Small Business Wake Up Call? Odds are Better in Las Vegas!
October 4, 2007
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I have been thinking a lot lately about business metrics and how we entrepreneurs measure business success. I have been writing online since 1998 and generally consider myself to be relatively successful online. In the last month or so I have started to look at all my activities more objectively. Specifically, I have been asking myself:
“What has been the Return-on-Investment (ROI) of all my marketing and sales activities?”
What I did not expect was that my mind set toward this topic needed a reboot, system re-install, and attitude adjustment.
Addicted to (Mostly) Meaningless Statistics
I discovered that the interactive nature of blogs and the plethora of online social media tools had lured me into the online ‘conversation(s)’ and slowly began to measure my success by simply being involved in the ‘conversation’.
This started a dangerous tendency toward counting blog comments, subscribers, and visitors i.e. (mostly meaningless) blog and web site statistics as an success indicator.
Subsequently, I have decided that I need to apply more practical and meaningful business success metrics. For example, I am thinking about tracking new customers, serious sales leads, or new revenue as meaningful business success metrics.
Online Businesses Need to Use More Stringent Business Success Metrics
I feel a bit sheepish admitting to my lapse of applying more practical, stringent, and revenue generating metrics (i.e. statistics) to monitor the effectiveness of my marketing and sales activities. Then I remembered this post titled It’s Time to Stop Surviving and Start Thriving, an except:
The Greatest Risk of Business Failure Lies Between Years Two to Four… there is more risk to the owner of a business between the years of two to four than a startup… 38% of those who made it past the second year, closed by the end of the fourth year… we cannot ignore the reality that after six years 62% of the businesses that started six years earlier ceased to exist.
The Odds are Better in Las Vegas
A 38% chance of succeeding in business past the sixth year is not that great. In some cases entrepreneurs would be better off taking their chances in Las Vegas. In his book, Jump Start Your Business Brain, Doug Hall shares the probability of winning a game in Vegas:
- Slots: 32%
- Horse Racing 41%
- Blackjack (as usually player) 45%
- Roulette 47%
- Blackjack (perfect strategy and card counting) 50%
He goes onto to say that 68% of the people who gamble play the slots, which have the lowest probability of winning. Doh! Via It’s Time to Stop Surviving and Start Thriving
Didn’t Realize I was such a Gambler
If horse racing, blackjack, and roulette yield better odds than starting and owning a business for six years, I think it is time we entrepreneurs wake up and get real. Start measuring all marketing and sales activities using better measurements:
- Ratio of Dollars Generated compared to amount invested.
- Value of time invested in versus the profit created.
- Number of new customers by type of marketing and sales activity.
I am sure there are other measures and key performance indicators, but this would be a good place to start. In my case, I discovered that my best ROI was generated by:
- E-Mail Newsletter, which I mistakingly discontinued a few years back.
- Podcast, again something I stopped doing.
- Referrals, fortunately, my clients still love me and referrals are priceless.
I gave myself a kick in the ass and am in the midst make small incremental changes to restore those previously successful and profitable strategies. Here is my question for you:
“What are you doing to correct your falsely held belief, assumptions, and flawed tactics that are not generating profitable, measurable results?”
Comments
3 Responses to “Small Business Wake Up Call? Odds are Better in Las Vegas!”
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Greg, this is great stuff. Blogging, I think, has a way of stealing your watch and then telling you what time it is. People get “blog monetization” confused with the more hardcore necessities of running an actual business. Blogging for bloggers is like meetings for businesspeople: they think the meeting is “doing something.”
You have inspired me to rethink a little what kinds of blogging strategies a business might pursue that offer a correctly balanced return for the effort.
Michael, this is what I have been wanting to talk to you about.
I have an idea to create a hybrid book that would blend practical internet marketing with a light version of business planning and a healthy, focused dash of blogging to round it out.
Interested?
I am impressed by your article on business metrics and you make a lot of sense.
There are a lot of online activities we are forced to engage in that don’t impact the ROI and you have cleverly addressed them. Your article is insightful, useful and I heartily recommend it.