Entrepreneurship & External Factors
To an outsider, Entrepreneurship looks impressive.
You work for yourself; you don’t have to apply for leaves, you can hire or fire people as per your wishes & what not.
But, does it really work that way? What about the risks?
Look, this world is a fair place. The more risks you take the more returns (or loss) you can expect. Being an entrepreneur means constantly living in the world of risk (or fear).
The fear of losing your clients.
The fear of losing your best employee.
The fear of Google/Facebook/Twitter changing their algorithms.
The fear of something you may not have thought in the wildest of your dreams (like Covid-19 pandemic)
The fear of government changing its rules.
The fear of tax notices.
The list goes on…….
There’re layers of external factors on which a small business or entrepreneur depends. To succeed, you not only need an excellent product or service but also a bit of luck.
Imagine you’re an Amazon seller & suddenly Amazon change their FBA policies. Out of nowhere, you can either get lucky or suffer loss overnight.
To make the matter worse, there’re new external factors like new marketplaces, brokers, aggregators, tech platforms appearing every other day.
Everybody around talks about the positive impact of tech on businesses. However, rarely does someone question the dependability of businesses on tech & the platforms associated with it.
Sure, tech brings convenience. But, what about the risks? Is your mind at peace when the “tech” part of your business depends on a number of layers or platforms?
Imagine, you’ve an internet business (let’s say a pure eCommerce store) & are shipping around 100 orders a day. This is your only business that makes your family & kids run.
Now, as per the established norms, 100 orders may look like impressive.
But, let’s look at the dark side.
How do you get those 100 orders a day? May be SEO, paid ads, social media marketing, or email marketing, influencers? Right?
So, your 100 orders per day are dependent on the following external factors:
- SEO = Google & Bing
- Paid ads = Zuckerberg (sorry, I mean Facebook) & Adwords (sorry, I mean Google)
- Social Media Marketing = Facebook, Twitter & Pinterest
- Email Marketing = Email marketing softwares like Aweber & email inbox apps like Gmail (again Google)
- Influencers = Instagram (owned by Facebook)
What if any of these tech giants change their rules? What will happen to your store then?
In fact, history says these tech platforms have wiped businesses by their “well-thought” “algorithmic” decisions.
Source 3: https://www.roirevolution.com/blog/2018/01/facebook-algorithm-update-retail/
That’s the fear 99% of internet-dependent small businesses live with. I don’t have stats to prove this, though.
Note, I just spoke about the sales aspect of a pure eCommerce store. There’re even more tech platforms you depend on when you take the operations part into account. Like Shopify or WooCommerce for processing orders, PayPal, or Stripe for processing payments, QuickBooks for invoicing, etc. Makes sense?
On the other hand, what if I change the scenario & assume you’ve a brick-and-mortar retail store along with an eCommerce one. Will this change anything?
Yes, dramatically.
Even if you’ve a footfall of only 20 customers a day, you still will enjoy the following benefits:
- Better customers (from conversion point-of-view)
- Assured return per day
- Revenue & profit predictability
Peace of mind? Yes of course, unless you’ve a Covid-19 like lockdown. You don’t have to depend on a layer of tech platforms who can change the rules of the game anytime.
And, is that the reason why even Amazon is looking to get into offline retail? May be. As per a stat, Amazon gets 10% of its sales from internet influencers.
So, is this article going the offline vs online way? No.
All I want to discuss is the fear with which most entrepreneurs are living with these days.
A better approach: Omni-Channel. Never ever depend solely on an online channel.
There’re exceptions though.
A number of pure-play internet businesses have gone on to build a loyal fan base who like to buy from them again, again & again. They’ve ninja products or have been blessed with VC funding.
Example: Send Owl, a SaaS company focused on helping entrepreneurs sell digital products, has grown leaps & bounds solely because they offer an excellent product (I’m a fan). They’ve taken a single penny from VCs & are 100% bootstrapped.
But here I’m arguing the case for small business owners like you & me.
I also happen to the victim of these tech platforms. My first online venture back in 2016, an eCommerce store, went bankrupt in less than a year. I was 100% dependent on Facebook Ads to get customers. It was more of a “spray-and-pray” approach. Spray ads & pray Facebook algorithm to give me a few orders.
Yes, I learnt the lesson the hard way.
Now, I run a pure offline business (a Niche store) plus a pure online business (Bizain).
Life’s good now. I know I’ve a backup if something goes wrong with my brick-and-mortar business and vice-versa.
So, what if you’re anyway hell bent to run a business that heavily dependent on tech giants?
Here’s what you can do?
- Make your product or service remarkable, extra ordinary & out-of-this-world kind.
- Have patience & build a fan base. Communicate with your fans & nurture them regularly.
- Don’t expect instant gratification. Invest for the “long-term”.
- Run a winning referral program.
- Conduct events, seminars & webinars.
- Help as many prospects as you can.
- Get in the good books of the government regulators.
Napster
Once upon a time, in early 2000 era, Napster was a platform where music lovers could upload & download music for FREE. Easy to guess, Napster got instant fame & changed the way people consumed music. It was revolutionary at that time.
But, Napster, did a huge mistake of ignoring an external factor that could shut down their business i.e legality. Yes, all music there was illegal. They hadn’t taken any permission from any of the record owners. Hence, the inevitable happened. The record owners sued Napster & won the case. Yes, Napster saw sudden death, so.
Apple, on the other hand, hatched the egg laid by Napster. Soon after Napster death, Apple came with its own cloud music service called iTunes (legal) & they rest as we say is history.
Paytm
Launched in 2010, Paytm is one of the largest digital wallet companies in India.
On November 8, 2016, India demonetized its biggest currency denominations namely Rs. 500 & Rs. 1000 notes. And, Paytm was the biggest beneficiary. Since people didn’t have enough cash money, they switched (desperately though) towards digital money.
Fast forward, a year, Paytm went from 125 million users to a whopping 280 million users.
Yes, the external factor (government ruling) worked in favor of Paytm.
Little Things
On 11thJanuary, 2018 Facebook announced its most famous algorithm update that gave preference to posts from friends & family over brands (in the news feed).
As a result, Little Things (launched in 2014) a digital publisher covering inspiring women stories, lost 75% of its traffic/visitors. They made a mistake of completely depending on an external factor to get their website visitors.
Imagine you sweat hard for 4 years to build a fan following on Facebook. Those likes, share & views. And, then suddenly, one fine day Facebook says that they changed their rules. It hurts, I know.
Yes, you guessed it right, Little Things couldn’t continue its operations the normal way & eventually had to shut down.
So, what about your business? Does it depend on an external factor? What’re you planning to do about it? Share your opinion by emailing me at vishal@bizain.com
Cheers,
Vishal Gupta
PS: I’m halfway through a marketing book called “Talk Triggers”. So far so good. It talks about building your business via word-of-mouth marketing. Loving it & would highly recommend you go & give it a read. Alternatively, you can wait for my next post (for paying subscribers) where I’ll be sharing the key ideas highlighted in this book.