The Impending Implosion of the Tech Bubble

Well it turns out that the crazy valuations for tech stocks are finally undergoing a correction. Finally! 

Amazingly, and I know you're probably shocked, the thousands of little tech companies that have been surviving off of the teats of their angel investors are beginning to starve! The poor little mongrels.

Investors, it seems, would like a return on their capital rather than supporting wacky business ideas that couldn't possibly work in the real world. The end result is that we're on the edge of another mass extinction event - a great implosion - that'll take out a bunch of tiny tech players thinking they could Get Big Fast before now. 

What? You say this sounds familiar? Well it is; to me, it smells like Teen Spirit, or rather, the late 1990's. At the edge of the Internet mania that would eventually pop the tech bubble.

Okay, you're a small business owner, what do you have to know about this next die off?

1. You've put your small business capabilities and intellectual property assets at risk if you've invested a lot of time and energy in a dinky, no-name Internet company. If it's not a proven brand, they won't survive the coming apocalypse; they'll either die or be acquired.
   

2. You need to consider relocating those assets and capabilities to a brand that'll survive the impending extinction event, and probably sooner than later.

Now would be a good time to consider this problem rather than waiting for the implosion to happen, when you don't have any more options.

R

Websites are Referral Generators

Okay kids: let me ask you a question.

You're a small business owner.

Why do you have a website?

Show of hands? Anyone?

If you answered:

• "Well, duh, you're supposed to have one," that was a good try but not exactly what we're looking for.
  

• "Visibility!", you might shout, and I'd say that's close but not really the right answer.
  

• "Because everyone else has one," and I'd have to wrinkle up my face a bit and choose somebody else.
  

• "Customer expectation," I'd have to nod my head in agreement but politely suggest that's not really a part of today's lesson.

So let me restate the question. The question is: why, do you, as a business owner, have a website? You have one because it's a referral / lead generator. And it is the only reason why you have one.

A website is an always-on machine whose sole purpose in life is to connect you to existing and potential customers. That's it. That's the whole enchilada. That's all a website is supposed to do. Everything you do with a website is all about generating more leads.

Okay, now answer honestly: 

1. Do you know what percentage of your sales leads comes from your website?
   

2. Are you familiar with the frequency of those leads?
   

3. Do you know your Average Customer Lifetime Value (ACLV)?

Let's review your answers.

If you don't know how your website contributes to your overall leads channel, why do you even own one? How can you measure its success or impact on your business? How do you justify the expense, the time (for things like blogging and social networking engagements), the benefit to your existing client relationships, what's it doing for you? 

If you don't know if lead frequency is increasing or decreasing, then you don't know how your website content is interacting with search engines or with social media. If it's not improving, or, you're not even aware of it, why don't you just go save yourself some money and throw the website away? Oh, right, going back to your earlier response, sure, everyone's got one, but here's the truth: nobody even knows your website exists because those competitors who do understand these numbers are ranked higher than you in the search engines.

If you don't know how much a lead earns you (your ACLV, the average gross revenue one customer will earn your company), then you have no understanding of the value of that lead. Thus you have no understanding of how to compare the cost of your website hosting and SEO expenses to your actual revenue plan.

Dude, you're being out-positioned, nobody sees you, and that emptiness you feel right now is that cold hard truth rotting in your bones. You have no idea how your website contributes to your company's success. Why even have one?

Want to change? Here's a couple of very simple ideas that you could do, right now, to take control of this situation and manage your website:

• Start tracking the number and frequency of your sales leads from your website.
  

• Develop an ACLV.
  

• At the end of your company's fiscal year, multiply the number of sales leads you landed by the ACLV value. Compare that benefit to the expenses you're paying for the website.

Then respond! Take action! Make incremental improvements to the website, re-design it, talk to someone (like, you know, a technology consultant) about how it could better serve you, or heck, just take it down. Nobody cares anyway (you certainly don't) and it's not earning you any money, so why have one?

R

Small Businesses Can Get Screwed by Their Technology Providers

It's terrible but time and time again, I meet clients who were bamboozled by their computer support provider.

This last week alone:

• I met a new client who had been offered a suspicious proposal: spend $5,000 up-front and obtain a network and server then pay a monthly retainer for maintenance; for their size and complexity, they shouldn't have been spending more than $2,000 in capital costs and I questioned what value does a retainer provide on a workgroup server that should be configured to generally manage itself.
  

• I met a client who received an invoice for $3,000 from a computer guy. $2,000 was for things like "planning" and "research" and "developing a solution"; the remaining balance was for the actual hardware and time necessary to implement. WTF?
  

• Another client was over-spec'd a high-end firewall product for a workgroup of five people who needed need it. They were told by the computer guy that they needed a very expensive firewall solution, yet, the customer expressed no need for that level of capability to the provider.
  

• And one of my clients actually had a software provider download a virus to their server which started generating spammy email to people all across the Internet.

I mean holy crap.

What we're witnessing here is, regrettably, all too common in my field. 

It is the direct result of fear, ignorance, and greed. And sometimes: just pure negligence.

With respect to ignorance, the customer simply doesn't have the technical where-with-all to question the recommendations offered by the solution provider. And why should they? They're trusting the provider to select the best solution to meet their needs, not gouge them because they don't understand their options.

With respect to fear, the customer doesn't want to receive a solution that's only going to work half-way. They want something they can rely upon and they don't want it to fail. Thus they're willing to pay a little more to receive that benefit, but their willingness to pay a premium is being preyed upon by the provider.

And that's where greed comes in. The provider knows that they can squeak out just a few more bucks from the customer because they aren't experts. The provider is taking advantage of their position. 

Unfortunately, this kind of stuff happens all the time in many fields. That's the value of a second opinion. Obtaining a second opinion from a qualified technology and/or computer consultant can be a real benefit to consumers who're not familiar with what they're buying in to.

When I'm validating pricing or providing proposals of my own, I will provide links to actual pricing online so that the customer can see for themselves how something costs at either retail or wholesale pricing, outline it's benefits or risks in plain and simple language, and then allow them to formulate an opinion on the actual cost of labor. Like, say, is $2,000/hr of time "studying" a problem a reasonable amount for implementing what would be a turn-key technology? Jesh, no! I work with my clients to deconstruct pricing to arrive at a potential cost model for the provider. I help educate. I help eliminate fear.

If you're a small business looking for a computer consultant that's all about transparency, accountability, and fairness, talk to me. I might be able to help, even if it's just some advice on a proposal some other guy gave you. I'm always happy to help.

R