If Cash is King,
Cashflow is The Castle
Very often, I
am confronted with a dilemma. One was surely an event that took place last
week. During midterm exams at the college, in one of my marketing management
classes, I caught a student cheating. This person had copies of class notes
tucked underneath his chair, which he discreetly read from time to time,
particularly when I was not looking his way.
When I caught wind of this,
I silently walked over to his table, grabbed the incriminating evidence and,
without a word, walked away. (I later confronted him about the incident in
private.) Now, we're told as teachers to never take this kind of unethical
activity personally. But I couldn't help. I love my students and take their
welfare very seriously -- and personally.
I offered a scenario to
this gentleman: "If you had to undergo life-threatening, open heart surgery,
would it matter if your doctor cheated his way through medical school?"
(Incidentally, a recent Internet cartoon jokingly referred to the same
matter. A surgeon was about to operate on a patient when he said, "Nurse,
please visit 'surgery.com' to find out what we must do next!")
Seriously though, the
correlation between cheating and Internet marketing is surely that of spam.
In reality, spamming is to cheat one's business out of much more in the long
run. For example, I often -- and often passionately -- teach about the
negative effects of spam. Unquestionably, spam is profitable in the short
term. But like so many other marketers on the Internet these days, spammers
think about cash instead of *cashflow*. Big difference.
Spam will generate sales --
a shrinking minority of people will respond favorably to spam giving a
short, temporary boost to any online business. However, like a drug the
effect usually never lasts and the need to keep spamming will emerge sooner
or later. And similarly, the hangover can often be deadly -- with ISPs
deactivating, flames abounding and authorities looming.
Spam is not the only
culprit. Many have instituted moneymaking processes on their websites that
typically generate either very small quantities of cash or very large
quantities in very short periods of time. By far, it is a better approach to
institute a process in which continuous streams of cash keep flowing.
Similarly, if your
promotional efforts have been to simply generate sales, you are solely and
wrongfully seeking cash instead of cashflow. This is usually accomplished by
advertising only the existence of a business or product, or offering price
reductions and sales promotions. It is better to promote the fact your
business is unique, different or special, and not that it is merely "open."
While cash is king,
cashflow is definitely a better option. So here's a question: What can you
do to infuse an endless stream of cash into your business? While every
single business is different, with individual needs, goals and
processes, here are two key result areas upon which you may want to ponder.
1) Business Model
Does your chosen business
model (in other words, the manner in which your business operates, exchanges
goods and markets itself) stimulate cashflow? Or is it one in which the
products or services you offer cause it to lose value, or to become
saturated in a given market, over time? If the latter is true, then it may
be your while to examine how you can change or improve your business model
to achieve cashflow. Here are some key questions:
Are there any other
businesses with which you can joint venture in order to capitalize on
marketing opportunities, share markets, upsell your current customer base or
grow your offerings (or their perceive value)? Are there strategic marketing
alliances you can form with others in order to enter new markets, tap new
segments or implement new processes on your website?
Can you develop strategic
example, can you develop info-networks, auto-networks or intra-networks so
to grow your marketing reach? Expand your target market? Expedite your
orders? Add value to your offerings? Simplify your customers' experience?
Reduce your costs? Or increase the size of your customers' transactions?
In short, don't stagnate.
Look beyond your business, including direct and indirect competitors as well
as other, non-competing businesses with which you can team. Look at ways you
can generate continuous customers by increasing either the size of their
transactions or the frequency of such. Often, you can accomplish this with
the help of other businesses or products and in ways of which you may never
have thought. Think "outside the box."
As marketeer Corey Rudl
often preaches, automation is the biggest, and often the most
underestimated, opportunity of the Internet. Whether it's to communicate
with your customers on a constant basis, to accept orders (such as by credit
card), or to fulfill and expedite your orders, automation should be an
important aspect into which you should look.
Are you implementing
processes that can help automate your business, its operations and above all
its marketing? Are you constantly thinking of ways through which your orders
can be filled, your customers can be served and your marketing can be
deployed automatically? Can it be placed on auto-pilot?
What I call "auto-pilotizing"
is the process through which you can engineer your business so that it can
operate with as little intervention as possible. For instance, Michael
Gerber, author of the bestseller "The
E-Myth," states that in today's fast-paced, convenience-seeking
culture business success is often inherent in a business' capability of
In Gerber's words, it is to
think of ways you can create multiple copies of your business that are
capable of running by themselves without intervention. It is even to think
of how you can add individual value to your business, making it possible to
separate it from the owner as well as sell it at a later date.
Now, the goal here is
neither franchising your business nor selling it -- at least not
immediately. The concept is to *think* in this manner right now. It is to
think about how you can automate your business today. And the more you think
along those lines, the more value you will add to your business and your
offerings, as well as the more cashflow you will in turn create.
However, here's a caveat.
Keep in mind that the Internet will demand a more humanizing experience -- a
demand that will keep growing over time. One of John Naisbitt's "Megatrends,"
from his book of the same name, is called "high-tech/high-touch." It means
that the more automated we become the more the demand for social interaction
will grow. But the question is, can automation and humanization be combined?
Of course. Technologies exist today for that purpose -- such as CRM
("customer relationship management").
(While the Internet is
still in its infancy, automation and certainly humanization are definitely
younger. Therefore, there may be an opportunity lurking in there somewhere
for you.) Nevertheless, the bottom-line is to think cashflow, not cash. The
more you do, the more prosperous and successful you will become.