The Costs of “Free” Social Media to SMBs

Summary: About one-third of SMBs are spending an average of $845 per month to manage their social media messages, according to new research from cloud marketing company Vocus.

Heather Clancy

By for Small Business Matters | September 25, 2012 — 22:55 GMT (15:55 PDT)

Social media marketing is referenced often as an especially cost-effective tool for small businesses.

Even so, 36 percent of small and midsize businesses (SMBs) spend an average of $845 per month on tools or cloud services for managing their social media accounts, according to a new survey sponsored by Vocus.

Another 32 percent of those surveyed on behalf of Vocus said they spend $1,000 or more on social media management, while 22 percent are outsourcing these functions to someone else (the amount of that investment wasn’t given in the materials I reviewed for this post).

The average number of tools used by the SMBs to deal with social media accounts is three, while social media activities represent about 25 percent of the respondents’ overall marketing mix, the data show.

The research conducted by Duct Tape Marketing has an error ratio of +/- 4.9 percent.

“What I’ve been noticing more and more is there’s finally this acceptance that social media not only isn’t going away, it’s an essential element of the marketing mix and the real challenge now is to figure out how to integrate it into the total online and offline marketing presence,” said John Jantsch, marketing consultant and creator of Duct Tape Marketing.

Here are some other findings of the research:

- 76 percent of the respondents use referral traffic to their Web site or e-commerce platform as the primary means of measuring social media’s effectiveness

- 87 percent believe social media has been “somewhat helpful” or “helped a great deal”

- 40 percent are focusing on a small but highly engaged audience

- For 91 percent of the respondents, the most common use of social media is information sharing

Personally, $845 per month seems like a lot to spend for an especially small business or sole proprietor. But if you consider where else that money might go — newspaper advertisements, flyers and such — as well as the high potential impact of social media engagement, the investment makes more sense.

Reasons Why Many Small and Medium-Sized Businesses Fail to Survive

SMB Small business failure trendIt’s a known fact that small and medium sized business failures have continued to increase over the past three years. Some businesses are failing in the first three to five years. It can’t just be bad luck that causes so many companies to lose ground permanently. Below are some of the biggest reasons small and medium businesses don’t survive.


Poor Planning

To have a successful business, planning and innovation is required. The amount of pre-planning that must be done before a business starts up can be exhausting but necessary. A good business ownerwill have a good methodical and systematic approach to ensure business goals are implemented and met. Smaller companies often fail at this step. They tend to start right off without a future plan and end up far from where they expected.

Avoid Technology

Technology can enhance a business in so many ways. Small and medium sized businesses can take advantage of automated accounting, internet, e-purchasing and sending e-catalogs to their current and potential customers. When a business fails to see how important technology is in their day to day business, they won’t be able to keep up with the market demands or business goals. Businesses that don’t take advantage of things such as SEOand PPC won’t be able to stay up to date with their competition. This can lead to little or no sales.

Lack of Funds

Many small and medium sized businesses underestimate the funds they need to help the business survive. Unrealistic expectations can add to the risk of bankruptcy. All businesses need to have a very good idea of how much funding is needed for starting up a business and staying in business. Business owners have to be prepared to make an investment into the business for years before it can make good profits.
Quality
Many businesses fail because they neglect quality. Providing quality can cost the business more up front, but it will produce better results in the long run. When businesses neglect having quality, they usually experience a downfall. Doing things below quality can significantly affect your customers. Customer service is always critical for a business to survive. If customers are not given the proper attention, if they are not treated with professionalism and respect, it can be the downfall of your business. Customers who receive good customer service can be the ones who stabilize your business.
Product Range 
When businesses offer a wide variety of products, they have more chances for success. Businesses have to consistently be proactive when it comes to modifying, endorsing or even eliminating products. When a business isn’t open to new ideas, or when they are not flexible with their products, they may not be able to keep up with their competition which can lead to failure. When a customer changes what they need, the business must be ready to change the product.
Small and medium sized businesses can do well when their owners have a good bit of knowledge about systems, processes and technology. It also benefits a business owner to be skills-associated with production, distribution, cash flow and employees. Following certain practices and rules can help small and medium businesses survive.
Max Boddicker writes about business, economics & more at www.homeequityloan.net.

Funding Tips for SMBs

Tips for Funding Medium-Sized Businesses in Today’s Environment

When running a business, one of the biggest problems many have right now, is obtaining funding. In the past, money has been much easier to borrow, but with current economic conditions, easy funding is gone. Businesses borrow money for any number of reasons including to hire employees or open up new locations. In reality, a lot of businesses of any size falter because of the lack of adequate funding. Here, are 5 tips for obtaining funding for medium-sized businesses in today’s environment.

Venture Capital
When running a medium sized business, one needs to determine how much they are willing to give up in regards to control. Venture capital money is usually obtained for higher risk, higher reward companies. This is an excellent way to get a serious amount of money to take a business to the next level. The downside with venture capital is; they end up owning a portion of the business. Oftentimes, they even want to control aspects of the day to day operations. Venture capital money can be used to start up a company, or to expand operations or ideas.

Traditional Banks
By the time a business is medium-sized, they will no doubt, have a banking relationship. Even though, receiving funding is difficult, an established business can still get money. Banks are exceedingly strict when giving out loans, so be prepared to have financial statements on hand. A business that over the long term has made money will have no problem qualifying for a loan. Establishing a banking relationship with a local bank is a terrific idea for a business owner.

SBA-Guaranteed Loan

Image representing U.S. Small Business Adminis...

Image via CrunchBase

If a bank will not loan money, there are other options. One is through the SBA guaranteed loan program. There are SBA district offices all over the country where one can fill out a loan application. The people at the SBA will be able to assist one in filling out the application. Many medium sized businesses can get more consideration if they are hiring new workers or in a certain industry. The small business association can help one qualify for the maximum amount of money.

Angel Investor
If a business is viable and profitable, an angel investor may be able to assist. Like borrowing from a bank, one needs a solid plan for what they plan to do with the money. One would need to have financial statements and proof of profits to have a serious chance of receiving funding. Angel investors are different from venture capitalists in that an angel investor does not seek to run the operations of a company.

Sell Stock
A company that is seeking funding, can also sell a portion of their company. This is a way to gain funding, while still controlling the company. This is a way a business can get a large amount of money, to really fund operations needed for growth. Stock can even be sold to employees who are confident in the companies operations.

Anyone looking to obtain funding for their business needs to be prepared. Financial statements and a serious business plan are needed. This is because anyone giving out a loan wants to be sure they are dealing with a legitimate business. When obtaining funding, a business has an excellent opportunity to take expand exponentially.

Skylar Rickman writes about business, finance & more at www.creditreport.org.

Central Bank Pursuing an Active Role to Address Democracy’s Shortcomings?

Jeff Madrick

Roosevelt Institute Senior Fellow; author, ‘Age of Greed’

Central Banks are Saving Democracy From Itself

The Federal Reserve‘s recent announcement of aggressive new policies is more than a little welcome. It involved a new round of quantitative easing focused on mortgage-backed securities, but more importantly, a statement that the Fed would keep rates low for a long time, even if the unemployment rate begins to fall markedly. In other words, the Fed will be more tolerant of rising inflation. A couple of points are clear and have been widely discussed:

First, more inflation is what this economy needs. It will reduce “real” interest rates down the road. It will also reduce the level of debt, which will now be paid off in somewhat inflated dollars. Lenders will pay the price; borrowers will benefit.

Second, the Fed is at last accepting its dual mandate, which is not only to keep inflation in check but also to keep unemployment in check as well. Inflation got almost all the focus since Paul Volcker‘s reign in the early 1980s.

Third, inflation targeting as almost the sole purpose of any government policy is now either not applicable to current circumstances or never really was the answer to our prayers. The main claimant on the uses of either hard or soft inflation targeting was none other than Ben Bernanke himself. He was the champion of the Great Moderation, which held that less GDP volatility and low inflation were admirable ends in themselves — proof of a nearly perfectly managed economy.

Never mind that growth in the late 1990s was supported by high-tech speculation in the stock market, or that growth in the early 2000s was supported by a housing bubble and crazy, risky practices on Wall Street. And forget that job growth was the worst of the postwar period under George W. Bush, even before the 2008 recession, and wages had been performing poorly for 30 years. It was all really great, said Bernanke, and only a few mainstream economists disagreed.

But there is another point that needs emphasis and is being passed over. This one is about democracy. Bernanke is acting aggressively because the American Congress and president are locked in an austerity embrace. Fiscal stimulus is now turning into de-stimulus. Even the president’s budget calls for fiscal restraint. The deficit bugaboo is strangling the world.

Those who want to make the Fed more subject to democratic control — and to a degree, I am sympathetic — should heed a lesson here. Democracy — that is, a democratically elected Congress and president — is choosing a damaging course of austerity. In Europe, it is far worse.

Needed policies are coming from America’s central bank, which was deliberately created as an independent entity. Note that it is Romney who is saying he wants Bernanke out of there and crying wolf about inflation. Bernanke, not subject to the whims of democracy, has had the courage to change his own thinking. He knows the consequences of tight policy now.

So what do we do? We should be a little modest about the universal benefits of democracy. For example, I think democracy may yet work to end the severest levels of austerity in Europe. People are mad. Governments are changing for the better. Democracy in America is the only answer to an ever-richer and more powerful oligarchic class in the U.S., which wants to lower taxes, limit regulations, and cut government into ever smaller pieces.

But we must also deal with the disturbing fact that one of the least democratic of our institutions, the Fed, is the only one saving the day now. The same is true in Europe, where the European Central Bank is now acting intelligently, in contrast to the fiscal hawks dominated by the German policymakers and apparently supported by a majority of the German people. This issue is not simple.

Cross-posted from Rediscovering Government.

FTIL 12 – Buying Your Own Island (Part 2 of 3 part series)

This is a follow-up to FTIL #7 published back in April. The McCaws of cell phone fame (Craig McCaw founded McCaw Cellular and Clearwire) have listed the family’s 780-acre private island also known to the locals as James Island off the coast of Vancouver, BC for a mere… drumroll please, 75MM. The island among other things, used to host a former WWII-era dynamite plant and at one point had population of 800+. For the hefty price tag, amenities are aplenty…

  • Four-bedroom, 5K sq. ft. main residence
  • Six guest cottages
  • Gym, store, staff accommodations
  • Airstrip
  • And most importantly… Jack Nicklaus-designed golf course

The family explained their motivation for the sale – “they have the perfect storm of kids’ activities and no one wants to be left behind.” Huh? Anyway, does anyone have spare $75MM to make the purchase? Especially given the current economic conditions, there’s room to negotiate… Happy hunting!

James Island

Central Banks of the World Flying By the Seat of Their Pants

Mohamed A. El-Erian

CEO and co-CIO, PIMCO

Central Banks’ “Responsible Irresponsibility”?

Many monetary policy purists will not recognize what central banks in Europe and the United States are up to these days. And those that do are likely to express outrage at how far these traditional guardians of monetary stability have ventured into unfamiliar territory — a situation they undoubtedly regard as inadvisable, if not dangerous.

Such reactions are understandable. Yet confusion and outrage are not the right responses for the rest of us. Whether you are a government, an investor or a concerned citizen — and whether you live in the west or in an emerging economy such as Brazil — it is important to understand why both the European Central Bank and the US Federal Reserve are so far adrift from conventional central banking; and what this means for the global economy as a whole, and for individual countries.

Like fiscal agencies, central bankers responded aggressively to the calamity of the 2008 global financial crisis. Eager to avoid an economic depression, they slashed interest rates, opened all sorts of emergency financing windows to keep banks alive, and also injected liquidity into the economy through whatever avenue they could think of.

From the very beginning, the intention was for this unusual policy activism to be both temporary and reversible. Indeed, much time and effort were devoted to designing “exit strategies” that allow central banks to return to “normalcy” in an orderly and timely fashion.

Yet there has been no exiting. Instead, central bankers have found themselves drawn deeper — much deeper — into experimental mode.

With ultra-low interest rates proving insufficient to deal with the economic malaise, the Federal Reserve has felt compelled to provide unprecedented “forward policy guidance.” It signaled its strong expectation that rates would remain floored at zero until at least the end of 2014. And by claiming that it could see that far into the future, it essentially challenged the time-tested view that monetary policy acts with “long and variable lags.”

This was not the only unthinkable. The Federal Reserve has aggressively bought US government and mortgage securities. On the other side of the Atlantic ocean, the ECB has acquired trillions of bonds issued by struggling members of the Eurozone; and it has even found a back door to get money to the Greek government in order for it to meet its debt obligations to the ECB.

The numbers are getting very large; especially as both central banks have signaled their intention to do more (including last Thursday’s ECB announcement). Already, the ECB has ballooned its balance sheet to over 30 percent of GDP and the Federal Reserve to 20 percent of GDP. (Note that the Bank of England and the bank of Japan are in the same ballpark).

Through their ever-larger presence in markets, central banks have inevitably influenced liquidity, price signals and information content. In some cases, even the provision of financial services to the public has been impacted (including money market saving instruments, pensions and life insurance).

Imagine if this were attempted by central banks elsewhere. It would be met in the west by cries of irresponsibility. Yet, ironically — and using a formulation adopted by economists such as Paul Krugman and Paul McCulley — central bankers in Europe and the U.S. have felt that it is in fact responsible for them to be irresponsible.

Central bankers will tell you that they have had no choice but to operate increasingly in unfamiliar and unconventional policy territory. After all, despite massive monetary (and fiscal) stimulus, the US economy has remained sluggish and unemployment is still way too high. Meanwhile, Europe continues to struggle with a debt crisis that started in Greece in 2009 and has spread wide and far. Even Germany, the continent’s powerhouse and the country that has undertaken the deepest structural reforms, is now slowing markedly.

Due to political paralysis and polarization, central bankers seem to be the only policymakers both willing and able to respond to these unusual challenges. Yes they are using imperfect tools. Yes the outcomes of their actions involve collateral damage and unintended consequences. But they see all this as preferable to the alternative of doing nothing.

I suspect that central bankers, whether in Europe or the U.S., realize that — acting by themselves — they cannot deliver the much-needed outcomes of growth, jobs and financial stability. Rather than guarantee the destination, they are helping to define the journey. They are building bridges, hoping to buy time for politicians and other policymaking entities to overcome their bickering and dithering.

Time will tell whether this strategy will work. In the meantime, the rest of the world has no choice but to adapt to this “responsible irresponsibility.”

The more western central banks inject liquidity into their economies, the greater the splash for other countries. The result is something that has been experienced by countries such as Brazil: significantly greater exchange rate volatility, disruptive flows of capital, and higher tensions between domestic and external realities.

Brazil and other responsive emerging countries have responded by re-caliberating their macroeconomic policy mix. They have aggressively cut interest rates while tightening fiscal policy; and they are looking to revamp structural reforms.

It is still early days though. Further policy adjustments will be required in the months and years ahead as western central banks implement additional unconventional policies, and as the longer-term effects become more visible. And it will not be easy. Policy responses will be analytically hard to calibrate precisely, especially as all this is happening with virtually no global policy coordination to speak of.

Have no doubt. While most countries would prefer to be just observers, they are in fact reluctant participants in one of the biggest monetary policy experiments of all time. The entire world shares an interest in the success of this unprecedented endeavor — after all Europe and the United States anchor today’s international monetary system and will do so for quite awhile. Yet in hoping for success, we are all well advised to also think of the range of contingency steps to deal with the collateral damage and the unintended consequences.

This article was originally published in Portuguese in Brazil’s Estado de Sao Paulo.

American Industry – Wine and Rust

America the Gutted: What Cleveland and Napa have in common

The loss of manufacturing jobs has left one-time industrial powerhouses on par with California wine country. 
By Solana Pyne.  Reprinted from GlobalPost.
 

NEW YORK — To wrap your mind around just how far America’s once-great manufacturing cities have fallen, consider this:

The industrial-era stalwart of Cleveland, Ohio now has the same percentage of production workers in its labor force as Napa, California’s wine mecca.

And in case you’ve never passed through Cleveland, the change hasn’t come because Ohio suddenly spawned a sunny climate and wine industry.

It’s just another example of the jaw-dropping statistics that underpin the loss of working and middle class jobs in America.

In the 1950s, more than half of the American workforce had jobs in fields like construction, transportation, and manufacturing. Now, just one in five have one of these working class jobs.

Maybe more surprising is how few people still actually make things in the big cities we tend to associate with manufacturing. Production jobs account for around nine percent of the workforce in Toledo, Akron, Cleveland, and Napa, notes Richard Florida, senior editor at The Atlantic.

Florida has compiled the data, and made this map, for his book “The Rise of the Creative Class, Revisited.”

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