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Downsizing Pride

Downsizing Pride

January 4, 2010
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" webmasters and site owners are conditioned to blurt out 'everything is going really well' "

Ask anyone running a company and you are likely to hear that they are experiencing amazing success in all facets of their business. Most webmasters and site owners are conditioned to blurt out 'everything is going really well' with the same level of enthusiasm as the former Iraqi press secretary. Never letting your competition know that you are sweating may be wise for some reasons, but it also makes it very difficult for companies to share helpful information with each other during a downward spiral.

One of the great strengths of the webmaster community during prosperity was a shared willingness to pass along useful information to others, even among competitors. However, in tough times with so few willing to admit that they are struggling, each site owner is left to rely on their own wits with much less shared information to rely upon. When one company saves thousands of dollars with a new tool or business practice, that information usually is not available to others — not because the owner wants to keep it a secret but because the owner does not want to give the impression that they need to find ways to save money or are having trouble paying their bills. With all of that in mind, if you 'have a friend' who is looking for ways to tighten their belt, this article should make downsizing easier and more effective.

In compiling the important steps outlined in this article, I spoke with several site owners ranging from single paysite webmasters to huge companies with undeniably ubiquitous brand names. In almost every instance they had a lot to say but wanted their identities left out of the article, only one very notable exception agreed to be quoted on the record. The one well-known webmaster willing to be identified for this article is the owner of VideosZ.com

"I really think the biggest thing right now is that many owners simply need to cut back on their pride, that is often the single biggest expense that their business has," Clement of VideoZ.com, said. "At first it means living a lifestyle that fits within the realistic amount of money a company can afford to pay its owner, but really it goes way beyond that. I often see people in this industry acting as if a task is too small for them or 'beneath them' in some way. I have worked every day at building and evolving VideosZ and I am still the first point of contact for affiliates. When an affiliate with only a few sales a month contacts VideosZ, I am the guy they speak with; when a video editor or writer or coder has questions about the work they are doing they contact me directly."

"Thinking 'this guy wanting to talk to me is not big enough and I am too important for that' is the fastest way to go out of business in my opinion," Clement added. "Many of the biggest earners for my company are people I spoke to and treated well while they were starting out or handling small tasks for my company. There is no substitute for really believing no task and no person is too small for your personal attention. As soon as you allow yourself to think you are a big shot, your days being a big shot are soon to be over."

The other owners I spoke with offered a variety of suggestions and opinions, which I have consolidated into the following checklist. These are simple steps that should strongly be considered by every business owner. Recognizing that many site owners have only been in business during good times, these things may seem obvious at first but often if you really sit down and think about your own company with these keys in mind you will find many ways to cut your costs without cutting your profits.

Identify The Fat
The first key to trimming fat from your operations is identifying it. Every business is different and while pressure may cause some to panic or act in haste, nothing will save you more money in the long run than a careful, unbiased analysis of what is making you money and what is costing you money. It is common for business owners to recall the glory days and to hang on to things that used to make them money with unrealistic expectations that the past will repeat itself. Set aside some time and examine your websites, expenses, employees and opportunities as if you were an outsider looking at your business with fresh eyes. The things that made you thousands a month and only cost hundreds a month in 2002 may not be what they once were and each needs to be evaluated based on current costs and income instead.

Regain Your Focus
Most companies only do a very few things well. When times are good, companies often test new ideas and products in the hope of expanding their revenue streams. During an economic downturn it's important to focus on the core business that has allowed you to branch out into other areas. Often a flailing business is be better served by focusing on the health of the tree trunk rather than trying to grow new branches. If you are a content guy, make sure you are getting the full benefit of those skills. If you are a writer, a coder, or a marketing expert, be sure your company isn't wasting your talents by having you do too many things outside your zone of expertise.

Stabilize Morale
Even strong and healthy businesses can quickly be toppled by employees who believe they are about to be fired, rumors about problems and unjustified fears. When one engine on a passenger jet malfunctions, the Captain needs to address the mechanical problems, but equally important is the task of keeping the passengers calm and the flight crew working on the tasks at hand. If you plan to lay off employees or stop using vendors don't let those decisions linger, the employees and vendors you do intend to keep can focus on getting work done and be far more productive if they aren't in constant fear they are about to be let go. Hesitation and uncertainty is contagious, if you lack a clear course of action the instability is often much worse for your company than any of the potential decisions you would have made along the way.

Optimize and Outsource
Once you have a grasp on what is not earning you money, a clear focus on what is earning you money and a stable motivated workforce, your company is ready to start tightening its belt. How tight is tight enough and how tight is so tight that it will cut off the financial blood supply to your legs? The best way to bring down costs without risking damage to your business is through optimization rather than outright elimination.

Examine the daily tasks needed to operate effectively and decide which are essential, which are important and which are mundane. Essential tasks are always best kept in-house and important tasks are usually too expensive to outsource. However, mundane tasks can often be optimized or outsourced in ways that cost very little and reduce financial drag. For example, how many hours per week are spent on shipping and handling of affiliate payouts? Outsourcing the mundane tasks of 'check-cutting and shipping' to a company like WebmasterChecks.com can save many hours of time for your company. That does not mean you should be firing your bookkeeper, it means your bookkeeper can put their time to better use on tasks like optimizing budgets, creating useful forecasting reports and other things that actually improve your bottom line rather than wasting that same amount of time on mundane tasks which can be automated or outsourced effectively.

Your employees and vendors often know where waste exists, and they will tell you if you ask them the right way. For example, telling your video editor you want to save money and avoid terminating them is a great way to get your editor to tell you a long list of ways your video can maintain all of its quality while being generated more efficiently. Recycle, Reuse and Reduce Waste is the enemy. That goes for waste in all its forms. Are you buying office supplies rather than reusing them? Do you have a stockroom full of items that will take you months or years to put into actual use? Each time you pay for something you should be thinking about ways to use it more than once. Whether you find a way to buy one hundred dollars a week less in office supplies or a way to create an entire in-house traffic network from content and technology you already own, anything that you already own is free and any additional amount it earns is pure profit.

Some owners will badly misunderstand the advice acquired for this article. They will terminate valuable employees, stop buying things that actually earn more than they cost or simply keep doing what helped them earn money five years ago whether it is continuing to work for them currently or not. However, the owners who take the time to look closely at their company to find ways to downsize their expenses without reducing their income are the ones who will continue to prosper. As Clement pointed out perfectly, for many people the difference between success and failure will be their own inflated sense of pride.


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