Don't kick the can down the road

CNNMoney has an article out today regarding businesses trying to figure out who they are and what they do during down economic times.

Now, if a business has to spend any amount of time trying to figure out who or what they are during any economic condition, they have to be concerned. But let's disregard that just for the sake of argument.

When businesses find themselves in a challenging time, among one of the things they do is cut research and development. The first item in the article discusses this, and it is very true. It's low hanging fruit and the immediate results of that research is not to be reaped. But the problem is that when the down turn ends, there are a reduced number of products in the pipeline to be rolled out.

Plus, it opens the door to your competition catching up and passing you. If you need to trim the budget in tough times, R&D is not the place to do so. All you do is kick the can down the road a bit without solving the initial problem.

If you do need to cut costs, find where the fat is. Before you do layoffs, can you discover if your people  are not focusing on the right things? Can their time and efforts be directed elsewhere to increase revenues or decrease costs?

Can your manufacturing costs be reduced just by improving the process your products are produced or assembled? Can it be done quicker and with fewer steps? Don't just cut corners by reducing the quality of your inputs (your customers can always tell).

At the end of the day, don't take the easy way out when trying to get through challenging times. Keep up the R&D expenses. Don't lay people off, instead better utilize their talents to get more for your bottom line. Find other ways to reduce costs other than just the quality of the inputs.

These won't guarantee your businesses survival, but when the downturn ends, you will find your business in a much better position moving forward.

Why your small business no longer needs a website

There is no need for you to create or maintain a traditional website for your small business anymore.

Now, that does not mean to eliminate all presence of your business from the Internet. That would be suicide. But there are a couple of  reasons why you should ditch the traditional website and fully embrace social media.

Those reasons would be time and money.

If you have ever set up, or tried to set up a website, you know how time consuming that can be to get the perfect look and to get everything working properly. Sure, a lot of hosting sites provide templates, and even let you customize basic layouts, but that still takes a lot of time.

Then you have to pay for hosting. Depending on what your needs are, it could cost a few dollars a month or a few hundred dollars a month.

The simple and easy way to avoid all of this would be to get your business all over social media.

Facebook, Twitter and blogging are all excellent ways to get and keep your name out there. It takes very little time to set up a Facebook page, Twitter account and blog (Blogger and Word Press are the easiest ways to go).

Plus, all of those are free. It takes 15 seconds to compose a tweet or Facebook post. Perhaps a bit longer for your blog if you have more information you want to put together and share.

When I had my small business, I never even had any of my customers asking me for what my webpage was. I connected with them via my Twitter account and Facebook page. That way I could keep my customers informed and directly answer any questions they had or address any of their concerns. They never had to find me...just contact me through Facebook or Twitter and I could get back to them very quick.

So do yourself a favor. Ditch the time consuming and expensive webpage. Fully embrace social media. You will have much more time and money to focus on your business.

Why you should not buy Facebook stock...yet.

Facebook officially goes public tomorrow, with an initial price of $38 per share. That price has largely been set due to initial demand and absolutely nothing to do with any form of rational thinking.

Yes, there are going to be some very wealthy people tomorrow both on paper and in their pockets. Those that are wealthy on paper are those that have a lot of Facebook shares and those that have their pockets overflowing with money are those that sell some or all of their shares tomorrow.

Here is the problem. Facebook pulled in only about $1 billion in revenue last year. That is no number to sneeze at, but with their IPO price of $38 per share, that values the company at about $104 billion dollars. Is their P/E ratio really worth being at 104?

Google's P/E ratio is 18.9. Apple's is 12.9. Even non-tech giants Johnson & Johnson and General Electric hang out at 17.4 and 15.3 respectfully. Sure, those companies have been public companies for much longer, and have even had significantly higher P/E ratios then they do now (especially Google and Apple).

So yes, Facebook's stock price will probably even rise tomorrow and perhaps into the next week as people trip over themselves just to get a piece of the action.

But the price will fall. It has to. Unless Facebook comes up with an amazing new revenue stream over the next several quarters. Once the P/E comes under 25 or so, it would be worth looking into owning.

That is, unless the company is one of so many other tech companies who were the hottest thing going and is no more - and is beginning to be passed by some new kid on the block.

Come tomorrow, take a pass on Facebook. Wait until their revenues come up, or the stock price falls then jump in. One or both of those will happen, and that, you can take to the bank.

A post about procrastination

I'll get to it tomorrow...

Think about the short term but focus on the long term

I have always been annoyed by something in the world of business. It's not a new problem. In fact, I'm not even sure how many people even realize it is a problem. However, it is something that should be looked at more and something should be done about it.

There is just way too much focus on company quarterly earnings reports.

I suspect that a lot of this is being driven by the 24/7 media cycle we find ourselves in these days. The media talking heads that are on all of the tv networks, business websites or bloggers such as myself need stuff to write and talk about. It is easy to talk about companies quarterly earnings because it gives great talking points about where the business currently stands, and provides contrast against prior quarters.

Add all of this to 'meeting analysis' expectations' and it becomes easy to see how companies can shift focus to maintaining the good news every quarter - and maintaining a good stock price. When those expectations become too much, companies can turn to various shady practices to keep the good times rolling, but they will inevitably get caught.

That is why I believe companies should continually maintain focus on their long term plans, strategies and growth. Yes, short term thinking is obviously needed, but don't let it overtake focusing on the long term.

However, companies must maintain their focus on the long term. By doing so, short term plans will take care of themselves. Yes, there will be quarters of disappointing news, but it happens to all companies. Don't lose sleep over that and keep looking forward!

The coverup is worse than the crime, Part II

A few weeks ago, I wrote about how former Arkansas football coach had an issue with credibility. Sure enough, there is another situation, that has some similarities to what I wrote about.

This time around, it was announced yesterday that the Scott Thompson, CEO of Yahoo, has been caught padding his resume. Today, the board member in charge of hiring Thompson is not going to run for re-election to the board. There is only one step left in this story to have yet happen.

Thompson must resign from his position or the board should fire him.

As it stands, Thompson has zero credibility with any of his employees. Or at least he would have none with me if he were my CEO. His deception is telling all of his employees that it is OK to lie to get ahead.

While it appears on the surface that he is qualified to be the CEO of a large company, if he is willing to lie about the credentials that he has, what else is he willing to lie about?

Yahoo has been a company that has been in trouble for a long time. They need a leader that not only people within the company can depend upon, but those outside. Thompson is not that leader.

What a company doesn't say, says everything

I had the opportunity earlier today to speak with Jessica Miller-Merrell about the "resume black hole." She was soliciting feedback from job seekers for a column she was writing and wanted to know if someone had any experience with this issue.

While I don't know what her column says in it's entirety, I would like to talk briefly about this and one other issue where those who interview for a position, never hear anything back from the company after that interview. I've experienced both situations, and those are both things that reflect poorly on the company.

When applying for a position for a company, I almost always receive an automated e-mail acknowledging that the company has received my application. What happens next is always disappointing: Never hearing anything ever again regarding that position.

I understand I'm not always the best candidate for a position. I understand I'm not always going to be asked to interview for a position. But if this is the case, at least send me an e-mail telling me that I will not be asked to interview.

The same thing goes for the second issue I am talking about: Interviewing for a position and that is the last you hear from the company. This has happened to me on a number of occasions, but I'll detail perhaps the worst.

I traveled out of state to interview with a well known company. They told me I was going to be meeting with eight different people, and the process would take most of the day. Not a problem. I was all set.

So the interview comes and goes and everything seemed to go great. I know I was not the only person considered for the job, but I felt confident about my chances. After I returned home, I sent out thank you notes to everyone that I had interviewed with. Then nothing.

No response from anyone. No acknowledgement that the company had ever made a decision either in my favor or against.

When either situation happens, it makes me wonder if the company can't even appropriately deal with potential employees, how do they treat their current employees? It certainly can't be all that well and it tells me a lot about that company - and it is not good.

Doing the simple things goes a long way towards making your company look great. Just by properly informing candidates that they are no longer being considered for one position, makes it much more likely they will come back to you when you have other positions available.