Red Zebra Business Centre -Management Memos
May, 2009. Making Measurably More For Your Business Since 1985!

MaxProfile
It might not be getting better, but 'less bad' is almost as good!

Max Williams, Principal Consultant

General opinion is now firming that the end of the collapse in the United States and Europe is almost here. Optimists are calling these signs the "green shoots of recovery". More pragmatic people see the signs as the end of the downward avalanche, with actual recovery yet to begin.

For Australia, a slight rise in officially recorded employment has been called a statistical anomaly, but even that indicates that the collapse in employment is not as rapid as it had appeared to be. While there is no doubt that we are in a recession, these bellwethers strongly suggest it is not going to go as badly as we had feared.

With that view now taking root, many business people will be thinking "We're OK - just let's hang on!" That might work for them.

On the other hand, if things are not going to be as bad as we had feared, those who take the opportunity will have even more openings to grow stronger than the rest - and the environment to do so even faster.

It may not be party time yet - but it is time for creative strategists to get their plans into action!



The Internet is filling up!

It's hard to think of it - but the internet is filling up.

"Internet space" is defined by one simple thing - your IP address. Where you are in the real world can be defined by your continent, country, region, city, or suburb - but in the internet, only your Internet Protocol (IP) address matters.

Now we're running out of addresses in the current internet standard - known as IPv4 - and a new version - IPv6 - was developed more than a decade ago.

The big advantage IPv6 has over IPv4 is the number of unique addresses it can accommodate. For IPv6 it's about 34 million billion billion billion (that is 34 with 33 'noughts' behind it), compared with 4.3 billion for IPv4. Although 4.3 billion may sound like a lot, addresses are often allocated in large blocks that mean many aren't generally available, and expert estimates forecast an end to new IPv4 addresses in 2011.

IPv4 exhausted
To sidestep the limitations, engineers have come up with patches such as network address translation (NAT) and dynamic IP addresses. But these fixes merely reinforce the status quo. A relatively large number of clients connect to the relatively small number of servers with their own IPv4 addresses. Clients generally retrieve the data from these servers but rarely host it on their own.

Although it's been hard for companies to justify the expense of embracing the next-generation standard for wiring together the Internet, the incentives are now arriving--and Google itself thinks the time is ripe to begin adopting IPv6.

A new generation of opportunity is about to open!



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Let your own recovery begin right now

G

reen  Shoots of Recovery may be appearing in some US financial institutions, but it will be a long time before we see recovery in the real economy in Australia and New Zealand. This time lapse creates the perfect opportunity for pro-active, aggressive, business people to take market share - and create or strengthen their leadership position. 




Perhaps the greatest danger of the present economic turmoil, is that a business manager or owner, will respond instinctively - and get it dead wrong!  It is true that there are conflicting signals, just as it is true that amongst our clients there are widely differing experiences of this ?GFC'. And in an environment like this, it is easy for our instincts to mislead us.

One client commented just recently: "Recession? What recession - we're so busy we don't have time to think!" Sounds good, but at the same time his cash flow is going to hell in a handbasket because he simply will not take advice on how to improve it.  Oh well, as consultants say, "It is the client's sovereign right to stuff up his own business!"

On the other hand, several of our long established clients are having real difficulty in maintaining sales levels, and just can't generate the market activity they need. Why is that?

Both these issues have their origins in the same place. Long years of doing the same things generate habits - and it is really hard to break a habit, especially if it has always worked well for you.

Do your instincts let you down?

Look at it this way - and let's take the poor cash flow case first.

Here, our advice was to increase prices in certain categories of goods and services, while at the same time reduce prices in other categories. Naturally, the advice to the client was much more specific than that, and included specific numbers and tactics.

While understanding the theory behind the recommendations, the client had the job of reconciling that advice with years of experience. In all those years, pricing has been a critical element of the business mix. What if the recommendation was wrong?

On top of that, it seems the height of craziness to actually contemplate putting up prices, when all the world is talking recession, and retailers everywhere are offering huge 'price-off' specials. There's that instinct again - and again it's dead wrong.

Counter-Intuitive is often wise!

Most of us recognize the wisdom of the old saw "buy when everyone else is selling", and most of us just wish we had the money to pick up a bargain. Swimming against the tide seems silly - but in cases like this it is clearly to our best advantage.

Be counter-intuitive, but don't be foolish. In this case there was a fall-back, or insurance, strategy to be sure that sales not only won't fall - but would actually increase.

Correspondingly, how would this client reconcile the recommendation to increase prices in a recession - and at the same time take on board our other advice to reduce certain prices? Seems daft! As you would expect, that's all part of a carefully prepared plan to round up the opposition!
Let us now contrast this case of the cash-strapped client with another client whose current trading results are very strongly positive. Sales year to date are up over last year - but regrettably down on plan. Well, you would see that in a recession, wouldn't you? Gross profit, on the other hand, and that is what really counts, is right on plan. We can quote this client verbatim: "Thank goodness we took your advice last year when we did, and increased our prices how you advised us to!"

While instinct can often save us from ourselves, there are sometimes - and this is one of them - where logically evaluating alternatives will create a much better outcome.  These are options our instincts do not provide.


Old habits die hard

Turning to well established businesses where sales leads and sales are simply hard to find, we see the same elements, but in a slightly different flavour.

After operating really successfully for twenty or more years, you'd have to say that a business probably has a very good idea of its market and its customers. In short, you would probably say they know how to market themselves effectively.

It can be very hard to admit that what you have been doing for years has been adequate, but only just. In the boom times, ?adequate' gets by just fine! Doing all the marketing things you always did, and which always worked (or seemed to), is just another way the habits we got in the ?good times', hold us back in the bad times.

Here the solution for the bad times is not so easy.

Things that should have been done in the good times - and were not done - are even harder, and relative to lower sales, more expensive to do now. Fortunately, we have been able to give helpful and effective advice to some of our clients who are in this position. Mind you, it means doing some things they never thought they would!

Do something you never thought you would!

One client, running on a downer even in the good times, has been able to see a quite dramatic increase in sales leads, and this month is expecting to see a striking increase in actual sales, principally because of a branding exercise that went right. Only a little while ago, such a client would have passed-off branding exercises as a self indulgent and pointless waste of time and money!

Again, success has come from being 'counter-instinctive'.

Now that the recession looks like it won't be not as bad as we thought, you have been cut a little  'slack'. Now, you have the time to use the best business intelligence you can access, and do the things that need to be done. Even if they run against your instinct.

While others are busily reacting instinctively to developing economic news - or an empty bank account - you will be busily doing what you need to grow and prosper.

If you start now, your recovery from this recession will start right now! It will be stronger, and last longer, than those who simply depend on their instincts.





If you'd like to find out more about beginning your recovery right now, talk to us, or ask us a question here! Remember, there's no charge or obligation.



This same offer applies in New Zealand. Click Here!

McNicol Williams Management & Marketing Services is a Small Business Advisor listed with the Small Business Victoria, and has presented The Red Zebra program under its auspices. This listing requires that the first hour's consultation is always free. So when we say "No charge or obligation", we mean it!