Anti-trust is now a bust

Microsoft were dragged over hot coals for bundling Internet Explorer in their Windows suite of products. By doing this they supposedly stopped free competition for web browser companies like Netscape. Huge amount of bad publicity for Bill Gates and the team.

Google develop Google Chrome - a web browser which anyone can download for free! And they get high fives all round. Are they not stopping free competition by giving their product away?

There are a few business lessons to learn here :

Size and market presence may leave a sour taste in customer's mouths

People love an underdog! If you operate a small business, you are uniquely able to meet your customer's need in a very personal way. Provided your product is comparable quality and price, you should be able to target and pick off a big enough client base to keep your business profitable.

You may face your stiffest competition from someone who is not your competitor

The answering machine industry was rendered obsolete by mobile phones with answering services and fixed line operators now offering the same. Google are not in the web-browser business. Who is not in your market but may compete with you? Who could you compete with?

Perception is reality

Microsoft were perceived as being the "bad guy", so they got punished. What is the market perception of your company. How do you change that or preserve that.

Is the tail wagging the dog...

There was a great movie in 1997 called "Wag the dog" with De Niro and Hoffman. The tagline was "Why does a dog wag its tail? Because a dog is smarter than its tail. If the tail was smarter, the tail would wag the dog."

I was reminded of this the other day when I phoned Telstra/Foxtel to reconnect my Foxtel service. A simple exercise really :

1. You move (obviously)
2. You phone Telstra to advise of the move
3. They thank you for the call and send a technician over to complete the reconnection.

Part 1 and 2 were completed with relative ease, I then phoned to find out what needs to be done. 2 weeks, 7 call centre agents and many wasted hours later I still do not have Foxtel. Why? The system will not process something that needs to be processed. When I try to find out what the problem is - the inevitable answer is "the system"

Now the lesson here is simple. Your processes, procedures or systems should never (ever) interrupt business, cause undue customer agitation or prevent sales. If someone comes into your shop and wants to buy something and your //insert offending item// is down, make a plan. Better yet, already have a plan that can be whipped out, dusted off and used without hesitation.

If you are in a competitive business, that customer may never walk back in again!

I'll let you know if the system at Foxtel stops wagging their customer service and I get to watch rugby again before the Super 14 ends.

Are you sure about your insurance?

Walking home from the train station last week, I noticed a woman mowing the lawn. She was wearing very good gardening gloves - which is good, because she may be switching between gardening task and the gloves are good for protection. The problem is - she was wearing sandals on her feet.

She had more than adequate cover for her hands, they were not really at risk - but her feet were much closer to the business end of the mower and her protection there was extremely inadequate.

According to the Insurance Council of Australia (ICA), one in six small businesses in Australia – more than 270,000 businesses – are not insured. In South Africa - I would imagine the situation is similar or worse, because let's face it, insurance is at best a grudge purchase.

If you are over-insured, it's costing you. If you are under-insured...well you don't want to find that out at claim time. Money spent on a broker may well be worthwhile, just make sure you are speaking to someone who understands your business and you are not talking to a consultant who is simply reading through a checklist to assess your risk.

Small comapnies are different to big companies. Your risks are different, your needs are different. However, one thing that most big companies do - and you should also, is annually assess your cover and determine if it is correct and sufficient. Do you have business cover, not just household insurance? It seems like a simple question but a lot of small businesses do not have business interuption insurance, public liability or professional indemnity insurance. What happens if you become injured and can no longer generate revenue?

Do you have the correct insurance for your business? Or are you mowing the lawn in open-toe shoes?

Back on Real Estate Agents...

I really enjoy reading Seth Godin's blog. His content is always thought provoking and he manages so many new thoughts a week - it's astounding. Read here for his thoughts on agents (interestingly after I posted my comments on real estate agents - but I doubt it was because he reads my posts).

I thought I would share a positive story on agents. We have finally found a place to move to, just around the corner from where we are now. Part of the reason I am so happy to move is due to the agent handling the transaction. The name of the agency - Plumb Property. I had reservations around their tag line of "Providing the ultimate in customer service" as you are never really sure if you actually qualify as customer...

The agent my wife dealt with was polite, interested and went out of her way for us. When we went in to sign the documents they had a box of toys to occupy our son. The receptionist even jumped at the chance to entertain him while the agent took us through the contract. I can't even compare this to our last experience. I have to admit, as jaded as I am - I felt like a customer.

I hope they continue to succeed in these difficult times for property related business.

Does your marketing message contradict itself?

Here in Queensland, Australia - we are about to have a state election. As a South African, it is interesting to see how directly the campaigners attack each other.

I would like to highlight a particular advert that is currently airing on television. (I tried to find a video version but they are all not working...here is a link to a newspaper article about the advert). Basically a number of world leaders make very strong statements about the global financial crisis and then the opposition leader is shown supposedly disagreeing with all of them.

The advert then closes out with a homemaker in her kitchen making a plea to voters, the opposition does not really know what is going on. Trust me, you should vote for the other party....

My issue with the advert is that the message brought by the advert is : Don't vote for the opposition - they disagree with the global view. Don't vote for the opposition, there leader does not know what he is talking about. Don't vote for the opposition - they are not adequately qualified to be leading you..........brought to you by some lady in her kitchen!

If I cannot rely on an elected official because of some statements edited into a slick package why in the world would I rely on the opinion of some random person commenting on this?

What is your marketing message? Is it consistent? Does it contradict itself? Does it build your brand or compromise it?

*Disclaimer*

As a non-resident I cannot vote. I have no party affiliation. This article is purely a comment on marketing message.

Real Estate Agency Theory

Agency theory looks at the conflicts of interest that exist between parties with different interest in the same asset. Usually this refers to the conflict between shareholders and managers of companies.

Real Estate Agency Theory (which is a term I made up over the weekend), refers to the conflict a real estate agent is in when looking after the interests of the seller or lessor, the buyer or lessee and themselves. The incentives at play in the agents mind are studied in Freakonomics (a great read, buy it here if you are Australian or here if you are South African)

As a buyer / lessee, you would do well to remember that your interest will probably always be last on the list. The problem with this sort of attitude from agents is that in any property transaction - you actually need a buyer / lessee. We are kind of a big deal in the transaction, it does not happen without us. In fact, if you thought about it, the only expendable party in the transaction is actually the real estate agent.

But in the property boom we have just been coming through, demand outstripped supply and the buyer / lessee group was huge. Agents and sellers had all the power, incompetent agents and agencies could make buckets of money without providing good service to all parties.

In order to be a successful agent in a downturn economy, you need to focus on all parties. This secures repeat business, this enhances your brand. All real estate agents sell exactly the same thing, surely the differentiation is who the are and how they sell.

Case in point (with thanks to my wife for coming up with this gem) : We submitted an application to a real estate agent for a rental property we are interested in. They get a whole bunch of applications, they process them and the owner picks a winner. The winning application gets a phone call, to say : "Your application is successful." Everyone else gets....nothing.

What? Not even a phone call. In a shrinking property market! In a fiercely competitive line of work! A real estate agent has :

1. A number of properties they are trying to let
2. A list of contacts that are actively looking (they even know what type of property these contacts are looking for)

A couple of calls and you could rip through your rental property inventory pretty quickly, with very little effort - they might not even have to advertise certain properties.

But I suppose this may not work - like I said at the very beginning - it's just a theory.

The proof is in the pudding...

You know the scene. Someone nods knowingly, smiles and then says : "The proof is in the pudding."

Now unless that is yet another corny and macabre joke during the opening sequence of a CSI episode, it makes no sense. What proof is in the pudding? And why is it in the pudding?

The correct version of the expression is actually : "The proof of the pudding is in the eating." This makes a lot more sense. You are only really able to determine if the pudding is a masterpiece once you have tasted it. That is the test, that is the measurement of success.

The proverb can be traced back to the 1300's and was popularised by Cervantes' Don Quixote in 1605.

What does this have to do with your business?

Simply, when the proverb was coined - it made sense. It had a meaning, people understood it. Over time, the expression was still used but it had changed. Some people may have known that it was incorrect, some people may have applied the meaning of the original expression to this new one. If you look at the expression with no understanding though, it is meaningless.

This could be said for a lot of business processes. When the process was developed it made sense. Over time though the process has been altered, it reason for existing may have changed or people may simply not understand why the process is there.

It is very important to regularly review your business processes and the challenge the status quo. If you are fortunate to have your processes documented, review them and ask yourself these simple questions :

1. Why is this process performed?


2. Do I still need to perform this process?


3. Does this process actually achieve what it was desgined to?

If you answer "Yes" to all those questions, keep the process. If the answer is "No", then you might need to redesign the process or throw it out all together. If you have not documented your business processes, get started - it is part of your organization's value.

Customer communication is vital

It was not that long ago that areas of Johannesburg, South Africa were regularly plunged into darkness. The reason, rolling blackouts instituted by the electricity supplier Eskom. The cause, not enough electricity production to meet the demand.

It was a number of events that led to this position, one being that generation capacity had been severely hampered by a number of generation failures. Another being that total demand had been steadily growing over time while the total generation capacity had not. Long story short - business and political disaster.

Eskom struggled to communicate to its customers when these blackouts would occur, how long they would last, if the blackout currently in an area was a scheduled one or an actual fault. It was ludicrous.

Then appeals to all - do your bit! Save electricity, don't leave the TV on, install ripple switches on your geyser, consumers of bulk electricity such as mines must curtail operations, no new houses may be built unless they have solar heaters for water and maybe even gas ovens and stove tops. Also, electricity tariffs will have to be increased to pay for more generation capacity.

Hooray! The problem seems to be rectified. No blackouts for some time.

Then today Eskom announce so more news. Due to the drop in electricity consumption (partly due to a downturn in the economy and probably partly due to everyone trying to save electricity) the electricity tariffs will have to be increased.

Excuse me?

This illustrates how important it is to make sure your customers are not in the dark (please pardon the pun, but I think you will agree it would have been irresponsible of me not to use it). It also shows how important long term strategy is - but that is another discussion for another day. By communicating properly with your customer and being transparent on the basis of decisions you create trust.

Why is it important to create trust? Simple. People pay for it.

Good packaging!

Good packaging and good marketing can mean the difference between success and failure. And more expensive does not necessarily mean better.

There is a coffee shop in the building I work in. Instead of following the practice of other coffee shops in our area of having a happy hour where coffee is half price, they package their deal slightly differently. During happy hour when you order your coffee, you flip a coin and call it in the air. If you are right the coffee is FREE and if you are wrong then you pay the regular price.

Based on probability theory, over time all coffee sold in that hour will work out to half price. So the coffee shop is not losing any money over time. Patrons get a cheap thrill hoping to get their coffee for free. If they do, Hurray! If not, well you pay normal price - no big loss.

But on the plus side for the coffee shop, if I was buying coffee at that time of the day, I would try my luck. The outcome is that they could attract more customers by offering the exact option as their competition, just in different packaging.

So the question is, what are you doing to attract customers?

Recession or Natural Selection?

Recession is not necessarily a dirty word. In fact, there is actually an upside in recession - you just have to look for it. For consumers, the upside is that businesses which offer poor service, have higher prices or incapable management tend to fade into obscurity.

The natural selection enforced by recession forces these businesses to fold and remaining are healthy businesses which should allow the economy to prosper when the tide turns.

There has been much debate around the bail out of the motor manufacturers. Based on the analogy above, I would liken the bail out to messing with the natural order of things. Yes, many jobs are at risk but long term you really are not doing the global economy a favour. Other motor manufacturers who run more efficient companies should have benefited by a massive boost in market share, they deserved it and it has been denied them.

If you run your own small to medium size business, bail outs are not your concern but the lesson is still there. Aim to be more efficient, offer better service and you could find yourself gaining market share and even being a more profitable enterprise. This does not always mean spending less, it really means spending wisely.

Hide and Seek on the WWW

If you run a small business, hopefully you have realised the importance of having web presence. Internet connectivity continues to grow and at the same time, the use of the internet to search for products and services continues to grow as well.

Obviously, the importance of having a great website is paramount.

But what good is that amazing website if no-one finds it? About as useful as a great product or service that no-one buys.

If you are running a small business, you may have heard or read about Search Engine Optimization (SEO). If you do a Google search on SEO, you will probably come across any number of people who are trying to sell SEO services to you. Before you spend that money, please do some research on how it works and try it yourself.

By following a set of instructions, a mildly tech savvy business owner can climb the Google search ladder with relative ease - connecting your business to your clients.

I followed the steps listed on the link above and now this blog is found by Google Search! If I can do it, so can you.

Are you a pirate?

Not the gun-toting, eye patch wearing variety. I am referring to "white-collar" pirates, the kind with illegal software on their computers. The Business Software Alliance (BSA) estimates a piracy rate of 60% in the Middle East/Africa region and 59% in the Asia Pacific region. (Source) I would guess that the rate in small businesses could be far higher.

What is the risk to you? In South Africa, conviction in a criminal case could lead to a penalty of R5,000 and/or 3 years in prison for EACH illegal item for your first offence and that jumps to R10,000 and/or 5 years in prison thereafter (Source). In Australia, the maximum penalty for individuals is extremely high at $93,500 and/or 5 years in prison and for companies that amount jumps to $467,500! (Source)

That's just criminal proceedings, there could also be civil suits filed and we have not even considered the cost of a damaged reputation. The BSA is very serious in tracking down offenders and rewards are offered for information on defaulters - as much as R100,000 in SA and $5,000 in Australia.

So what do you do? Well software is quite expensive. Prohibitively so for some small business owners, and everyone needs to have Office, right? Well no, not really. What a lot of small business owners do not realise is that Office probably has far more features than they really need and there is a great new concept that the Google revolution has brought to end users. Free stuff!

Office productivity software from Google and OpenOffice may just meet your need and your budget. These are just two examples of such software, search for more. The only requirement to run the applications is that you have a good internet connection as most of these services operate on thin-client type technology, where the processing and data are not actually held on your computer.

These solutions would probably be just fine for most micro-businesses and would probably stand up to some small business requirements as well. Keep checking back as I look out for other freebie or low cost software that will suit your business.

The Fourth Estate

Some of the inspiration for this article comes from something I read by Graeme Codrington.

The responsibility of the press (in South Africa anyway) is laid out by the Press Code (I would imagine that a fairly similar set of standards prevails in most countries). The code requires journalism to present the news accurately and fairly, in context and in a balanced manner.

In any paper you pick up today, you will read that public confidence is extremely low due to the global financial crisis. Is this not a self-fulfilling prophecy? Follow my thinking :

1. Newspapers (for the most part) print only bad news about the current economic outlook.


2. People read this, public confidence dips.


3. They then interview their readership to discover *gasp* public confidence is low.


4. People read this, public confidence dips (even more).

I worry that a newspaper's first priority is to sell papers to make money and the second is to present fair and accurate news. While not mutually exclusive they can often be opposing forces.

Another non-business example of this in Australia was brought about by the sudden retirement of Matthew Hayden (a long serving member of the national cricket team). Last week every newspapers was a critic, saying he has lost form, he should not be selected etc. Then the day he retires, the same newspapers sing his praises, what a legend of the game, sad to see him go, who could possibly replace him?

Give me a break.

The truth is, it's not all bad news and you should not believe everything you read. Businesses are suceeding in these times, and so can yours.

Car sales are crashing! Now what? (Part 3)

According to NAAMSA, December 2008 sales were down 27%. That is quite a serious number and it probably is similar to numbers around the world. That kind of drop, coupled with the already low dealer margins, stock holding building up, cost of financing the floor plan and suddenly car dealers are making losses on car sales.

What do you do? Well if you are a buyer, you bargain hunt. If you are a car owner wanting to sell, you don't. But if you are a car dealer, you need to change your business focus in a hurry.

Most car dealers have other revenue streams as well, and one they will have to focus on is the high margin service and parts departments. If you suddenly have less foot traffic on your floor and sales people are sitting idle, turn their attention to service lead generation. You already know who bought cars from you and when, give them a call and find out how they are enjoying the car, enquire about mileage and remind them when there next service is due. Offer to book them in and then call the day before and remind them.

If your salesmen are not that busy, make sure they are driving the high profile service customer to work - preferably in a demo model of the new version of that customer's car.

Selling cars does not have to be a once off transaction with a never-to-be-seen-again customer, it can be a service customer acquisition excercise. If you don't have this approach, and a dealer in your area does, your future service revenue might just be driving through their front door.

And when the economy turns. Don't stop doing any of the above!

The real estate market is flat! Now what (Part 2)

A lot of the inspiration for this came from Seth Godin whose blog I follow...

The real estate market the world over has taken a bit of a dive. In South Africa in particular a perfect storm of low interest rates, strong economic performance, low inflation and a mass of first time buyers led to astronomical house price increases.

Demand exceeded supply as the developers could simply not keep up. The only possible effect - price increase. Good real estate agents made good money, average real estate agents were suddenly popping up everywhere due to all manner of people following the money.

But then the inevitable collapse. Due to the world financial crisis (ironically driven by the real estate subprime crisis in the US), the collapse was spectacular and rapid. Where to from here for real estate agents who actually want to sell houses and make money as opposed to just making money?

Start a local paper for your area...as mentioned in post linked above.

Why you may ask? Well the current market condition is temporary. What happens when the tide turns? You need to be poised to reap the benefits.

Your agency has a reputation in your area, maintained by dealing with integrity, having professional staff and selling houses. In a flat property market you aren't getting enough face time with that client base to maintain that profile.

So over time your agency no longer stands out but merges into the crowd. To stay at front of mind when buying and selling decisions get made a project such as this could keep the image of the agency bouyant.The content should be relevant to persons involved in property or thinking about property. It should be honest and professional, not a sales pitch. You make the money when you make the sale - this is just to get the customer in the front door.

The economy is flat, now what? (Part 1)

If you are operating a business that is adversely affected by the current economic conditions, what are you doing differently right now?

If the answer is nothing then you are in trouble! You have two immediate decisions you have to make :

1. Can you buck the trend and improve sales during this time?


2. What are doing to make sure you are in a better position than your competitor when things pick up again?

If you aren't thinking about this, then you are sliding back with the economy and losing ground.

We will look at some practical, cost effective strategies that various businesses can implement right now to prepare them for success.

Stock take sales!

In South Africa, the days before Christmas are a mad panic of shopping. The concept of going to the mall in those days scares me - fighting for parking, pushing through the throngs of shoppers like a homesick salmon and then trying to find the correct gift.

In Australia, I did some shopping at the Chermside Westfield in the lead up to Christmas. Free underground parking, practically no-one in the centre - it was great. If you missed out on an opportunity to hit the shops, there was 36 hours of shopping at the centre (starting on the 23rd thru the night to the 24th) which seemed like a very clever idea.

But apparently, the shopping centre stood empty. Was this a sign of the financial crisis? NO! In Australia, everything goes on sale on the 26th. The shopping centre bursts at the seams as the whole of Brisbane pours in to get the good deal on the stock take sales.

The lesson : If you are going to pay staff overtime to work round the clock before Christmas, start the sales at the same time and maybe you will be able to get some more units out the door.