From the Blog
The benefits of increases in search engine rankings can’t be summarized by a simple linear relationship. In finance, if you go from $9m in revenues to $12m in revenues, you have a simple 33% increase in revenues. If you move from the #11 spot (first page) in Google to the #10 spot (first page) you can expect a 143% increase in traffic! If you move from the #2 spot to the #1 spot you can expect your traffic to double.
This great article by Todd Jensen explains how 2nd page is 1st loser.
The takeaway: investments in SEO that result in improved rankings will have an effect more akin to a power curve on traffic than a simple linear effect!
“Cash is King.”
For small businesses, the ability to exploit emerging opportunities, respond to market pressues, and make strategic investments in the future all depend on access to cash. As a healthy heart is the result of eating right and working out, possessing a healthy cash flow is the result of consistent, effective investments in marketing.
Though startups are especially prone to wave-like fluctuations in cash flow, it is an issue every business must address. When the iron is hot and production people are stretched to meet demand, it is natural to pull back on marketing and lead generation. However, your current workload is due to the proposals and invoices you sent out in a previous cycle, and you will be bored and broke in the next cycle if you let off.
So how can you combat this?
- Cycle Length: figure out how long your cycle is, from the moment a lead comes in until a project is completed and paid for (service company) or product is sold (product company).
- Lead Value: Look at the last 6 to 12 months and add up all the leads you received. Calculate the final sales value of those leads (minus abandoned projects, discounts, and so forth). Divide the number of leads by the final sales value and you have a rough value for each lead. If you need to make $50k a month to stay afloat, and each lead is worth $500, you need to generate 100 leads a month!
Profits are to business as breathing is to life. Breathing is essential to life, but is not the purpose for living. Similarly, profits are essential for the existence of the corporation, but they are not the reason for its existence.
Dennis Bakke, founder of AES
Profits are a byproduct, like happiness. Those who pursue happiness at their sole end find themselves lacking it. Those who have purpose, clarity, and discipline reap happiness in full measure. So it is with profits.
As prepared for IT Strategies, University of Denver PMBA. References John Gallaugher’s “Information Systems: A Manager’s Guide to Harnessing Technology:”
“Often Imitated. Never Duplicated.” Whoever it was that first uttered this famous marketing adage, it is certainly appropriate as a descriptor of Facebook. The darling of Web 2.0, its meteoric rise has seen it hit milestones that seemed simply impossible five years ago
- Microsoft (yes Microsoft) paid $240m for a 1.6% stake, which can imply Microsoft valued Facebook at 15 billion dollars
- Facebook overtook MySpace in 2008 as the largest social network in the world
But despite these heady numbers, we have to ask: is Facebook worth it?
The Issue At Hand
The reach of Facebook into the daily lives of people around the globe is analogous to religion or politics. Indeed, Facebook has played a leading role in the uprisings spreading across the Mideast. Facebook Connect and social plugins now often replace the discussion area on websites. Facebook is used as the login verification system for a variety of websites like LivinSocial.com. As Gallaugher points out, Facebook is enveloping the web and other business models.
However it is Facebook’s business model that is the “issue at hand.” Google’s remarkable stock price increase over the last few years has reflected what its financial statements have consistently shown: its paid advertising is a cash cow. When people visit Google and search for “clearance hiking boots,” advertisers have made the resulting ads their “store windows” for Keen and Timberland boots.
Facebook’s strength is in its social reach. However, Facebook’s own research indicates “an average Facebook user with 500 friends actively follows the news on only forty of them, communicates with twenty, and keeps in close touch with about ten.” So when a user indicates a like for hiking, are they necessarily indicating a need for hiking boots, or will the ads simply seem annoying? When their friend shares pictures from their great vacation to Mexico, the readiness of their friends to make a similar purchase is not necessarily implied.
Can Facebook profit from the gargantuan amount of consumer data it has without creating a privacy debacle (as they have before) that creates a mass exodus? Can it create dependable revenue streams with its partners and advertisers? Or from a Profit and Loss standpoint, is Facebook all bark and no bite?
Potential Solutions
At the heart of Facebook is what Mark Zuckerberg calls the “Social Graph.” Like it sounds, it is the global mapping of users, organizations, and how they are connected. All potential solutions for Facebook come back to leveraging this social graph, and the reach it has into how people connect with one another.
- Paid Business Profiles: having a business profile on Facebook is becoming commonplace, like the Yellow Pages of today. By charging a nominal fee (say free for 6 months, then $19 a year), Facebook could raise significant capital. They would risk losing market share to Twitter, which already may have the advantage for businesses seeking to reach potential customers.
- Ecommerce: Some businesses are already providing purchasing opportunities through Facebook, but providing a feature-rich, secure ecommerce platform through Facebook has significant market opportunities. For established businesses it allows them to sell socially, targeting their products to very specific demographics. For new businesses, this could allow them to forego a significant investment to setup their own ecommerce website, and focus their sales on the global Facebook community.
- Payment System: PayPal has made a fortune on transactions that are low price and high volume. Facebook could become their own payment processor for all commerce done through the website. Making money in this manner requires high volume – something Facebook has in full supply.
Recommended Solution
The solution I recommend is a combination of all three. Together they build a comprehensive business platform for millions of small businesses in the US and globally. Greater adoption of the platform would include greater benefits:
- Those who use the Facebook Payment System also receive their business listing for free.
- The Facebook Payment system could be expanded to mobile devices, extending the social selling to consumer’s pockets.
- Facebook could become what eBay was 5 years ago: THE prime place to start an online business with an active, engaged community of consumers.
IT ETHICS
Our use of technology is beautifully (and dangerously) ingrained. The way it has changed our daily lives is profound, and yet we are often unaware of those changes. I often observe a whole-hearted acceptance, even unrealistic allegiance to technology as the messiah of our age. There seems nothing we cannot conquer with technology.
I take naturally to technology, and it makes sense to me. I also have a streak of distrust of anything in society that is embraced without reflection. In the news headlines we see people grappling with the darker sides of technology: nuclear radiation, pollution, privacy in social media. This tension with our relationship to the tools we need in our lives is not new. It must’ve been quite the shock when the first stone tool was used to bludgeon someone instead of building a house.
The pace of technological growth is exponential, and I fear our ethical growth is lagging. It is difficult for us to synthesize as business leaders these new realities into our strategies, our organizational culture, and our personal lives.
In many of the scandals of the last decade, we see individuals whose “creative use” of the tools at their disposal outpaced their personal development. The selling and reselling of mortgage-backed securities, the credit-default swaps – these were all very creative usages of industry technology and the scale of modern economies. However, those involved were not grounded in the appreciation of the risk they were injecting into the system, for everyone from homeowners to securities holders.
Questions I want to be able to answer:
- How do you develop an ethical culture in your Information Technology?
- What are the ethical issues at stake in modern IT?
IT STRATEGY MATRIX
IT is much like web design, the industry I am in. Every 6-12 months there is a disruptive technology that makes the technology of several years ago obsolete. I would like a greater understanding of current technologies at use in business. Also, I would like to discuss emerging technologies that are potentially disruptive over the next several years.
Ultimately, my real goal is to develop the sort of IT strategy matrix that enables me to understand how to make good decisions with IT. The processor speeds, available technologies, user interfaces, and so forth are in perpetual change. However, with the proper decision making matrix, I can arrive at an optimal decision.
Questions I want to be able to answer:
- What constitutes an optimal IT decision?
- What criteria must be in order to reach that decision?
From my learning outcomes paper for IT Strategies at the University of Denver.