Page 10 of the Fortune Magazine published on 6th September 2010 has this subtitle – The growing power of technology and social media has made starting a business simpler than ever. The magazine has listed 5 areas where costs can be reduced substantially by referring to the experience of a media veteran.
She bypassed lawyers for her company incorporation and did form filling and filing online by herself. We can easily do the same in many countries such as New Zealand. The New Zealand Companies Office charges NZ$10 inclusive of GST for reserving a company name and NZ$150 inclusive for incorporation of a new company. We get our shareholders and directors to sign with pen on paper and this is about the only piece of manual work to do. The process may take 30 minutes total. To do the same 10 years ago would take 3 weeks and a lawyer fee of $1000 plus disbursements
– Brand Logo Design –
She needed a logo for her new retail business. Instead of getting an advertising agency to design the logo, she posted her brief on Crowdspring dot Com and chose from 65 submissions. Similarly a new start-up in the video surveillance business in New Zealand used 99Designs dot Com and chose the best logo design from over 200 submissions. The cost is US$200. A percentage of it went to the website operator and the bulk went to the winner of the design contest. We are free to offer a higher or lower price (prize) and every price (prize) level will attract a corresponding quantity and quality of submissions. We can be quality or budget driven.
– Marketing & Services –
How to do marketing? This aspect has never been easy or cheap. We need signage for our presence. We need sweet words to attract customer attention. We need to provide a comfortable path for customers to walk in. For sure, we need good products and good pricing as the fundamental premises. She created a website for her presence. She used social media to obtain mind share, and Google AdWords to attract customers to her website. She spent US$1000 over the period. If she did something else for a similar effect, she would have spent 10 times more. By the way, to register a website domain name in New Zealand costs $27.90 plus GST per year.
Can she do so much by herself? She is not a multi-arm person and she employed assistants. To get from Day One to where she was over a three month period, she spent $19,800 for engaging freelancers and paying workers on the go. If she wanted to achieve the same 10 years ago with in house resources, she would have spent 10 times more on consulting fees and committed staff wages.
Lastly she ran her retail outlet business from her home office but without getting any interruptions from customers to her privacy. She used virtual and occasionally physical shopping malls for marketing and selling. For a high traffic physical location, the rent would be $175,000. For a high traffic virtual location, she spent 5% of the amount.
She successfully started up her business to a trading position with an investment of $40000 which is a small fraction of what she would have incurred 10 years ago.
Website Design and Maintenance
The above example seems to put all bets onto the website and the Internet. How do you design a website and construct one that is effective to operate and easy to maintain and upgrade? There are many people offering website templates. The same video surveillance start-up company in New Zealand mentioned above purchased a template for NZ$279 and suddenly obtained the design and a content management tool overnight. There are 2 big savings in design and construction respectively. Obviously, the template will require some fine tuning but most features are there and are right. The start-up company just needs to furnish their specific product and service information and decide which information to communicate with customers.
– Employment of Staff –
At some point every business will need to employ staff to do daily operations and to relieve the manager to work on higher value functions. The manager can use a recruitment agent or a human resource specialist to handle the recruitment. Irrespectively, the manager must define what jobs the new staff should do, how much to reward the person, and what the career path is for the staff member. Once this is done, she can use the web again. For NZ$200, she can place a full page recruitment notice on a high traffic employment website for a month instead of placing a 4cm single column classified advert in a regional paper for one day. To her surprise, she obtained the first applicant almost instantaneously as soon as she posted the advert on the website. This is due to the website carrying out a matching of profiles. Recently the writer’s company obtained 130 applicants and successfully picked the best person for the job within 3 weeks including 1 week of physical interviewing.
– Grab a Seat –
“Grab a seat or a room” is a popular way of selling services which have a margin cost structure. If an airline flight is not full, why not grab a few more customers by selling a few seats cheap. Will this upset other customers who have paid a lot more for the same flight? Not likely. Other customers may not know about this, or may not have time to do this, or cannot live within the limitations associated with this. The airline and the seat grabbers see themselves as the winners and other passengers are not the losers. The same situation applies to hotels and motels and to any business which has a high operating overhead but low cost of sale.
– More Food for Thought –
The Oxford English Dictionary has sold about 30 thousand sets in total over the last 20 years. Its online version gets 2 million hits a month from subscribers who pay US$295 a year each. Which one will do better over the next 10 years?
Printed newspapers will disappear by 2020, journalism will be crowd sourced, and phones will be predominantly based on VOIP (voice over IP). Do you believe these predictions?
– Guidelines for Business –
Whichever tools a business uses should have the following characteristics: it is easy to use, not expensive to use, fast to produce results, and produces accurate results.
– Email versus Snail Mail- Email won
– Company incorporation- Online won over going through a lawyer or accountant
– Logo design- Web contest won over paying a marketing agency
– Website construction- Web template won over in house resources or consultants
– Vacant Position advertising- Web won over printed advertising via newspapers
– Online sale versus a physical shop – there are many success stories but the jury is not unanimous
– Online Advertising versus other means- the jury is still out but online advertising revenues are on the rise day by day
In all the above cases, we get what we want and do not give up any right or ownership.