I just listened to an interview of Fred Smith, Founder of FedEx, concerning the economy. He's optimistic as his company has seen an increase in all business sectors the past few months. Our company has also seen this uptick.
The economic numbers are starting to perk up, and most economists agree that we are now in positive territory and the greatest economic downturn since the Great Depression is over. Now, it's time for a slow recovery. The question is: How can we speed this recovery?
Historically, consumer spending and small businesses have fueled recoveries. Hopefully, consumers will start spending.
As far as small businesses, you can count on their help only if we can get liquidity into the marketplace. Tight lending has caused many businesses to stop growth plans and others from starting businesses at all. Home equity lines were always an entrepreneur's ticket to living the American Dream. Well, tight credit and a depressed housing market have made this one of the most difficult times for small business owners.
If small business is going to play a role in this recovery, more credit is a must.
--Ron Ameln, SBM
Sunday, September 20, 2009
Saturday, September 19, 2009
Twitter: Sucking Everyone Into The Next Web Bubble
Remember the days when VC companies would hand millions of dollars to young, hot-shot web gurus. It was a strange time, back then. The VCs were always so proud of themselves: "This company isn't making money, but its burn rate isn't that bad." Wow, what a great investment. My client's not losing that much money.
Most of those companies never made money (were never going to make money) and crashed and along with the tech bubble. You'd think everyone would learn a valuable lesson. Apparently not.
I just finished reading a St. Louis Post-Dispatch article by Tim Barker about a visit by Jack Dorsey, one of the founders of Twitter. Dorsey came to St. Louis as a guest of Webster University. According to the article, he answered questions for an audience of 1,000. Benjamin Akande, dean of Webster's school of business and technology, compared him to Johannes Gutenberg (printing press inventor) and Alexander Graham Bell (telephone creator).
I should seem ironic that a business school would honor Dorsey and a company that has never made a dime in profit. I say "should."
Twitter continues to struggle to find a way to be profitable. "Just wait," say the VCs that just pumped $50 million more into the firm. I'm not as confident. Dorsey and his staff thought they'd be making a profit last year. Didn't happen. They've yet to successful implement their mythical business plan.
Yet, VCs fall all over him and he's honored by 1,000 teary-eyed followers (sort of like the Beattles, without the hit singles).
Don't get me wrong. I like Twitter, use Twitter and would love to see Dorsey and Twitter become a success. But my definition of business success is making a profit. I'd like to see a profit before we start comparing Twitter to the printing press and the telephone.
And, of course, Dorsey discussed a new application that would be out soon. Sounds like the old tech companies that always stayed one step in front of the VCs by promising a new application. (When it looked like money was drying up, there was always a new application.)
It's easy to see why VCs get sucked into these companies. Just like the 1,000 guests that came to hear Dorsey, they get sucked in with the sexiness of the service.
If we can learn anything from the tech bubble, it should be investing in profitable companies.
--Ron Ameln, SBM
Most of those companies never made money (were never going to make money) and crashed and along with the tech bubble. You'd think everyone would learn a valuable lesson. Apparently not.
I just finished reading a St. Louis Post-Dispatch article by Tim Barker about a visit by Jack Dorsey, one of the founders of Twitter. Dorsey came to St. Louis as a guest of Webster University. According to the article, he answered questions for an audience of 1,000. Benjamin Akande, dean of Webster's school of business and technology, compared him to Johannes Gutenberg (printing press inventor) and Alexander Graham Bell (telephone creator).
I should seem ironic that a business school would honor Dorsey and a company that has never made a dime in profit. I say "should."
Twitter continues to struggle to find a way to be profitable. "Just wait," say the VCs that just pumped $50 million more into the firm. I'm not as confident. Dorsey and his staff thought they'd be making a profit last year. Didn't happen. They've yet to successful implement their mythical business plan.
Yet, VCs fall all over him and he's honored by 1,000 teary-eyed followers (sort of like the Beattles, without the hit singles).
Don't get me wrong. I like Twitter, use Twitter and would love to see Dorsey and Twitter become a success. But my definition of business success is making a profit. I'd like to see a profit before we start comparing Twitter to the printing press and the telephone.
And, of course, Dorsey discussed a new application that would be out soon. Sounds like the old tech companies that always stayed one step in front of the VCs by promising a new application. (When it looked like money was drying up, there was always a new application.)
It's easy to see why VCs get sucked into these companies. Just like the 1,000 guests that came to hear Dorsey, they get sucked in with the sexiness of the service.
If we can learn anything from the tech bubble, it should be investing in profitable companies.
--Ron Ameln, SBM
Monday, September 14, 2009
When It Comes To Sales, Persistence Is Key
Have you ever heard the expression, “90% of success is just showing up.” It amazes me as I talk with clients and others in the business community how reluctant salespeople are to actually sell. Here are some statistics I find fascinating. When I look at these numbers, the ones that pop out to me first are: 1.) 2% of sales are made on the first contact with a prospect., and 2.) 80% of sales are made between the fifth and twelfth contact with a prospect.
• 48% of sales people never follow up with their prospects.
• 25% of sales people make a second contact with their prospect and then they stop.
• 12% of sales people make three contacts with their prospect and then they stop.
• Only 10% of sales people make more than three contacts with their prospects.
• 2% of sales are made on the first contact with a prospect.
• 3% of sales are made on the second contact with a prospect.
• 5% of sales are made on the third contact with a prospect.
• 10% of sales are made on the fourth contact with a prospect.
• 80% of sales are made between the fifth and twelfth contact with a prospect.
--Ron Ameln, SBM
• 48% of sales people never follow up with their prospects.
• 25% of sales people make a second contact with their prospect and then they stop.
• 12% of sales people make three contacts with their prospect and then they stop.
• Only 10% of sales people make more than three contacts with their prospects.
• 2% of sales are made on the first contact with a prospect.
• 3% of sales are made on the second contact with a prospect.
• 5% of sales are made on the third contact with a prospect.
• 10% of sales are made on the fourth contact with a prospect.
• 80% of sales are made between the fifth and twelfth contact with a prospect.
--Ron Ameln, SBM
Wednesday, July 29, 2009
In Business, It's All About The Bottom Line: Your Profit
In baseball, batting averages and ERAs earn players' big contracts and All-Star appearances, but wins get them and their teammates championships.
In business, it's all about the bottom line: Your profits. Profitable companies win the championships at the end of the day.
It's not about the number of employees, what you'll be in the future or even revenues.
Sometimes entrepreneurs forget this as they motor through each day, always looking for the next great conquest. Civic organizations and our political leaders also overlook this small fact. In fact, I notice that many of the smaller (old-fashioned) businesses often get overlooked like they don't exist. I'm talking about the dry cleaners, the restaurants, small retail shops, etc. Although in many cases, those businesses are actually making a profit.
For example, if you had to pick between Frank's Dry Cleaning on the corner and Facebook, which would you think is making a profit? Well, it's not Facebook.
Surprised. Even though the company takes in between $300 and $500 million a year in advertising and has great marketing leverage, it has never made a dime of profit. In the game of business, Facebook is striking out.
YouTube is also losing. The video site owned by Google sells ads but has always run at a loss. ALWAYS.
What about Twitter? That sensation of a website with 40 million members. It must be profitable, right? Think again. It doesn't even try to generate revenue, let along profits.
The ironic thing is that when I meet folks out networking, some will approach me with helpful online ideas for our company. I dig that. However, the conversation usually ends like this, "...and you can turn it into the next Twitter."
Thanks, but no thanks. I would rather run a small operation with a profit.
--Ron Ameln, SBM
In business, it's all about the bottom line: Your profits. Profitable companies win the championships at the end of the day.
It's not about the number of employees, what you'll be in the future or even revenues.
Sometimes entrepreneurs forget this as they motor through each day, always looking for the next great conquest. Civic organizations and our political leaders also overlook this small fact. In fact, I notice that many of the smaller (old-fashioned) businesses often get overlooked like they don't exist. I'm talking about the dry cleaners, the restaurants, small retail shops, etc. Although in many cases, those businesses are actually making a profit.
For example, if you had to pick between Frank's Dry Cleaning on the corner and Facebook, which would you think is making a profit? Well, it's not Facebook.
Surprised. Even though the company takes in between $300 and $500 million a year in advertising and has great marketing leverage, it has never made a dime of profit. In the game of business, Facebook is striking out.
YouTube is also losing. The video site owned by Google sells ads but has always run at a loss. ALWAYS.
What about Twitter? That sensation of a website with 40 million members. It must be profitable, right? Think again. It doesn't even try to generate revenue, let along profits.
The ironic thing is that when I meet folks out networking, some will approach me with helpful online ideas for our company. I dig that. However, the conversation usually ends like this, "...and you can turn it into the next Twitter."
Thanks, but no thanks. I would rather run a small operation with a profit.
--Ron Ameln, SBM
Wednesday, July 22, 2009
Finding The Right Banking Partner
Why do so many good commercial lending deals fail? Not because of lousy business plans, poor personal credit or over-inflated numbers. In many cases business owners simply go to the wrong bank. Every bank has a different appetite for certain types of lending. Businesses should look at their particular circumstances and find a bank that best fits their needs. The decision of where to find business capital involves more than just comparing interest rates. Here are some questions to ask when evaluating lending sources:
1. Can you meet regularly with your banker? Choosing the right banker is similar to choosing a good doctor. You want someone who is competent, personable and a good listener. The right banker can become an integral part of your management team. Meeting face-to-face and discussing your future plans is an important part of building a successful banking relationship.
2. Are loan decisions fair and balanced? You’ll want a lender who can provide a balanced credit decision that takes into account your total picture, including all of your business assets and potential.
3. Does the bank understand small business?
4. Does the bank understand your industry? When bankers don’t understand how an industry operates, they don’t understand how they’ll be repaid. And when bankers don’t understand how they’ll be repaid, they decline loan requests.
5. Is the bank small enough?
6. Is the bank large enough to meet your needs?
7. Does the bank have the ability to advise?
--Ron Ameln, SBM
1. Can you meet regularly with your banker? Choosing the right banker is similar to choosing a good doctor. You want someone who is competent, personable and a good listener. The right banker can become an integral part of your management team. Meeting face-to-face and discussing your future plans is an important part of building a successful banking relationship.
2. Are loan decisions fair and balanced? You’ll want a lender who can provide a balanced credit decision that takes into account your total picture, including all of your business assets and potential.
3. Does the bank understand small business?
4. Does the bank understand your industry? When bankers don’t understand how an industry operates, they don’t understand how they’ll be repaid. And when bankers don’t understand how they’ll be repaid, they decline loan requests.
5. Is the bank small enough?
6. Is the bank large enough to meet your needs?
7. Does the bank have the ability to advise?
--Ron Ameln, SBM
Saturday, July 18, 2009
Health Care Reform And Small Business
Years ago I had an interesting conversation with an entrepreneur that owned a local Handyman Hardware store. We were standing outside his shop and watching construction crews build a brand new Home Depot across the street. "I don't have a problem with competition," he said, thinking about his future. "I just think we should all be on the same, level playing field."
You see, Home Depot received tax breaks and property tax breaks to build across the street. Now, I understand that the Home Depot will employ many people and bring lots of sales tax to the area, but the Handyman entrepreneur had been a good citizen (paying full tax rates) for 30 years. Why not offer him the same deal.
"I don't think they really care if you are here or not," I told him.
Well, some things never change. With the country on the edge of health care reform, it was great to see the recent House Bill that expects small businesses to pay for the many uninsured Americans.
Under the House bill, businesses with payrolls of more than $400,000, must either provide health insurance for their employees or pay a penalty of 8% of their payroll. For those of you who don't own a business, most businesses don't even make 8% (of overall revenues) as a profit. Many are in the 2%-4% range, if they are lucky. This plan would destroy many small firms.
That's not all. The second part of the double whammy is a surtax of at least 1% small firms would have to pay when business earnings exceed the threshold of $280,000 a year.
Don't you think small firms would provide health insurance for employees if they could? I mean, small firms are competing with larger companies for talent.
Here's an idea: If health care is that important to this country (which I believe it is), why don't we have everyone (including the 40% of the population that currently pays NO taxes) help pay the cost.
Politicians love to give lip service to the fact that small firms are "the engine of the economy." Yeah, right. Reality: I don't think they really care.
--Ron Ameln, SBM
You see, Home Depot received tax breaks and property tax breaks to build across the street. Now, I understand that the Home Depot will employ many people and bring lots of sales tax to the area, but the Handyman entrepreneur had been a good citizen (paying full tax rates) for 30 years. Why not offer him the same deal.
"I don't think they really care if you are here or not," I told him.
Well, some things never change. With the country on the edge of health care reform, it was great to see the recent House Bill that expects small businesses to pay for the many uninsured Americans.
Under the House bill, businesses with payrolls of more than $400,000, must either provide health insurance for their employees or pay a penalty of 8% of their payroll. For those of you who don't own a business, most businesses don't even make 8% (of overall revenues) as a profit. Many are in the 2%-4% range, if they are lucky. This plan would destroy many small firms.
That's not all. The second part of the double whammy is a surtax of at least 1% small firms would have to pay when business earnings exceed the threshold of $280,000 a year.
Don't you think small firms would provide health insurance for employees if they could? I mean, small firms are competing with larger companies for talent.
Here's an idea: If health care is that important to this country (which I believe it is), why don't we have everyone (including the 40% of the population that currently pays NO taxes) help pay the cost.
Politicians love to give lip service to the fact that small firms are "the engine of the economy." Yeah, right. Reality: I don't think they really care.
--Ron Ameln, SBM
Sunday, July 12, 2009
Social Networking: Making Old Girlfriends Pay
Julie K had better watch out. You see Julie was my first love back in the eighth grade. Until, that is, she turned me down for the Valentine's Day Dance. Now, after 27 years of dealing with the pain, it's time for a little pain and suffering on her end.
I'm going to use social networking to make her pay.
First, a few facts. Her friend Sarah told me she wanted to go to the dance. Then, I asked her and she broke my heart in two. And I must say, I was a catch back in 1981. I sat in the back of the bus with the other cool kids, I wore a concert shirt to school at least two days a week (sure sign of coolness back then) and I even shaved once every few weeks. Heck, I had hair back then.
But Julie ruined my life. (I'm playing Lionel Richie's "Endless Love" as I write this).
Now, it's her turn to suffer. I'm going to use every social networking site I know (Blogs and more blogs, LinkedIn, MySpace, FaceBook, Twitter, etc.) to basically trash Julie.
I was talking with a PR professional last week and he mentioned that PR firms (who used to promote businesses) will now help disseminate messages (for and against others) through social networking sites. These firms make it look like a real grassroots undertaking. (Don't want the world to know it's really four guys in a South County cubicle.) I'm going to hire that PR firm. Ah, the world against Julie K. I can rally every heartbroken 8th grader against her.
Then, I'm going to hire an IT firm to make sure all of these entries end up high on Google's searches. Julie's dog will soon know how bad she hurt me.
I could walk away, move on with my life and not worry about Julie. Yeah, right. Why would I do that when social networking is here to make people like Julie pay.
I'm looking for much more than an apology. I've had years of pain and suffering. I'm thinking a two-week cruise to the Caribbean might help.
Now, Julie will probably hire her own PR firms and disseminate bad information about me or information to make herself look better. She'll probably also hire an IT firm. She may even tell some stories about me to discredit me.
That's OK, my PR firm will just disseminate some more crap about her.
I just want to thank the designers of social networking. Somehow, when the idea of social engineering began, getting back at Julie K was exactly what the founders had in mind.
--Ron Ameln, SBM
I'm going to use social networking to make her pay.
First, a few facts. Her friend Sarah told me she wanted to go to the dance. Then, I asked her and she broke my heart in two. And I must say, I was a catch back in 1981. I sat in the back of the bus with the other cool kids, I wore a concert shirt to school at least two days a week (sure sign of coolness back then) and I even shaved once every few weeks. Heck, I had hair back then.
But Julie ruined my life. (I'm playing Lionel Richie's "Endless Love" as I write this).
Now, it's her turn to suffer. I'm going to use every social networking site I know (Blogs and more blogs, LinkedIn, MySpace, FaceBook, Twitter, etc.) to basically trash Julie.
I was talking with a PR professional last week and he mentioned that PR firms (who used to promote businesses) will now help disseminate messages (for and against others) through social networking sites. These firms make it look like a real grassroots undertaking. (Don't want the world to know it's really four guys in a South County cubicle.) I'm going to hire that PR firm. Ah, the world against Julie K. I can rally every heartbroken 8th grader against her.
Then, I'm going to hire an IT firm to make sure all of these entries end up high on Google's searches. Julie's dog will soon know how bad she hurt me.
I could walk away, move on with my life and not worry about Julie. Yeah, right. Why would I do that when social networking is here to make people like Julie pay.
I'm looking for much more than an apology. I've had years of pain and suffering. I'm thinking a two-week cruise to the Caribbean might help.
Now, Julie will probably hire her own PR firms and disseminate bad information about me or information to make herself look better. She'll probably also hire an IT firm. She may even tell some stories about me to discredit me.
That's OK, my PR firm will just disseminate some more crap about her.
I just want to thank the designers of social networking. Somehow, when the idea of social engineering began, getting back at Julie K was exactly what the founders had in mind.
--Ron Ameln, SBM
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