Google Buys Motorola Mobility…And So Begins The Dark Ages

By Gene Marks, originally posted on Forbes.com.

Editor’s Note: Gene Marks is a small business management columnist, author, and speaker who also owns and operates The Marks Group PC, a highly successful 10-person firm that provides technology and consulting services to small and medium sized businesses. The Marks Group PC, launched in 2004, has grown to help more than 500 companies and more than 2,000 individuals throughout the country. Gene writes weekly online columns for The New York Times and Forbes, as well as monthly and bi-weekly columns for Bloomberg Business Week and American City Business Journals. Intuit has, on several occasions, contracted Gene to provide marketing-related services.

Last week I finally, finally purchased a Motorola D3 smartphone. I’m loving it! And I’m loving Google!  So you’d think that I’d be loving the news that Google is purchasing Motorola’s cell phone business, right?

I’m not. This is like the beginning of the end of the Roman Empire. And the beginning of technology’s dark ages. At least for many small businesses like mine.

Lots of reasons are given for the acquisition. Most experts believe that it’s motivated by certain patents that Motorola owns which will help Google defend itself against infringement lawsuits brought on by Apple.

ZDNet’s Jason Hiner agrees, but also offers this reason: “…it’s pretty clear that Google also wants to have the option of producing its own hardware devices so that it can build prototypes, concept hardware, and leading edge devices to demonstrate its vision and point its ecosystem partners in the right direction.  With Apple’s continued success in mobile, BlackBerry’s large (albeit fading) market share, HP’s new hardware/software unification with WebOS, and now the Google-Motorola deal, it’s becoming clear that vertical integration is winning in mobile. Going forward, look for the latest, greatest, high-end devices to all be vertically integrated, while many of the low-cost, copy-cat devices will come to the market later and be made by mass market manufacturers like Samsung.”

This is all great for Google. But will this news help my small business? Unfortunately, no. The empire is breaking up. Chaos is approaching. Life, particularly for my business, is about to become more complicated.

Chart 1 (here)

Chart 2 (here)

No one can argue with the above two charts. PC shipments over the past few years have been consistently below the peak levels from the 1990’s. And other devices, like tablets and mobile phones, have taken off. This is the main reason why HP decided last week to get out of the PC business and focus instead on software to power all these gadgets. Workstations and servers are on their way to becoming generic boxes, waiting for the customer to install their operating system and applications of choice.

None of this is good news for small business. Like the people of ancient Rome we complain about our conditions and our leaders. We say we want better choices. But really we just want things that make life easier. And things that work. Inexpensively. Which is the way it used to be.

Because once upon a time there was just one evil empire and it was named Microsoft. Every computer shipped was shipped with Windows. And people complained about them all the time. The company faced anti-monopoly lawsuits from both individuals and governments. We frequently grumbled about Windows: its bugs, the blue screens of death, the bloatedness of it all. Its software was targeted by endless armies of hackers. Of course, these being more civilized times, no on attempted to assassinate its CEO. But pies were thrown. Competing operating systems, like Linux, were more like harassing barbaric tribes.

These were the days of Pax Microsoft. And during those days, technology flourished. Software developers developed software. Lots of it. And primarily for businesses. And business owners like me were more productive. Microsoft’s biggest selling product became Office. And other software vendors created applications for accounting, order entry, inventory management, communications and customer relationship management.

Of course, the Caesars weren’t perfect. And neither was Microsoft. Why? Their Windows software was flawed, annoying, frustrating and an oftentimes faulty platform for which to write software. But, like the bureaucracy of Rome, the system worked. It was stable (for the most part). It was consistent. And, like the Roman Denarius, it was accepted in just about every business in the country.  Microsoft partnered with hardware companies but never owned them. They just wrote software for them. And we could buy software knowing that it was Windows compatible.

But now that’s all changing. Microsoft has slipped, and the Pax Microsoft era is coming apart. The Gauls and the Goths are invading. The world has gone mobile. And the empire is losing the mobile market to Apple and Google.

So now we no longer just have Microsoft Windows. We have Apple’s iOS and Google’s Android operating systems. More choice is good, yes? No. There is no one company writing software that’s runs all of our computers and devices. We now have three companies who have created three different and separate operating systems.

And now we have Google buying Motorola, so that (like Apple) the software and the hardware become as one. Before we know it, if we want an Android we’ll be “encouraged” to purchase a phone or other device manufactured by Google, just like we are now forced to buy iPads and iPhones for Apple software.  How much time until Microsoft admits it can no longer be just a software company and purchases a big PC manufacturer like Dell so that their software can become as one with hardware too?

And then what?  The empire breaks up. The technology world divides itself into three camps. And small business owners, many who do not have the resources to support all these different platforms, will need to make some choices. And live with them. So what will it be: Latin, French or German?

Software vendors will have to develop their products not for just one platform but for three. Most can’t afford to do this. These are not little “apps” for a smartphone. These are business programs which I need to manage my operations. Which means that if I choose, for whatever reason, to standardize my business on Google/Motorola/Android, then I will only be able to choose those applications written for that platform. I would need to replace the software that I already have for software that may be inferior, or lack features that I need to run my company.

And I’ll be limited as to what hardware I can purchase. For now, I can purchase PCs from a variety of different sources because I know they all run Windows and my business applications will be compatible. But in the future will I be forced to only purchase hardware manufactured by Apple because I run Apple applications? And will this hardware have all the features that I need? Will I have a broad choice of local support? Will it be compatible with other devices, like bar-code readers and document scanners that my business may require? Or will I be stuck? Stuck because I was forced to pledge my allegiance to one and only one King.

And what if I want to leave the camp?  The Emperors of Rome didn’t much like those that switched sides. And neither will Apple, Google or Microsoft. Suppose, after a few years, I don’t like the software I’m using to manage my orders process. In today’s world, migration from one software application isn’t easy, but it’s do-able. Most major business software applications are Windows-based and run on similar databases like SQL. So data can be mapped and moved. Will this be the case if I want to move from an Android based order entry system to an Apple or Microsoft based system? Or will, by that time, vendors be so territorial that they will encircle their kingdoms with walls and moats, making data too proprietary to move somewhere else?

And then there’s integration. Because instead of solving the biggest problem that business owners have had since the dawn of technology, the end of Pax Microsoft makes it worse. Even in the world of Windows, most of us have suffered trying to make our accounting systems talk to our service systems and our service and accounting systems talk to our websites. And that’s not to mention our never realized dream of being able to quickly and inexpensively communicate financial information with our customers and vendors too.  Most of us endure with entering the same data two or three times into disparate systems and hoping for the best. But at least these were all Windows-based systems. And as technology matured there was some hope that software developers would create applications that can one day make this integration a reality.

But these same developers are now distracted. They’re writing new apps for the Droid or iPhone. And the dream of having seamlessly integrated systems now seems unlikelier as Apple and Google rise to challenge Microsoft and break up the hardware and software infrastructure into competing camps. Maybe one day my Android-based applications and hardware will all integrate effortlessly. But it feels like we’re starting from scratch.  And even if that does happen, what if I still want to keep that great Windows app for managing salesmen commissions but also want it to share data with my Windows based accounting system?

Some may say that these issues will all be resolved by The Cloud.  But if that’s the case then why does every cloud based provider today have separate applications for mobile devices? Won’t they be forced to ultimately choose sides as well? And what about all those companies who prefer not to have their data delivered through a cloud based application because it doesn’t suit their business model? More choices. More complications.

I’m not saying that life during the Roman Empire was all bliss. And I’m not saying the Microsoft Windows era has been a perfect one for small and medium sized companies. Apple and Google make great products. Did I mention that I love my new D3?  But I know my history. And when the Roman empire became fragmented the world entered a period of chaos and suffering. I’m concerned my company faces the same technology future.

 

Tell Your Customers: Get Rid Of Inventory!

Editor’s Note: Gene Marks is a small business management columnist, author, and speaker who also owns and operates The Marks Group PC, a highly successful 10-person firm that provides technology and consulting services to small and medium sized businesses. The Marks Group PC, launched in 2004, has grown to help more than 500 companies and more than 2,000 individuals throughout the country. Gene writes weekly online columns for The New York Times and Forbes, as well as monthly and bi-weekly columns for Bloomberg Business Week and American City Business Journals. Intuit has, on several occasions, contracted Gene to provide marketing-related services.

“But I need to carry these items,” Sam whined to me one day. “What if a customer called and I didn’t have it in stock?”

Do you have customers who are distributors? Fine, then it’s their business to carry inventory. They’re the middle man. Inventory is their life. They’re being paid to make sure stuff is in stock so the manufacturer doesn’t have to.

But wait, you have customers who are not distributors? They manufacture? They provide services? Then you, as their banker, should say to this them: “What the HELL are you doing with extra inventory in your shop? Shame on you!”

Sam sells and services fire protection systems to restaurants and retail customers. He’s got inventory lying around all over the place. He’s got a warehouse with spare parts stacked up to the ceiling. He’s got a dozen trucks on the road with parts stuck in every crevice. Some of his techs keep materials in their own homes.

This surplus inventory is sucking out the cash. He’s leasing more warehouse space than he needs. He’s incurring utilities and other additional overhead costs. He’s losing production administering and accounting for missing parts. And he’s missing parts. Fifty bucks here, 50 bucks there. Sam’s company tosses out thousands of dollars each year on inventory mismanagement. It costs Sam MORE money just to keep a lot of this inventory then not.

“But,” he tells you, “what if a customer called and he didn’t have it in stock?”

Well, that depends on the customer! Sam wants to make sure he has stuff in-house so that if ANY customer calls he can get a replacement part right out to them. It’s not a great idea. If the customer is a high dollar, high turnover account then carrying inventory especially for them would make sense. But if it’s not, then other arrangements have to be made.

Tell him to dump that inventory. Sell it back to the manufacturer. Scrap it. Set it on fire. Whatever, just reduce it. Re-negotiate your lease for less space. Put a ping pong table in that newly created area so your people can have some fun on their lunch break. Or build a room there and move in your teenage son. There are a lot of great things you can do once you’ve relieved yourself of excess inventory.

It’s your job to help Sam re-think how he is servicing some of his customers. Can most parts be over-nighted from the manufacturer? If it’s going to be less expensive to pay that shipping cost, should he then carry the part in-house? Are the parts truly mission critical? Can they wait a day or two? Will Sam lose a significant amount of business because it takes an extra day to get that part in? Or is he losing more money on that account by keeping the part in stock?

By Gene Marks

Ask And Ye Shall Receive

Editor’s Note: Gene Marks is a small business management columnist, author, and speaker who also owns and operates The Marks Group PC, a highly successful 10-person firm that provides technology and consulting services to small and medium sized businesses. The Marks Group PC, launched in 2004, has grown to help more than 500 companies and more than 2,000 individuals throughout the country. Gene writes weekly online columns for The New York Times and Forbes, as well as monthly and bi-weekly columns for Bloomberg Business Week and American City Business Journals. Intuit has, on several occasions, contracted Gene to provide marketing-related services.

Ask And Ye Shall Receive

As a business owner, I was never one for asking for a lower price…until I found myself getting lower prices by asking.

Your better customers know that the reality of doing business today is this: everyone’s got a price. If someone told me to shed my clothes and go streaking across Lincoln Financial Field on a January Sunday I’d turn up my nose and sniff: “Hmmph, exactly what kind of a sick, depraved animal do you think I am?”

But suppose I was offered a million bucks to do that (and saw the cash)? Depravity…here I come!

So just watch me rationalize. “Welllll,” I’d think aloud. “It’s only for a few minutes, isn’t it? And it’s not like I’d be on national TV, right? And I’d only potentially serve a few months in prison at most. And even my wife agrees that it’s really, REALLY not a big deal at all (if you get my drift).

It may not be the same topic, but this rationalization is shared by most other salespeople when asked to lower their price. The point is….everyone has a price. As a banker and advisor to your customers you should remind them that they should always be pushing for the lowest price possible by asking, asking, asking.

For example, you’re meeting at your customer’s offices and just at that moment he’s in the middle of trying to purchase a bunch of raw materials he needs to process for a big order coming in. He’s complaining to you because his supplier’s price is too high. As his banker, it’s in your best interest that he makes the best deal possible too! So give him some advice. Tell him to ask for a lower price. Because, guess what? The supplier wants the business as much as your customer needs the materials. We all need more business.  Whatever’s being asked is usually just the opening bid. Tell him that chances are the price can come down a bit. Multiply that bit times lots of pounds (or whatever the units are) over a period of time and this adds up.

Another story: My wife (who also happens to be the world’s best negotiator) got two bids to have our living room floors re-done. And of course the higher bid came from the company she liked better. Did she pay it? I think you know the answer. She just said she couldn’t. She needed a lower price. At least something comparable to the other company. She just…asked. And her favored contractor conceded.

Your customer needs to be reminded that he should always be asking for the lower price. Why? Because that’s what his customers are doing to him every day, aren’t they? I find it incredulous, shocking, outrageous and downright insulting when, after clearly stating our hourly fee, a client asks for it to be lowered. How dare they! And of course…I usually lower it. Why? You know why. I want the work. I don’t want my competitor to get the business.  I’d probably throw in a personal car wash to get the business. Don’t look at me that way. You’re no different!

Encourage customers not to be afraid to ask for a discount. No one expects to negotiate a treaty with North Korea or haggle like an experienced merchant in a Turkish bazaar. But not paying top price is what being a profitable business owner is all about. Tell him: Just because you can afford the price doesn’t mean you have to pay the price.

Ask. You will receive.

By Gene Marks

How Much Did Your Customers Lose Today?

Editor’s Note: Gene Marks is a small business management columnist, author, and speaker who also owns and operates The Marks Group PC, a highly successful 10-person firm that provides technology and consulting services to small and medium sized businesses.  The Marks Group PC, launched in 2004, has grown to help more than 500 companies and more than 2,000 individuals throughout the country. Gene writes weekly online columns for The New York Times and Forbes, as well as monthly and bi-weekly columns for Bloomberg Business Week and American City Business Journals. Intuit has, on several occasions, contracted Gene to provide marketing-related services. Here, Gene offers advice to bankers on how to find ways to strengthen their relationships with their small business customers.

 

How Much Did Your Customers Lose Today?

Psst! Want to help your customers make an extra $5,000 – $10,000 next year?

It’s easy. It’s common sense. So naturally I rarely see business owners doing this. But if your customers are in the service, manufacturing or distribution business they could be letting some significant dollars slip away.

Here’s what you can tell them to do:

  • Take out their payroll register from last year (and try not to let them get to upset when they’re reminded how much they’re overpaying some people).  Add up all the hours spent last year by production and service employees.
  • Next, take out last year’s tax returns (and also try not to let them get too upset over how they’re overpaying) and add up all the overhead expenses incurred last year, like utilities, maintenance, office expenses, etc.
  • Now, have them divide the overhead expenses by hours to come up with an overhead rate per hour.

Finally: tell your customer to create a little spreadsheet. Have an admin person in their office find out the materials cost used and the time spent for each job that shipped the day before. This is not a tough assignment as long as the admin person knows how to use a phone. Have that person enter this information plus the selling price and shipping cost on a pre-designed spreadsheet that includes the overhead rate per hour. Let the spreadsheet calculate profit.

Tell your customer to get a copy of that spreadsheet every single day! Every….single….day! And start getting surprised.

Some jobs (or products, or classes, or services, or projects) that they thought were making money didn’t make as much. Other jobs may have been more profitable than they estimated. And many probably came in line with what they expected.

Now your customer can make some adjustments. Yell at some people. Stamp their feet. Throw something at a wall. Go back to their customers and re-quote future orders. Find new customers who would take more profitable jobs.

It’s not perfect. The numbers probably aren’t exact.  But it’s going to be pretty close. And it’s also not a six figure job costing system that some consultants would recommend.

Your customers may find themselves getting reacquainted with their production people and their customers. They may be relieved to get rid of those customers that they always suspected were unprofitable. You may find themselves taking advantage of some vendors that for years were taking advantage of them.

How did I come up with a $5,000-$10,000 savings? I figure if a company bills out half a million or a million a year, and they increase their job profits by just 1%…well there’s your answer.

By Gene Marks