You’ve Heard of Targeted Advertising? Now Comes “HyperTargeted” Ads

MySpace today officially announced the domestic beta launch of ‘MySpace MyAds’, the new advertising platform designed to for individuals and small businesses to create relevant, targeted promotional business campaigns within the MySpace social media environment.  MySpace MyAds is a do-it-yourself advertising platform that allows users to create customized banner ads, target to specific audiences using MySpace’s “HyperTargeting” technology, and analyze ad campaign topamax to buy online performance tracked throughout the MySpace ecosystem.  MySpace says the cost of these ads will run from $25 to $10,000.

Many of the entrepreneurs we work with have found MySpace to be a good means for bootstrap advertising.  It will be interesting to see if this new program offers enough value added to actually pay for social media ads.

Postponing the Inevitable Only Makes Things Worse

My column in this week’s Tennessean examines one of the most painful issues faced by almost every entrepreneur at one time or another:

“I kept thinking I could ‘fix’ my plant manager,” said an entrepreneur in one of my seminars. “By the time I finally admitted to myself that I needed to fire him, the damage was already done. I had angry customers who were furious about poor quality and late deliveries, and all kinds of employee turnover. It almost ruined my company.”

Firing a key member of an entrepreneur’s team can be a painful and even unnerving process. But, almost every entrepreneur faces a situation where a key employee needs to be terminated for the best interests of the business.

Continue reading Postponing the Inevitable Only Makes Things Worse

Even VC Backed Firms Go Back to Basics

A friend sent along this slide show that was leaked from a meeting held by the VC giant Sequoia Capital.  It gives an objective analysis of how we got into our current economic mess (greed and living beyond our means), what lies ahead (slow recovery is probably best case), and what start-ups of all types and sizes can do to survive (get back to basics).  I

f you have not seen this I urge you to view it, study it, and learn from it….  as we say in my business, “This WILL be on the final exam!”

ripgoodtimes100908.jpg

Small Business Owners Express Concerns

As a response to economic turmoil, American Express OPEN conducted research -called the Economic Pulse – October 7th and 8th to look at how sentiment has changed in the past two months and gauge opinion on breaking news such as the 0 billion financial rescue package. 

 

Credit tightening has become a major issue: 63% of small business owners say the tightening of credit has affected their business, compared with 50% in August. As a result, 12% have had to lay off staff, 79% say sales are decreasing and 51% say they have had to tap personal assets to pay business expenses.

 

Here are some specific findings:  

 

  • 55% of small business owners believe the financial rescue package signed into law on October 3 will be effective in some way to stabilize the economy — although more than half, this is not a strong endorsement  
  • 25% of small business owners say increasing the amount of bank deposits insured by the FDIC from $100,000 to $250,000 will help them — I hope this is not low because the remainder are already in a weak cash position   
  • 33% of small business owners are raising prices to manage in the current economic environment versus 48% in August — this is probably a sign of sagging demand      
  • 71% of small business owners are stressed out by the economy; 55% were stressed out in February — this finding worries me the most, as we need small businesses to get us out of this mess.
  • And the most sobering finding?  Nearly one in five (18%) small business owners risk going out of business because of the economic climate.

“The Knack”

Today’s touch economic times require that entrepreneurs develop an even sharper set of skills.  A new book by Norm Brodsky and Bo Burlingham, aptly titled The Knack, will quickly become an indispensible tool for any entrepreneur facing the tough times ahead.

The Knack is full of practical wisdom.  It uses rich examples and storytelling to illustrate a treasure chest full of tips and good advice.

The authors give a lot of attention to making those early sales — a critical skill set for entering any market.  But, they also warn against developing a myopic sales mentality.  You attract customers with good sales strategies, but you take care of them and keep them through sound business practices.

One of my mantras with our students is to “know the numbers.”  The Knack offers pearls of wisdom on cash flow and understanding your financials. For example, the authors state this about accounts receivable:

Receivables are loans to your customers.  Make sure your portfolio is in good shape.

Many business owners are much too casual in extending credit.  They take an “anything for a sale” approach.  But cash flow is was matters — not just revenues.  Don’t make loans like the mortgage bankers did over the past several years.  Instead, only extend credit to those who you know can and will repay you. 

Every chapter ends with four tips called “The Bottom Line.”  It offers a clear and sharp summary for the rich stories and examples in each chapter.

Just as the E-Myth quickly became a classic, I predict that The Knack will become a favorite for most entrepreneurs,  Every copy will soon be full of underlined passages and dog-eared pages.

Risk Taking in an Uncertain Time

Need a little inspiration in these uncertain times?  Brett Nelson has written a great piece at Forbes titled “The Greatest Risks They Ever Took.” 

Here is one of my favorite quotes that hits entrepreneurial risk taking at its most personal level:

“The biggest risk was telling my fiancé one month before our wedding that I was going to quit my high-paying job to gamble on a ‘big idea’ with my old college roommate,”

So said Michael Chasen, co-founder of Blackboard.  The outcome of this risk?  Their business is now listed on NASDAQ and his fiancé agreed to tie the knot.

Here is what Nelson took away from his interviews he conducted while writing this story:

The best results come to those willing to take a chance–an important reminder for entrepreneurs, financiers and political leaders as the global economy braces for even rougher weather.

Indeed. 

My hat is off to those financiers who did not pursue the short-cuts created by greed.  Our economic system will need their strength more than ever over the coming months.

My hats off to the politicians who did not panic and vote for the soon-to-be ill-fated bailout.  History will show their courage to be well-founded.  I am proud to count my own Representative Marsha Blackburn among this group.

My hat is off to those entrepreneurs who continue to forge ahead in uncertain times — buying new buildings, adding new staff, investing in increased inventory — because they are confident in their ventures.  They are the ones who we will rely on to rebuild a strong economy.

VCs are Basically Conservative

The notion that VCs back the riskiest of ventures that are creating entirely new industries is not true.  VCs are cherry pickers.

A post at Tim Berry’s blog Up and Running, which reviews an interview with investor Naval Ravikant, highlights the conservative nature of VCs:

“I look for two things that are paramount above all:

  1. Great team. It’s obvious. It’s a tautology. Everybody says it. You have to be working with some of the best people in the industry you’re in.
  2. Huge market. Niche markets just don’t work because the first idea never works. You always have to change the idea, so you need room to maneuver in a big market.

Berry rightly took exception with the comment about niche markets:

Ravikant has more authority on this than I do, but his reference to niche markets bothers me a bit. I like niche markets in a world that is constantly splintering and dividing itself into finer and finer pieces. Some of the biggest markets there are started as niches: Facebook, for example, focused first on a few university campuses. Yahoo was a niche-the Internet-when it started. Starbucks was once a niche (gourmet coffee, affordable luxury) in the Northwest.

I also like innovative niches.  But generally VCs do not.  The truth is that VCs generally want proven people in proven markets — and really big markets, at that.  This is neither good nor bad.  It is just how VCs go about their business.

I just hate to see when entrepreneurs who do not meet these criteria waste time and energy chasing money that is probably out of their reach.

(Thanks to James Shewmaker for passing this along).

Small Business Credit Tightens

From the Wall Street Journal:

Small businesses are turning to angel investors, suppliers and personal credit cards as the financial crisis spreads to Main Street and access to commercial bank loans becomes more restricted.

After being rejected last month at two commercial banks, Education 4 Kids Inc. owner J.M. Ivler is back to financing his 5-year-old online retailer with personal credit cards. “I can’t get the banks to give me a loan,” complains Mr. Ivler, whose Las Vegas company is profitable and produced $350,000 in sales last year.

I have been warning about tightening credit for the past several months. More than ever entrepreneurs will have to rely on their bootstrapping prowess to keep moving forward. 

NFIB Survey Once Again Differs from ADP Report on Jobs

William C. Dunkelberg, chief economist for the National Federation of Independent Business, issued the following statement on September job numbers based on NFIB’s monthly economic survey that will be released on Tuesday, October 14:

 

“Seasonally adjusted, small business owners reported basically no new job creation over the past few months. The September NFIB survey showed an average loss of -0.34 workers per firm, a decline in private sector employment. Eight percent of the owners increased employment by an average of 3.4 workers per firm, but 18 percent reduced employment at average of 3.1 workers per firm. Not a great performance, unfortunately. 

 

“Forty-nine percent of the owners hired or tried to hire, and 78 percent of those trying to hire reported few or no qualified applicants for the job openings they were trying to fill. Seasonally adjusted 18 percent reported unfilled job openings, a 3 point gain (but still below the thirty-four year average of 22), suggesting that the unemployment rate won’t change much, if at all. Nine percent of the owners reported that the availability of qualified labor was their top business problem, well below last September’s reading of 17 percent.

 

“Over the next three months, 12 percent plan to create new jobs, and 10 percent plan workforce reductions yielding a seasonally adjusted net 7 percent of owners planning to create new jobs, down two points from August, historically weak but not a real recession number. The September survey shows that small business owners are still muddling along in this economy.”

These findings indicate a gloomier picture than the ADP survey issued earlier this week.

VC Backed Firms Somewhat Insulated

Although not completely immune from our financial mess, VCs are flush with cash and still doing deals.  FastCompany has an analysis of the current state of the VC backed part of the economy, which seems to be somewhat insulated from the economic storm:

It may seem sanguine to use the word “haven,” since no corner of the economy is impervious to larger trends. But because venture capitalists work on long fundraising timetables and deal in liquid money, faltering banks and crises of credit don’t effect VC funds as acutely as they do other institutions. That means startups can continue be free to innovate and grow, with money in the bank.

Anecdotal evidence seems to indicate that angel money is still flowing, as well, although many angels seem to be getting more cautious and putting more of their investments into cash.

(Thanks to Jim Stefansic for passing this along).