Category: Running a Business for Fun and Profit

Today, allow me to present two sides of one coin. Heads, we have corporations using blogs to find out what people really think about their products. Tails, executives using blogs as a corporate soapbox, an place where three-letter types can speak their minds without being interrupted, and yet in a more personal way than a press release. Both stories are a boon for anybody seeking information.

Let’s say, for example, that you work for an automobile manufacturer. You’ve got a new vehicle you are trying to launch. The first thing you want to do is find out what your competitors are up to. However, if you limit yourself to sources like MotorTrend or the Detroit Newspapers, you are missing the most important data. Car critics can only buy so many cars; in the end you will have to sell cars to living, breathing people. So it isn’t enough to find out what a bunch of paid reviewers think are the strengths and weaknesses of your product. You need to find out what Joe and Jane Average think.

How do you tell that? Well, sites like Edmunds have some consumer reviews. However, most of them are rather short, and tend towards rants or raves. Furthermore, you might be missing important data by relying on your opinion — or Edmund’s opinion — of what your product’s competition really is. Here is where blogs — and judicious Googling — come into play. Wheat and chaff must be carefully separated, but you might just find out really important details about yourself and the competition. You might discover which features really matter, or what petty annoyances they have, or what they think of the price, or that they find your ads so obnoxious they won’t even go see your product, or that they have a completely different idea of what your product is all about. People can be really blunt in their blogs, but you are rarely left wondering what they really think.

You can’t pay for this kind of information. No focus group or survey will ever get you this data. Most people are simply too polite to tell you this stuff if they think you will ever know. Oh, and the article linked above touches ever-so-gently on the idea that letting a prominent blogger preview your product can result in free advertising.

On the other side, you can find out a lot about your competition by paying attention to what they do and say. Sure, read the press releases and any news coverage that might be out there, but nothing tells you what’s going on like reading what the people at the top think. It’s unvarnished, free from outside editing, free from outside spin. You are guaranteed to find out what he wants people to know about his product or company. You might find something insightful. You might find something insightfully stupid — young CEOs are particularly adept at inserting foot into mouth in a way that would benefit the competition if they were paying attention.

For that matter, you might find out what your bosses are thinking if you can get a look at their blogs.

Use both approaches on any company or product, and you will almost certainly know more about it than someone who limits himself to traditional news sources and a stack of traditionally prepared market research reports.

As an aside, why did Greenspan raise interest rates today? Because “We’ve turned the corner. Because with oil at record high prices, and that means almost certain inflation. If you believe any of these things, rates had to go up, and they may need to continue going up. Despite this, my theory is — unproven and with no degree in economics to back it up — that the dirty secret of interest rates is beyond a certain threshold, low rates do not stimulate economic development. This is because despite the low cost of borrowing money, there is also low incentive to lend on the part of financial institutions. I think in the end, this will be the lesson we learn from Japan.

We interrupt this post to point out the obvious. Torturing, humiliating, and murdering prisoners is a bad thing. Even the President of the United States says so. It isn’t even acceptable when it happens in American prisons. Don’t dare excuse it by saying these were all “bad” people. The bottom line is they are all people. Maybe they don’t deserve deluxe accommodations and gourmet meals, but they surely don’t deserve what has happened either. Enough said.

We now return you to your previously scheduled commentary.

When I took English 1302 in college, they took great pains to remind us that when writing an essay, we must consider our audience: who will be reading it; what will they be expecting to see; what do we want to say to them. There was the tacit understanding that through most of our collegiate career, our primary audience would be our professors, who would among other things expect to see good grammar and spelling, and an adequate understanding of the things you were supposed to have learned in class. Depending on the professor — and this was something you might hear in passing or something you might experience first hand — you might be expected to adhere to a certain party line, and at least pretend to espouse liberalism, conservatism, feminism, chauvanism, capitalism, socialism, Protestantism, Darwinism, or the theory of the day. Failure to adhere to this unwritten rule is failure to consider and cater to your audience.

This principle can be applied to business too. In fact, I like to summarize it as follows: Do not annoy your customers. This includes both people who use your product/service, and those who might do so someday. This may come as a shock, but people don’t like to do business with companies that annoy them. There are some exceptions to this rule of thumb, for example if you are fortunate enough to have a monopoly (telephone, cable, computer operating system). Or perhaps if you are in a situation where the people who pay the bills are different from the people who actually use your services (any business that depends on insurance companies for reimbursement).

The bottom line is that I will avoid giving you money if you annoy me. That being the case, don’t stuff flyers under my windshield wiper. Don’t stick them in my front door. Don’t send me spam, don’t call me, don’t send me junk faxes (who the heck are these people buying OTC penny stocks on the basis of a fax tip anyway? And when I want a new mortgage, I’ll call a mortgage broker rather than check my fax machine). Think about it for a minute: do you do business with companies that advertise this way? No? Then why on earth would you waste time and money doing it? I don’t really mind junk mail, because most of it recycles. Besides which, every once in a while I actually find a company to do business with from junk mail. Just the same, how many AOL CDs do I really need?

Make it easy to get ahold of you. I shouldn’t have to play tag just to find a valid phone number for you. When I do call, I do not want to navigate an arcane voice-mail system, I want to talk to you and arrange service or solve a problem. And if you have a web site, it should be simple, fast loading, and easy to navigate. Oh, and it should definitely include a way to reach you someplace.

I’m already your customer? Then return my phone calls promptly. Show up when you say you will, and have all the equipment you need to do the job. Do what I need done, and do it right the first time. I will not be happy if you have to come back to my property to fix things you messed up, missed, or just plain didn’t do correctly. Be responsible. Don’t tell me how reliable and professional you are, show me. Gee, another business rule you could have learned in English class.

Don’t talk down to me, don’t try to sell me goods and services I don’t need, and for goodness sake don’t you dare call me “dear” or “honey.” You can darn well call your customers by their title and last name: Mr. Jones, Miss Smith, Dr. Stewart; your customer is not your buddy. If you have a customer who feels this is too formal, he or she will correct you. Smile and comply with his or her wishes. The “topic sentence” of this paragraph — and this essay — is treat people with respect.

Some years ago, when I was a somewhat younger ShortWoman, I worked in the kind of business that required “closing techniques.” That’s a fancy name for getting a sizable check and a signature out of a customer. I personally preferred a very soft close; I showed my product in its best possible light and demonstrated its benefits; either my product was going to work for the customer or it wasn’t, and no amount of badgering the customer was going to change that. As a result, I was one of the few people in my industry who routinely had people come back a day, a week, a month later with checkbook in hand. Furthermore, I had more “renewals” — repeat business — than many colleagues.

But even with the softest of closing techniques, I still had to ask for the money. People might say no, but they can’t say yes if you don’t ask. Churches and charities even know this. Does the local preacher leave a box at the back of the hall for offerings? No! He passes the plate up and down the aisles, putting your donation or lack thereof literally “in front of God and everybody.” And hasn’t every mailing from a charitable organization you have seen included a card preprinted with “Yes! I would like to help! Here is my donation of…” and usually a series of checkboxes with recommended amounts. Some of these are preprinted with your name and address, and come with a handy envelope. “No” is never ever listed as an option.

Strangely enough, there are pockets of corporate America that have not figured out that they must ask for the money. Every “buy now pay later” scheme rests on the sinking sand of not asking for the money. Witness, this item in the current issue of Forbes:

That just happened with Mitsubishi in America, which had great success selling cars to people who couldn’t pay. Possibly you remember the Mitsubishi commercials: loud music, young drivers at the wheels of sporty cars. And what deals: no money down, no payments for a good while. Sales kept rising, but not the payments on the cars. Mitsubishi lost hundreds of millions of dollars, and the bill isn’t final yet. The company stopped the giveaways, replaced management and canceled its U.S. expansion plans. Recovery will take years. But I know that in a few years another company is bound to do the same thing.

Nor is Mitsubishi the only company to have the delusion that moving product is more important than getting paid for it. Google for “no payments for” (be sure to include the quotes) to get an idea of how big this problem is. As of this writing, it would appear that I can get 90 days with no payments and a fair interest rate from WalMart, Dell, and Honda Motorcycles. I can also apparently get no payments for 12 months on Pella windows and doors, and certain Sony Grand Wega televisions from Crutchfield. This is the results of 5 minutes searching, to say nothing of any local vendors which may offer ludicrous deals of their own. Furniture stores seem to be particularly bad about failing to get the money up front. If the “no payments until next year” ads haven’t started in your area, they will soon.

Is it a sale when the customer buys it, or when he pays for it? That is a question to ask yourself when reading up on companies you’d like to invest in.

Every big business you can think of, every publicly traded company, every non-Government contributor to the Gross Domestic Product started as a little company, or part of a large company that was once a little company itself. This obvious fact is easily forgotten. Microsoft did not spring fully grown from the head of Bill Gates. Nor did Henry Ford spew forth a multi-billion dollar behemoth in a year. Effectively, every company started small, in one location. Sometimes that location was a storefront or workshop, sometimes it was nothing more than a garage or a spare bedroom. Even in today’s world of huge corporate  conglomerates, 99% of American businesses are “small,” employing fewer than 500 people. These same companies employ over half the American workforce. Small business is the spark plug in the economic engine, and the traditional leader out of recession.

Economic stimulus depends on having and spending money: people — and companies — buying things. Indeed, for the last several quarters, consumer spending has been the only bright spot in the economy. Companies buying things is particularly good for the economy, benefitting both the buyer and seller. Not only does that allow both companies to produce goods and services for sale, it allows them to pay employees for that production. Companies having money is fine, but it is people having enough money that keeps them from complaining about the economy and voting out politicians. And how do the overwhelming majority of Americans obtain money? From their jobs.

To truly and lastingly stimulate the economy, you must create jobs. Although it might on the surface seem much more efficient to encourage large companies to create lots of jobs, that approach is short-sighted. Not if, but when market conditions dictate, those additional employees will be laid off, exacerbating any existing downturn. Corporate tax breaks, dividend tax breaks, and similar measures are not going to create an appreciable number of jobs. Corporate tax breaks will serve the limited purpose of making publicly traded companies look as if they earned more money. Some of them might even spend a little money upgrading some equipment. Dividend tax breaks won’t even do that. Contrary to political rhetoric, they won’t create a single job. Dividends siphon money that could have been used on plant upgrades and hiring more employees. The only thing “eliminating double taxation of dividends” will do is encourage some people to buy shares of big, profitable companies that pay dividends, driving share price up a little bit. “Price per share” is largely irrelevant to whether or not companies are hiring.

The legion of laid off “consultants,” “contractors,” “artisans,” and “independent salespeople” who decided that there is no job they do not create for themselves is a nice start, but an end in themselves. The odds of any to them becoming employers is really quite small. It’s simply too big a hassle for such people to employ anyone on the books. This situation also puts such people in the dangerous position of “don’t work, don’t eat.” A particularly nasty cold puts them at risk of losing everything, even if they can afford health insurance. The key to sustainable economic growth is the encouragement of small business: people who become employers; companies that employ a few people for years; small local enterprises that become big national or maybe even international concerns. To encourage small business, we must do the following:

Simplify the the registration, incorporation, and taxation of small businesses. The initial expenses of setting up an LLC, complying with mountains of government regulations from all levels, and simply figuring out what taxes must be paid and to whom can be overwhelming for a new entrepreneur. Such hassles may encourage him to be self-employed (putting business taxes on the only relatively simple Schedule C) or simply decide “don’t quit your day job.”

Seriously examine the funding of small business. The Small Business Administration appears to be in the sole business of writing paperwork, press releases, and guaranteeing second mortgages. They cannot be counted on to help start a business. In fact, a bank asking the SBA to get involved is a vote of no confidence. One idea that is relatively new to the United States but appears to be working wonders in poorer nations is the “micro-loan.” These loans of under $1000 (in reality, often under $500) certainly go farther in developing nations, but the premise remains the same. Here in the States, the amounts available are a bit higher. Loan a small amount of money to buy items like tools and sewing machines, and suddenly people can go into business.

Critically reconsider barriers to entry. “Barriers to entry” are things that make it more or less difficult to enter and compete in a field. It’s almost impossible to set up in auto manufacturing or oil drilling independently. It’s difficult to start a bank. It’s relatively easy to open a restaurant, particularly a franchise. It’s ludicrously easy to set up a website. While I think most of us agree that it’s just as well you can’t on a whim open up “Gina’s Fine Handcrafted Automobiles” or “Bob’s Bank of Fort Worth,” some barriers to entry are artificial and protectionist. Some of the rules and practices have little purpose beyond limiting the competition.

Remember, 99% of American companies are small, and they have over 50% of American workers on the payroll. Economic stimulus isn’t just for the S&P 500, it’s for the little diner, store, or machine shop down the street.