Community Economic Development Fund

Articles and podcasts to help plan and operate your enterprise.

It's high time you learned SEO basics

Nate Berger of KnockMedia in New Haven provided an excellent introduction to the world of Search Engine Management (SEM) and Search Engine Optimization (SEO) in our recent seminar. I wish all of our clients could have attended because it has been my observation that while almost all of our borrowers have established functional, attractive websites, sadly, many of them are not well tuned-up for best search results.

I think much of this occurs because of a separation in the marketing world between the developers of small business websites, who often have a graphics design background, and the specialists who have experience with the technical settings that improve Google's ability to understand the contents of a website. Once a website is created, the work of improving its technical settings sometimes is forgotten. And often whoever writes the copy for the website, whether someone associated with the business or a marketing company, also fails to consider certain SEO basics.

Small business owners are busy people and can't be expected to master every technical subject and conduct all the adjustments on a do-it-yourself basis, even though in many cases the most essential tweaks would be well within their capability with a little study.

If you're going to run a business, you have to at least understand the principles of marketing, finance and personnel management (to name a few subjects) and know when to reach out for expert assistance. With so much activity running through the internet nowadays, even business owners who don't think they conduct e-commerce, really should try to pick up the fundamentals of SEO. This website provides a great foundation and is worth investing a few hours of reading. The return on the time invested is likely to come back quickly in the form of more customers and sales once the website tune up is accomplished.

-- Frederick Welk
CEDF Business Advisor

It's the leader not the concept

The mythology of American entrepreneurship goes something like this. You research a problem that startlingly nobody has ever noticed. You contrive a solution that your testing demonstrates is attractive and you build a Minimum Viable Product, or MVP. Your value proposition makes your customers an offer they can't refuse, and in no time your swelling sales allow you to raise millions from venture capital, leading to personal fortune and a few magazine covers.

Dileep Rao, a business professor at Florida International University gathered some surprising facts that make it clear that this is, well, a myth. He points out that VCs fund very few ventures, only about 100 out of 100,000 prospective deals. And only 20 of the 100 prove a success, with just one spectacularly so. So, Dr. Rao concludes, venture capital doesn't help 99.98% of the companies. 

His thesis is that there's too much emphasis on product, whether on TV's Shark Tank or in pitch contests or in business schools. What's really important, he contends, is the not the MVP but the MPE, or Maximum Potential Entrepreneur. That is, someone with the right set of skills to be a better leader than his or her competitors. Most rocket-ship type companies succeed because of management not because their core product was so unique, he says. These crucial skills include product development, sales and financial acumen. And not many people have this combination of abilities.

So maybe the unicorns that investors famously hunt for are the founders not the business concepts.

Be ready to wrestle the bear

In recent months, this column has addressed competition with Amazon from a couple of different perspectives. While current statistics still show the majority of sales on the site are made by third party sellers (who might actually be a small business owner),there’s a conspicuous trend toward the giant taking over more and more of the pie.

This New York Times article detailed the challenges, frustrations and dependencies that come along with selling through the platform. I can think of two clients who have fought the bear and walked away after being bitten.

One client, selling a proprietary product directly to Amazon and on the site through approved dealers made the hard choice of cutting off the grizzly. You see, Amazon won’t agree to minimum advertised price (MAP) policies and instead it makes sure it “wins the box.” That is, by showing the lowest net price it places its own listing ahead of other sellers.

This results in the price of the merchandise spiraling downward, undercutting the dealer network. So, our client effectively walked away from millions in future Amazon purchase orders to protect the integrity of its primary distribution chain. Who can blame them? How can you justify betting it all on one outlet (even one named Amazon) when the dealer distribution chain that helped you grow your business would be at risk?

Another client who manufactured personal care products found his supply chain leaking. He suspected a distributor was selling merchandise to unauthorized dealers who were reselling on Amazon and undercutting the brick and mortar dealer network. While this diversion wasn’t Amazon’s fault, our client hit the Amazon brick wall trying to get help to control it. He worked for months to prove to the Amazon bureaucracy that he owned his own trademarks and was classified in the right merchandise category and therefore qualified to invoke an Amazon policy that would allow him to shut off those unauthorized sellers. Business is tough when you can’t get anybody on the phone to discuss your protests. Eventually, this client realized that even selling direct to Amazon was no dream. For every item purchased by one Amazon warehouse, another would ship back his unsold goods. The slow payments and return fees effectively canceled each other out.

Now, if you’re thinking of making a late entry for your business into e-commerce, don’t be discouraged just because Amazon seems to outsell the next seven largest competitors combined (yes, including Wal-Mart). And don’t think that just because your industry’s products are already on the site (and cheaper?) that there’s no response you can make.

Yes, commerce is shifting online. Yes, customers are beginning to expect to shop this way. Yes, Amazon is a formidable, perhaps even a predatory competitor. Remember, there’s more to selling on the internet than on the one dominant platform. Sure your sales volumes will be lower, but keep your eye on the long term and look for a way to satisfy customer needs beyond price and speed.  Emphasize service and experience and you’ll have a better chance to survive your walk through the woods.

-- Frederick Welk
CEDF Business Advisor

 

 

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