The economic turn-around

Hindsight purportedly provides amazingly clear vision. Looking back, we should not have any doubts or uncertainties: the facts are supposed to speak for themselves.

Of course it never works quite that way, as historians appreciate. History is interpreted and revised based on current perspectives, technologies and resources (and sometimes contemporary ideologies).

I certainly thought of this dynamic a couple of years ago, comfortably seated on a Lufthansa flight from Frankfurt to Tel Aviv. Certainly, there was plenty of security, but not the form that Hitler would have ever imagined.

Today, some -- perhaps most -- of this blog's readers are still fighting the Grand Recession of 2010. Aa few of us see the light at the end of the tunnel and have resumed growing. How have our perspectives changed, and where do they take us in reinterpreting the past year, and looking forward to the future?

I'd like to say we've matured, learned from our experiences, grown leaner and more effective at our work/business/life, and positioned ourselves for much better times ahead. But some of us are probably holding on, still, for dear life, wondering when this mess will end.

Here is how things have changed in my perspective:

The "new media", with social networking, the Internet, and convergence between visual and written media, have truly changed the way we communicate. Even though we continue to publish printed newspapers, I rarely read them like before. POINT: If you are thinking one-dimensionally in your marketing, and that the old approaches are still okay, watch out for the storm that is about to hit you.

Word-of-mouth and existing relationships still count for much, but your network and knowledge can (and should) be much deeper.

Research is much easier these days than before; I can write comprehensive stories on significant topics in days rather than weeks or months when I pull together online resources; these qualities are apparent in the story on social networking and technologies for the Design and Construction Report. OBSERVATION: If you aren't comfortably using at least some of the new media (you most likely are, if you are reading this blog), you will soon be left far behind the competition.

Bad, untalented, stuff is still out there; it may seem there is much more of it, and it is much more visible. But good stuff still rises to the top. Before, publishers would have screened your work before letting it see the light of day; now anyone can post, write, and observe. But other gatekeepers, whether it be search engine algorithms, spam blocks, or simply the "voice of the crowd" (see Wikipedia) manage things so that you don't waste your time with stuff that doesn't help your business and life.

CONCLUSION: Remember your strengths and focus on them. Just don't forget that your strengths are not what you want to be, but the combination of how you feel best about yourself and how others who matter to you think about you. We don't live in isolation.

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Billion Dollar Blunders

Libraries are great places. Lots of useful information, for a really reasonable price. In the last six months, as I began watching my business "pennies", I've replaced the bookstore with the library, and discovered several gems on the shelves.

Billion Dollar Lessons by Paul B. Carroll and Chunka Mui is one of these greats. The overline title is: "What You Can Learn from the Most Inexcusable Business Failures of the Last 25 Years".

The book's thesis is that much attention is focused on success stories -- sometimes myths --- and little study has been done on why big businesses flop, crash, and burn.

The stories the authors tell are however also truly relevant to smaller organizations because all businesses ultimately fall under the same fundamental constraints, passions, and weaknesses.

So why do businesses fail?

Many disasters occur, the authors suggest, because of blind take-over and acquisition strategies, or the ignorance of major trends and shifts right under the business leaders' noses. Add to the mix a load of ego and group-think, and you have recipes for disaster like the AOL-Time Warner Merger, the decline and/or collapse of Kodak and Polaroid, and the flame-out of WebVan (an ill-fated Internet grocery delivery service born during the Internet boom.)

And of course there is FedEx's disastrous ZipMail, trying to combine faxing and courier service, and Motorola's Iridium, perhaps the highest flying (or rocketing) waste of funds when just a little common sense would have told the market for direct satellite phone service from utterly remote regions is, well, small.

Even smaller businesses (yours truly, included) have fallen into some of these traps:

1. Illusions of Synergy
2. Faulty Financial Engineering
3. Deflated Roll ups
4. Staying the (Misguided) Course
5. Misjudged Adjacencies
6. fumbling Technologies
7. Consolidation Blues

The writers suggest caution, real due diligence, and fearless verification of ideas is one way to avoid walking into disasters, without stifling innovation or the times when you need to face the music and realize the old game is up.

(You can buy this useful book from Amazon.com -- they will pay me a small commission -- or visit your local public library.)

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Remembering the basics

Yesterday evening, after a string of setbacks and key employee resignations (yes, these things happen), I thought of my responses and strategies.

For a while, I thought, "Wouldn't it be nice to just put everything on hold for a year." Then I figured how I could finance this appealing diversion, and began imagining how I would live and spend the borrowed money to reset my emotional clock and priorities.

My wife (thankfully I am married to someone who is rational and wise, as well as beautiful) quickly put me into my place. She reminded me forcefully and effectively that debt rarely solves problems long-term, and if I want to take the break, I will have to deplete my savings. I can do this, of course, but should I?

These choices reflect the difficult decisions many people encounter; in exchange for short term or immediate gratification, they pull out their credit card or refinance their home and for a while live the good life. Then everything crumbles and the debt, if it is a problem originally, just gets worse.

Fortunately, I've followed my own advice to date in this blog, separating business debt from personal obligations (which are minimal) and this has given me a degree of security that people living on the financial edge don't enjoy.

But I admit that, for a while yesterday evening, I was tempted to break my own rules. Not everyone has the will or ability to defer gratification, of course.

Then, what is the right way for me to "find my break", if I want to take it?

These answers from common-sense business models apply:

• I can reduce my expenses and fixed costs, including, if necessary, my salary, to balance the reduced income if I am not actively engaged in day-to-day work. This may mean giving up some of the treats and pleasures of life, and being frugal about my personal budget.

• I can drain my savings. Hardly wise, but if I really need the break, I can take the money from retirement funds and feel the emotional pain of every dollar I withdraw. This will keep me firmly focused on restoring financial equilibrium and avoid the false feeling that "everything is normal" when debt is increased to maintain comfort or purchase pleasurable things.
  

• I can improve the business income from current activities. Obviously a good idea, and one of the best ways to do this is to find and encourage people to buy more of what we have to sell.

• I can develop new streams of income. Probably the most satisfying answer, because the additional revenue provides more security and of course allows more freedom. How? Some ideas are forming at the back of my mind (which of course require little if no financial investment).

As I thought about these options, I regained my spirit, composure, and hope for the future. Sure, I can take a break. But why not instead think about creating some new breakthroughs?

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What you really need to know to survive (and succeed) in business

Family weddings are great events. You see your closest relatives, and a large number of (until now) complete strangers -- friends and family members from the other side.

Because of scheduling confusion, we had an hour sitting at our table with not much to do but converse with our table mates. On my left, I chatted with my younger brother, who for years has run a music studio/support business in Vancouver. On my right, I met one of my brother's neighbours.

Overhearing two of the three Buckshon brothers discussing business, the neighbour to the right said: "You must have a lot of courage to be in business for yourselves."

I responded, "Well, not really, I think I have more job security than most people with regular jobs. If things get tough, I can lay off employees and keep my salary."

Then she explained how a friend had gone bankrupt in business. Turns out, he "invested" a small fortune in real cash in the operation, and it collapsed shortly after launch.

Ouch!

If there is one vital rule of starting a business, it is this: If you need to "invest" a significant amount of real cash in the business, (especially if it is your first), stop, right away, and drop the idea. Do something else.

While our older brother (one of whose daughters was getting married), inherited the family business (a pharmacy), neither Jim nor I wanted to get into the drugstore world. I wanted to be a journalist, and Jim, the younger brother, wanted to be a musician. Hardly careers where you can get rich, and hardly careers on the surface that match with business success.

But life throws its curves, and our upbringing in a home where our father said: "You should always be in business for yourselves", eventually struck a chord. I became a publisher, and my brother began renting studios to other musicians. We started our businesses on shoestrings -- no inherited family wealth to squander.

We've had our shares of ups and downs, but have been able to retain viable businesses by remembering the basics. It helps that we generally enjoy our work.

In the end, businesses survive and succeed because they provide value and meaningful service to clients willing to pay. Trouble is, at the start you aren't sure if they will -- and this is why investing significanct money in the hopes that your brilliant idea will succeed is often a recipe for disaster, especially if you lack business experience.

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Personal, business, or both

This image of a construction worker at Providenciales, Turks and Caicos, is relevant to the business, but does the viewing of some construction sites make the family vacation over the Christmas holidays a business trip? Not in this case: We kept our costs rock-bottom low, but used personal not business funds to pay for the vacation.

Successful entrepreneurs rarely truly separate their personal and business lives. If you start your business because of your passion, skills, and drive for the business, you can't just "leave it at the office" when your work day ends. This isn't that bad, of course, if you are married to someone who shares your entrepreneurial values (my wife, thankfully does), and you don't allow your business time to take away so much from your family that you cannot be with the key people in your personal life.

A more complex and challenging situation occurs when you merge your personal and business interests to improve your life. At least one major Canadian construction association, for example, structures its conferences so that every second year they are in warm and sunny places, and all conference business sessions are conducted in the morning, leaving the afternoons (and most evenings) free. The conference brochure also outlines the resort's "Children's program".

Lets call this what it really is, a free ride, vacation junket (paid for by the company, regional construction association, or your business, which then claims the business expense deductions for the conference.)

Other examples of merged business and personal activities include season's tickets for major league sports teams, cultural events "sponsorships" and the like. If you can bring your family along, all the better.

Is this bad marketing or business? Here, things get a little complicated -- and potentially lucratively interesting. Clearly, if you enjoy these free activities, and you are associating with current and potential clients, the time is well spent. We melded for example last summer a visit to the Society for Marketing Professional Services (SMPS) national conference in Denver with a family vacation. (I claimed my air fare, and the hotel accommodations for the actual conference days as business expenses, obviously reducing costs for our family overall.)

But there is an argument against this sort of mixing of business and pleasure; and it occurs when the pleasure overrides your business judgment and common sense, or causes you to fail to appreciate the true cost of your enjoyment. For example, if your company is struggling, how would your employees feel if you enjoy your annual junket?

Think carefully when you "ask" your company to pay for something that benefits you personally. But when it makes sense, go for it -- nothing says you can't enjoy your life when you are running a business.

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Penny Wise and Pound Foolish? Maybe not.

The cliche "penny wise and pound foolish" often is used when we wish to justify small unnecessary expenses, (wrong) or when we spend much time on little things while failing to consider the real cost and importance of major expenses (right).

If we are giving as much time and attention to the cost of paper clips or whether we can spend a little extra for coffee, as we are to our key staffing and business development and marketing efforts, I suppose we are penny wise and pound foolish.

But if we carelessly allow expense accounts to increase unchecked-- even if most of the expenses are "pennies" individually, we are also penny foolish!

Recessions, of course, are good times to bring the "wise" back into our thinking. Here is an example.

We have several out-of-town employees, and last year, we flew them all into Ottawa for the bi-annual planning review meeting.

This time around at today's meeting, two employees joined us by teleconferencing. We saved about $1,000 in flights. We aren't spending $250 for an evening pre-conference meal at the Keg. One of our sales representatives negotiated a trade-out at a local hotel, so two employees who are travelling into town for the event (one lives within driving distance; the other took the train), are staying without cash cost.

But can we do better? Our consultants said they would set up a conference line, and use their service. So I asked them: "How much does this cost?" Their response: "We don't know -- but look at what you are saving on travel costs."

Well, unknown reimbursable costs scare me in the current circumstances. On Friday, one of our sales representatives (Chase) forwarded marketing materials from Vesta Networks. Their price: $.06 cents a minute from callers anywhere in North America (toll free) compared to $.12 to $.16 for Bell (the service provider we had been using) and Primus. Last month's teleconference bill was approximately $700.00. So a 50 per cent or great savings makes sense.

Today, I also realized that our mailing list has more than 11,000 names, but that mailing service provider Constantcontact.com doubles its fee when there are more than 10,000 names in the database. So can we remove some unnecessary names, especially of people who don't really want to receive our emails? Certainly. You may be here because of a special "mass mailing" to remove names which shouldn't be there.

Email Marketing
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Online Surveys

The key in finding these savings is to remember you should allocate appropriate time and energy to achieve them. If it takes just a few minutes to test the system, and you can save $1,200 to $1,500 a year because of the savings, do it. If you are distracting yourself for weeks and analyzing every minute detail, then don't.

One important thing about penny-wise savings. This type of initiative, like most successful business endeavours, needs to come from both the heart of your employees -- and your own practices. If you expect your staff to be happy while you continue to travel first class (or travel at all) while they are restrained in their movements, expect rebellion, rule violation, or simply bad morale.

But it never hurts to be both pound -- and penny -- wise.

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