand, website traffic and, to re-hire experience. While making cuts in expenditures is prudent, eliminating a key member of the management team is a short term fix that leaves you vulnerable to the competition. You’ll also risk missing the trends and the opportunities when the economy does pick up. Keeping customers in a crummy economy Second, keeping your key marketing strategist is important so you can stay in the game. Cutting budgets doesn’t mean that you stop all marketing communications and campaigns. • Think about incentives, promotions - from discounts to freebies to keep your existing customers. Offer discounted 1 year memberships to lock them in, coupons to entice them back to make the next purchase. (This doesn’t actually cost money to execute.) Get creative! It costs more to acquire a new customer than retain one. • Maintain regular communications with customers via P.R. (an inexpensive marketing tool); there’s always lots to talk about and customer stories cost little to produce and free to distribute via YouTube. • Use the Internet for creating Blogs on your company websites and tap into social networks. • Research and monitor the market; know your competitors so when things pick up, your are ready. And finally, if you really cannot retain a key marketing professional full-time, you can still stay in the game by hiring part-time, interim or a consultant. That puts you in a position to run once the market picks up. Help your company to survive and help the economy to recover faster. Got a question or comment, post here or e-mail me at businessissuestoday@gmail.com

Monday, October 20, 2008

There is a Silver Lining

Fear, volatility, doom and gloom news of the stock market and the economy is everywhere, but there are signs of business as usual and even hope. A new commercial bank has just been launched (yes a new bank), in New York called The Heritage Bank. It has raised over $60 Million despite the last few weeks of financial turmoil. David Bagatelle, President and CEO, said earlier on Fox Business News: “we are a bank, not a bond fund.” Heritage Bank will focus on making loans to small and medium sized businesses, providing a “personalized level of service – back to what banks should do; make loans, hold loans and develop relationships with its customers,” said Bagatelle. Its competitiveness will stem from expediency and quality of service working with CEO’s to understand their business. Isn’t this what traditional banking was always meant to be? Are we not returning to tried and tested business models with discipline and standards? After the dot com boom and bust a similar approach of back to basics and sensible business models also followed. History has an uncanny way of repeating itself. Got a question on your business, post it here or email me at: businessissuestoday@gmail.com

Wednesday, October 15, 2008

“Yotify” – The New Concierge Style Search Engine for Consumers in the Web 2.0 World

A useful tool from a new San Francisco start-up takes search engine alerts to the next level. Most of us are aware of the Google news search alert feature, but what if you are searching day after day for an apartment or a specific item or piece of furniture? Yotify takes away the tediousness of the search allowing you to define the search and set alerts, daily or even hourly in the form of a SCOUT. In fact, you can keep a track of all your searches by creating an account. You can even share it with friends within your social network through Facebook or LinkedIn. Just when you thought things were slowing down, innovation continues and technology will enable this economy to rebound given time. Got a question, post it here or email me at: businessissuestoday@gmail.com

Monday, October 13, 2008

Start-ups Looking for Funding: What should you do?

All we keep hearing about is “a credit crunch” and a "global financial crisis". But what does this exactly mean on a day-to-day basis for a start-up in the tech world? It means that CEO’s are going to have stretch that funding as far they can and try to reach positive cash flow without relying on that second round of funding, as economic recovery will be long. I see so many start-ups that are out of touch with reality. It’s time to re-examine that business model and make sure your business plan is realistic. Here are some key points to consider: - Manage what you can control, such as spending and debt - immediately; - Focus on quality and know your customer; - Series B & C rounds will be small (so cuts are a must); - Valuations will drop - ($15 M raise @ $100 M post valuation is gone according to Sequoia Capital); - Mergers & acquisitions will decrease and profitable companies will be in favor; - IPO’s – don’t count on that exit for some time to come! Investor criteria is going to be tougher so here’s the checklist of must haves: 1. Superior/Must have product 2. Understand market demand 3. Understand consumer’s ability to pay and expenditure constraints 4. Do your competitive analysis and product positioning 5. Established revenue model is a requirement 6. Need for profitability sooner Next Blog: we’ll look at operational and marketing issues. Got a question? Blog away or email businessissuestoday@gmail.com

Friday, October 10, 2008

What does the Wall Street meltdown mean for technology start-ups?

The technology start-up sector has weathered many a storm even though it’s a fairly young sector in the big picture. Not too long ago we had the dot com bust and then the 9/11 meltdown and we wondered what would become of the Internet after the hype vaporized. The world did not come to an end. It was the bursting of a bubble, “irrational exuberance” as Alan Greenspan once said and several years later, yet another bubble has caused today’s meltdown. Once again, it will not be the end of technology and innovation. Since the last Wall Street meltdown of 2000-2001, technology and innovation continued quietly, the seeds were sown and great companies emerged by the middle of the decade. Take Google for example; in 2000 – 2001 when the dot com bubble was deflating, Google was in its infancy and Facebook was not even around, nor was Linkedin or Myspace. If you mentioned a social network, no one would have known what you were talking about! Let’s go back even further to the 1980’s when Apple burst onto the stage in 1984. Apple was in its incubation in the late 1970’s when there was stagflation in the economy. What does this mean in terms of raising cash? Start-ups were not really in the pool for lines of credit anyway so the current credit crunch isn’t likely to impact directly. Angels and VC’s will continue to invest, after all, where will they get growth for their cash and it won’t sit around forever. What we can expect is a tightening up of the investment criteria. The next 6 months will be hard no doubt so be prudent and conserve. Investment will come but at a dearer price tag and it will be slower; consider it like a half off sale. The U.S. has historically been extraordinary at incubating technology companies and right now the foreign investor is also looking for a place to put their money. Continued technological innovation will be the key to turn this economy around. The Internet has shown us that great ideas can scale and become big business very quickly. Yes these are hard times, but America has and will survive. Comments/Questions about your business concerns? Blog away!

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