Tuesday, May 12, 2009

Technology for small business

As a technology specialist and small business owner I am often asked the question “what technology should I invest in?“. The answer is generally it depends on the answers to the following questions.

  • What technology resources do you have?
  • What do you want to achieve?

Lately, technology options for small business has become alot more accessible because of the increased products delivering technology via  software as a service (SaaS).

Software as a Service (SaaS) is where an application is hosted as a service provided to customers across the Internet. By eliminating the need to install and run the application on the customer’s own computer, SaaS alleviates the customer’s burden of software maintenance, ongoing operation, and support. Conversely, customers relinquish control over software versions or changing requirements; moreover, costs to use the service become a continuous expense, rather than a single expense at time of purchase.

Therefore investing in SaaS allows small businesses to get the features and functionality normally only companies with significant resources can afford. SaaS allows small business to you use the software without the complex and expensive infrastructure requirements.

Below is a list of reasons SaaS makes sense for small business.

  • There is a lower total cost of ownership (TCO), especially important at the moment is lower upfront costs of the user pays model. 
  • Zero or low maintenance and upgrade costs.
  • In the current economic crisis owners like the pay as you go option. This is seen as less financial risk.
  • Extensive broadband penetration within the ANZ market.
  • Quick & Easy deploy - plug and play.
  • IT press has been hot on the topic for a number of years.
  • Certain SaaS vendors like Saleforce.com have reached such a size, with large numbers of customers that the technology is no longer seen as “risky”.
  • Big players are all developing product offering which have legitimised the industry. Eg Microsoft, Google, IBM, Oracle, SAP.
  • More incentive for software publishers to invest in the core product in subscription licensing vs perpetual licensing. This resulting in better quality products over time. 
Types of SaaS being used

Types of SaaS being used

What technologies should you look at?

The following list of technologies I have tested or used personally and are happy with. I am not affiliated with any of these companies other than being a customer.

Salesforce.com - is a Customer Relationship Management (CRM) system and is considered the largest SaaS company and most talked about when people refer to the SaaS industry. Salesforce.com was founded in 1999. I have been using Saleforce.com for 4 years and I think its an excellent product.

Netsuite - offer CRM, ERP/Accounting and E-commerce on-demand or SaaS product offerings.

Saasu.com - this is an Australian based company offering easy online accounting.

Google Apps - this is a messaging and collaboration tool for small business. We use this at Style after moving from a in-house managed Microsoft exchange server. Google apps provide a full list of features including spam handling.

For a full list of SaaS products by product and category I found this blog. Most of these product offerings are for micro to small business.

Full SaaS List by Melvin

Final points -  even though at Style we have the technical resources to go with either Software as a Service or software installed on our servers I much prefer the SaaS option because they are generally cheaper, less of my time, more features and more secure.

The one downfall with SaaS is if you want to integrate the system with another system integration is complex unless a plug-in has already been built. This would be a benefit on going with the larger SaaS vendors.

What is Marketing?

The traditional definition of Marketing is ” the activity and processes for creating, communicating, delivering, and exchanging products or services that have value for customers”. Therefore marketing is extremely important for the survival of all businesses because its “marketing” that drives revenue.

Marketing is generally thought of as a task that only medium and large companies can afford to worry about, but if small businesses want to survive they need to understand the best way to add value to customers. My view of marketing is that the process (marketing plan) helps small business identify how and where they add value, and what makes customer buy from you and not your competitors, therefore in many ways its a reflective process.

The problem is that small business does not have the resources to dedicate to the task of “marketing” so this blog is designed to demystify what is meant by the word marketing for small businesses.

I like to use a simple definition of marketing for clarification:

“find out what the customer wants and give it to them”

Marketing has moved from the notion of “telling and selling” to that of building long-term relationships. Small business is perfectly placed to build long-term relationships with customers because they;

  1. Generally have smaller customer bases
  2. Can remain closer to customers 
  3. Often have passionate owners who are involved in the business

Small business can excel at marketing if they spend adequate time and resources on all three of the following.

  • understand customer needs
  • develop products or services that offer superior value
  • communicate effectively

My view is small business is often good at one or two of these but struggle to excel at all three. The key to success is  you must have all three.

Now the above list sounds obvious but small businesses often fail because they are so focused on developing superior products or services  but they fail realise that either; its not really what the customer wanted, or customers don’t know about the great product or service offered.

1) Understand customer needs

When was the last time you asked a customer for an honest feedback.?

Have you lost a sale recently did you ask why?

Its not good enough to ask existing customers for feedback, you need to know what potential or lost customers think of your product or service offering.

Do you involve your customers in new products or services decisions?

Many technique exist for knowing what your customers want, often the simpliest is a simple call directly asking for honest opinion from your customers.

2) Develop products or services that offer superior value

This is the area most small business focus all time and resources to and therefore most do this well. The problem comes when you spend all your time doing this and nothing else.

2) Communicate effectively

These two words describe many activities in the marketing process. This is the part of the marketing process Style can help you with. At Style we are experts in providing small business with print related marketing material which is a big part of communicating effectively.

How to - Survive the financial crisis (GFC)

This post will provide a number of simple tips (in order of importance) to help small businesses survive  the current financial crisis. The main piont is that the financial crisis is short term and that by surviving it your business will be stronger over the long term.  

Tip 1) Cash is the number one survival tip

Cash flow is the life blood of the business world, too survive small business needs cash. There are many examples of profitable small businesses who go out of business because they have a short term cash problem.

The following checklist is designed to ensure you have enough cash to survive.

  • Go to the bank and organise a line of credit just to be safe. This must be organised before you run out of cash.
  • Keep a close eye on accounts receivable. Companies use accounts payable as free credit and therefore will delay payment. Chase outstanding debts early. If a customer value your product or service they will not have a problem meeting your payment terms. If you have a small number of customers this activity becomes even more important.
  • Offer discounts for advanced or early payment . A simple Net Present Value (NPV) calculation can provide you with what your accounts receivable (debtor balance) is costing you.
  • Use payment terms offered from suppliers, as pointed out above its free finance.
  • Increase the limit on your business credit cards, avoid using credit card debt because of the cost but they can be useful in emergencies.

The key point is that you need enough cash to pay your debts when they fall due, if you don’t nervous creditors (especially banks) will have no hesitation in bankrupting you.

Tip 2) Spend time on your business not in it

Small business owners often get tied up dealing with the day to day running of the business and do not dedicate enough time thinking and planning about what they want from there small business.

Below is a practical list of ways you can spend time working on your business.

  • Develop a business plan, the process you need to go through in a business plan gets you to think about your business in a reflective way which helps you identify areas for improvement.
  • Formulate a strategy for the next 3 years, I admit a static strategic plan is of limited value becuase they represent the situtaion on the day they were created and tommorrow everything may change. I like to do a strategic plan on an intranet site that defaults as my staffs home page and update the plan with input from staff regularly. The strategy should address the following areas.   (I will create detailed post on creating strategy for small business). 
    • What are your personal goals?
    • SWOT analysis - Strengths, Weaknesses, Opportunities and Threats.
    • Competitor Analysis - what are you competitors doing? - mini SWOT on each of them.
    • Customer Analysis - who are your customers?; why do they choose you over the competition?; How should you approach them
    • This leads to number ways of competing  
      • Compete on price - lowest cost, deepest pockets generally wins
      • Compete on value - this involves developing a unique position in the market and creating exceptional value
      • Compete on quality - works in premium markets
      • Compete on service - works on customer convenience
    • The key to strategy is that you can not be all things to all customers you need to focus on where you have a competitive advantage.
  • Formulate a marketing plan for the next 12 month. At Style we help small business develop marketing plans and one part of our strategy to add more value to our customers.

Tip 3) Financial crisis can be viewed as an opportunity

The current crisis can be seen as an opportunity to go into new or different markets because competition is reduced or the landscape has changed.

There is a concept in economics from Joseph Schumpeter called “creative destruction” it describes how during hard times is when opportunities arise. The problem is you need to see above the current crisis to view the opportunities. 

A few examples

Join forces with one of your competitors, when times are good and both companies making modest return neither would be willing to join forces. The result of a properly designed merger should be increased economies of scale resulting in better returns for both parties.

New position in the market becomes available for a new product or service.

If you have the funds invest in new technology and infrastructure now. Resources are available and cheaper at the moment. When the good times return you will be well placed to ride the wave with your new technology or infrastructure. Also locally in Australia the government has provided some significant tax breaks.

Perfect opportunity to negotiate new deals with supplier for long term contracts and lock-in lower costs. 

Re-negotaite a reduction in rent becuase your landlord will be keen to keep you, this may be difficult.

Tip 4) Drive revenue up

Increasing revenue sounds obvious but most small business focus efforts on cutting costs which actually drives revenue down because costs drive revenue. Now is not the time to cut on advertising, marketing, exhibitions and sales staff because all these costs drive revenue.

At Style we can help you with your marketing.

Tip 5) Cut costs that don’t add value

The focus should not be on cutting costs to maintain a profit or break-even level because this type of short term cost cutting is the beginning of the end. The following is examples of costs I would be careful in cutting.

  • Staff costs - for small business staff are the key. If you need to reduce them why not ask each of your staff to cut back 1 day a week. This works out better for staff and the business.
  • Advertising costs - if anything I would be increasing as long as you can gauage how effective you advertising spend is - topic of another post
  • Marketing costs - drive new business
  • Customer service - drive repeat business
  • Quality control - maintains quality
  • Production costs - maintains quality
  • Training costs - keeps resources productive

That does not mean that you should not be looking at each cost closely asking what it adds to value in the final product.

Costs which should be looked at closely

  • Telephone expenses
  • Technology expenses
  • Motor vehicle expenses
  • Finance costs - if you have security now is a gret time to secure low rate finance.
  • Travel expenses - although careful with this

Hopefully this practical list of tips is useful and if anyone has any additional suggestions I would like to include them.

Friday, May 30, 2008

First Blog

Welcome to Business and technology blog.

The purpose of this blog will be to provide business with practical tips and tricks which can be used by all.

My knowledge comes from years in various technology related business roles.

Please enjoy