Thursday, March 20, 2014

Never Send Your Local Customer, or Even a Local Warm Lead, to Your Website - Even if They are Not Local

Never send your customer, or even a warm lead, to your website - Why?  Let's set the stage first.

Do you ever get the feeling the "Internet" is spying on you as it knows exactly what you are doing, even offline?

Maybe you have been doing some home improvement or some car maintenance in the last few days; maybe you have been doing a little research on how-to.  Then, all-of-a-sudden, it seems like every web page you visit has very specific ads for items you have searched; maybe an air filter or a circular saw - the very one you were researching or searching for - scary...

You need to understand - Websites do know what you are doing and it is not scary.  When you are are researching a product or a service, "cookies" (small bits of data and information) are planted on your computer. They are not harmful and there is nothing you need to do (or can do about it). Cookies are designed to improve and enhance the user's Internet experience (your experience).

Let's get to why you should not be sending your customers and warm leads (or any referral) to your website.  Very simply put, the same Internet spying that happens to you, happens to them.  Let's say you are the local Sherwin Williams paint store and you get a phone call (warm lead) asking, "Do you carry "X-Quality Paint" and rather than answering them immediately, and potentially writing up an order, you send them to your website, after they look at your website, that warm lead will likely be exposed to ads from other websites that will not only be specific to the product they wanted to ask you about, but  even more specific ("X-Quality Passion Blue at Lowe's").  It's gets even worse if you email the answer to a public mail service like GMail - the ads are email specific - all these ads pop up IN YOUR EMAIL that say"ME TOO - WE HAVE X-QUALITY PASSION BLUE TOO".  This is called Intelligent Ad Delivery.  Obviously I am embellishing my point here, but the question still is, who wants to expose their customers to the competition.

Why does the Internet work like this?  Very simply put, it is the Internet companies that have an interest in you buying there.  Advertisers bombard us with information because they have identified us as A BUYER.  Whats even worse, the Local Sherwin Williams Paint Store, can't profitably compete there, even if it knew how.

Sometimes we need an analogy - It's like sending a caller (warm lead) back to the phone book to see the list of colors you carry.  Think about how dumb that sounds.

This situation seems so obvious if you understand all the ingredients, but so few of us do.

Make your website is a one way path - from your website to you.  That is its purpose - to make your phone ring. If people are calling, they want to talk to you and get questions answered - answer them and take their order.  Your website did its job.

So what inspired this article?  I called a local HVAC company who I knew carried the AprilAire air filter I needed (high-tech air filter not available at Home Depot or Lowe's).  Instead of giving me the information over the phone (I was a buyer), he told me he would immediately email me if I gave him my Gmail address (collecting email addresses).  He did immediately email me the pricing information as well as pricing for removal of the old filter and installation of the new filter.  Up popped ads with similar pricing and detailed removal/installation instructions - stupid-is-as-stupid-does - convenient local instantly became very inconvenient.  Don't repeat his mistake.

Lesson Learned.  You have zero privacy anyway . . . . Get over it."  ~ Scott McNealy

Bob Leonard

Wednesday, September 25, 2013

My Twitter IPO Prediction . . . and Why... it is not Facebook.

Twitter, the other "social networking" tool that few understand why.

So where is the great value here as I don't care what Kim Kardashian is wearing today.  Add to that, do any of us real people use it?

The first thing we need to understand is how it is different from Facebook.  Think of Facebook as your snail mail box at Christmas time; we receive letters and cards from our friends and relatives as well ads from places we buy - except with Facebook, it's Christmas every day.  We have the capability to keep up (or be kept up) with those distant relatives we normally see at weddings and/or funerals (and still receive Christmas cards).  We keep up with our interests and favorite places (stores) as well as get kept up with those places (stores) that buy in (advertising).

Twitter is much different from Facebook in that it is neither about being kept up or keeping up even though people do both with it.

Twitter is about being found.  Twitter is about creating relevance in the SEO world (Search Engine Optimization).  Relevance is what moves a search up on the the search engines (Google / Bing).

This is why TV and commercial brands create Twitter campaigns - It's why we see the hashtags (#) everywhere.

Every time, for every tweet, "bots" (Search Engine Robots) grab those tweets and create relevance tables - a far better approach to relevance than meta keywords.  For more detailed information on this read my article from June 14, 2013 "The SEO - Twitter Secret That SEO Service Sellers Don't Talk About ( Because they don't know it !! )" and my August 29, 2012 article "Search Engine Optimization (SEO)".  In Twitter it's all about creating relevance in the tweet multiplied (not literally) by the number of followers of the tweeter (bonus for retweets).  This is also something Facebook does not and can not do (at least with the same effectiveness).  Twitter, and specifically Tweets, gets you found by moving you up in the search engines - this has a huge commercial value.  It's less about people reading it and more about the bots seeing it.

So the Twitter IPO (coming any day).  Twitter will have the traditional run-up that high profile companies have on day one and two of trading.  Twitter does not have the hype power Facebook had - The few who have the opportunity to get in on the IPO (kinda like granted land rather than deeded land) will do well as Twitter will leave some "money on the table" (going public term - the difference between the IPO price and the close price on day one).  In Facebook's case, they took extra money off the table (the companies objective and dream). making entities (big entities only) upset because the did not get the day one score they normally get with high profile IPOs.

IMHO, this will be a good investment because 'the market' does not understand Twitter's value.

In full disclosure - I am biased.


Tuesday, September 10, 2013

The Perfect Storm (Economically Speaking) a Year Later. The Worst (Best) is Yet To Come.

To understand this article you will need to read my article from a year ago with a similar name.  The Perfect Storm (Economically Speaking).  What's different, what's new, what have we learned and how far have we come and where are we going?

Capital, even though it is hemorrhaging slowly, is still pent-up. It needs to flow faster to the capital demand and will as it realizes it is missing opportunities (which it is).  What do the markets think?  Go to almost any trade show this year - They are bigger and the crowds are huge, much larger than just last year.  This is definitely a leading indicator of the state of our economy (Peter Lynch style).

Businesses are spending and hiring; the pace on both is going to increase.  Last year I felt like we were in a sling shot still pulling back (potential energy) - it's definitely moving forward now (kinetic energy).

As I have said before, a government that is indecisive, causes money to sit still - no one invests when the rules-of-the-game have not been defined.  Today, even though the rules still need some tuning, the capital and venture markets can no longer hold back - we are moving to flowing dollars.  What is even more amazing (IMHO), business activity is driving our government policies to make decisions (immigration reform).

So what else is coming?  High interest rates, high inflation, low unemployment, cheap non-exportable energy (venture $$$ abuzz), re-urbanization and localization.

Fun times ahead, I wish I were a young entrepreneur again; I envy my children and my grand children as there is a bright future for the young entrepreneur.

Oh, and I took the summer off from writing :) .


Wednesday, June 19, 2013

Where the Money Goes in Growing Small Businesses - Small Business Week

Small businesses have several stages they go through in their early years much like a puppy or a child.  Each of these phases present different challenges and a different understanding of the numbers as they happen.  I am assuming a successful business startup here; success does not mean Easy Street, it simply means we have a product / service to sell that actually does sell at more than it costs and the business has cash flow.

The first feeling in a successful business startup (remember my definition of  "successful business startup") is truly amazing - the selling - the making of 'all the money' - the satisfaction of  'doing something good' and making the world a better place (seriously).  We feel 'in-the-money' as we are making money for each of the process elements of the product / service.  We feel the 'WOW' and want to do it more - the same feelings we get when we win at a casino (except you are betting on yourself) - you can taste winning.!.  Welcome, you are now an Entrepreneur.

Then the business grows - we have a product that people want and we can sell it.  The results though are not quite what we expect - twice the sales do not generate twice the personal income.  Additionally, we hit some stumbling blocks - all of a sudden we have employee issues, sick days, differences in throughput and a lower commitment than we ourselves have as owners - don't try to pretend this does not exist but also don't let this consume all your time and focus.  Sometimes we think we need to adjust prices to compensate for the additional costs - in reality there are no additional costs - those costs are simply not going to the entrepreneur anymore.

Remember: Price has nothing to do with costs
except that it must be higher than cost to be in an ongoing business.

Assuming we can get beyond making a lower percentage on sales (maybe even less money), we then run into the next entrepreneurial stumbling block - hiring sales people.  They will never be as good as you and they are motivated by money, not your businesses success (normally).  This is the point where the entrepreneur must become more of a manager then entrepreneur.  This is difficult as the business is the entrepreneur's child.  Success here has more to do with building an asset and creating wealth than making more money.  What I tell business owners that reach this point is that they will now feel forever broke as they continue to build the asset (the business).  This is one of the most difficult things to comprehend in small business.  They ask, "when I did one, I made $110K/year; now that I am doing 15 why am I only making $140K/year?"

What the entrepreneur fails to realize is, if they stepped back from the business, they would still make $110K/year as they now have an asset generating cash flow and profits.


Tuesday, June 18, 2013

Why a House to Live in is Always a Good Investment.

Another off topic article, but good information for equating personal finance and business financial decisions.

Our homes are typically our largest purchases in our lives.  I try here to add a little business thought to the process.

To understand and project a return-on-investment, the investment must be looked at from and with a business mindset.  This is true whether we are in business or making personal investments.  This is not a simple process when our home is the investment - there are intangibles and emotions to consider (which I won't here).  There are also location and demographic considerations (big ones).  These complications are compounded by the fact that the economic environment is different and more volatile than in anytime I know of in modern history.  Subsequent articles will utilize this information to determine whether real estate, be it commercial or residential, is a good business to be in beyond the home you live in. I will make several assumptions in these articles and will identify them so you can use your own assumptions. A final note - buying a home is not this complicated; being in the real estate investing and/or the property management business is far more complicated.

The first thing that needs to be determined is a baseline number - that being the cost of a place to live - it's a requirement.  This is a major factor in making owning the home you live in an attractive investment.  Let's say the cost for you to rent a place to live is $1500 per month; this is your baseline number.

Assumption One: We have the 20% down payment for the house we can afford (No PMI) and $0 closing costs.
Assumption Two: We intend to be in the house for 15 years.
Assumption Three: An average of 6% inflation and a opportunity cost of money of 4.25%.  These two items traditionally track each other pretty closely and it's better to assume this than predict why they may not in the future.
Assumption Four: We are in a 25% incremental tax bracket.

We are purchasing a $350,000 home, putting 20% down and paying a fixed 4.25% on a 30 year mortgage.  This equates to a $1,872 monthly mortgage payment including taxes and insurance.

Assumption Five: approximately $8,600 in interest and $7,500 in property taxes per year (note: interest is not straight line and taxes are different everywhere).

This is a $16,100 deduction and in a 25% tax bracket this represents $4,025 reduced tax bill.or approximately a $335 savings per month.

The net difference between renting and buying is $1,872 less the tax benefit of $335 less out baseline cost of $1,500 equaling a net difference of $37 (seems close).  Lets add $300 per month for maintenance and repairs (roofs, water heaters, furnaces, etc over 15 years). total difference is $337 per month (this is really really rough).  The present value of $337 over 15 years (using the assumptions above) is approximately $44,800.

At this point we can project our total investment $114,800 for our $350,000 home ($70,000 Down payment plus the $44,800).

At 6% inflation, the future value of the home will be approximately $839,000 after 15 years (super oversimplified - many other factors including and especially location).

The return = The $839,000 value less the total investment of $114,800 (for the $350,000 home) equaling $724,200 or a 14.2% annualized return over the 15 years - not bad for a very conservative investment (this is not the way you calculate your capital gain nor is it the way the IRS thinks as maintenance costs generally do not go back into your basis, but they would be considered in a businesses P&L).

Just note, that my article last week on gold prices predicts both high inflation and high interest rates in our near future.  This volatility increases the risk in any investment (as well as the reward if you guess right).

A forthcoming article(s) will consider the additional elements of real estate / property management as a business (income, depreciation and capital gains taxes).


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Friday, June 14, 2013

The SEO - Twitter Secret That SEO Service Sellers Don't Talk About ( Because they don't know it !! )

One of the largest ways to improve your website's organic search position is to demonstrate relevance to the search engine's BOTs.  I have been amazed that SEO people, who sell SEO don't know the best way to do this.  People who have something to sell, and sell heavily online do know it and don't talk about it or share it.  Why?  If you knew the winning lottery ticket numbers, would you share it?

Not much has changed since I originally wrote about this 10 months ago: Search Engine Optimization (SEO)

You now have the answer - you only lack the questions and the why.


Wednesday, June 12, 2013

Where Gold is Going and Why is this "Up or Down" So Different.

Everyone needs to do a little research on some basic economic principles because our next economy is going to be very unique - unique in that what could occur will be unique, not only to my life, but in modern history.

What defines today's economic environment:
Low Interest Rates (3.25% Prime)
Low Inflation (1.72% annualized in April 2013)
High Corporate / Business Profit
High National Unemployment (7.6%)
Ridiculously High (and still growing) National Debt 

What I think the future brings us in the next 10 years.
Higher Interest Rates (duh). Yea, yea, but try to remember the 80s where good mortgage rates were 13% - 16% (think about what that would do to your monthly mortgage payment).  Prime rates exceeded 20% (21.5% on December 19, 1980).  So what will cause rates to go up?  Demand for capital and inflation.

Higher Inflation.  No one likes to talk about this one much but there is definitely the buzz  of borrow today (or yesterday) and pay back at and with tomorrow's dollars.  Can our government (the controllers of our M1) do anything else?  With a 100% inflation over a 10 year period (this is not a lot nor hyper) paying back the national debt will be only half as costly.  Think about that... and then consider that inflation could be as high as 250% in the next 10 years.  Back in 1980 inflation went as high at 14.7%; 1980 was a very interesting year.!  It takes only 7.2% inflation to double the cost of living in 10 years (rule of 72).  In a time of record corporate profits and stagnate wages, we can expect our wages to increase because of new and higher demand for labor and profit potential from that labor.

Corporate profits will, likely change hands and most likely drop from their current levels - but not much.  What does this mean?  Stocks are not necessarily the best investment.  Corporate balance sheets will also change from very high cash positions to lower, more normal, positions.

Unemployment can only go one direction and that is down.  This drop in unemployment will be a part of the fuel to drive inflation (again, remember the 80s and Reagen's 84 classic speech repeating what he said in 1980, "are you better off now or then you were 4 years ago".  In addition, there is a "feel good" to big raises even if they are only to keep up with inflation.

National debt is, like said above. The government will address this with tomorrow's less valuable dollar rather than today's more expensive dollar.

The title of this article is "Where Gold is Going and Why is this "Up or Down" So Different".  So where do you think it will be in 10 years?  A better question to ask is why (based on the information above) is the price dropping over the last several months.  My prediction: $8K to $10K per ounce before 2020.  Hmmm, consider contra-investing.! and ask why some pros are buying.


Personal Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 30 days. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it.