Darwin’s theory of the survival of the fittest may appear banal and capitalistic, but it accurately describes the ongoing evolution of the Internet industry.
A giddy financial bubble artificially supported many nonviable (Internet) business models for a while, but first-time (and one-time) entrepreneurs with the least-fit business models failed.
Perhaps if they had read a little more carefully through their business plan, they might have applied the survival skills that can help any business, even during the toughest of times. Here’s a list of the top-six survival skills most needed to survive and succeed.
1. Conduct Market Research
One typically validates the viability of a new business model by
- Consulting with individuals that have related business experience
- Performing market research with individuals that form the target audience for the business (the potential customers)
- Fully implementing the business model and testing it against competition in the real market
One trait shared by many failed and failing dot-com businesses is that they went straight to step three — a very expensive way to test a business model! Furthermore, these same businesses spent hundreds of thousands of dollars designing and performing market research on their brand name and logo and buying expensive reports with market data from research companies. Unfortunately, they had such blind confidence in their business model that they failed to check if there was an actual market for their product or service.
Granted, performing market research takes time and money, but that is a small price to pay for valuable information.
2. Take the Right Risks
An entrepreneur who does not take risks (some of which are inevitably going to be mistakes) is not pushing the envelope far enough. But you have to know what kind of risks to take.
Many businesses are failing today either because they exhausted their financial reserves without having additional funding available or because they didn’t have the ability to achieve positive cash flow before resources were expended. Both of those have proven to be unacceptable risks to take.
The willingness to take risks is part of the equation for success. Successful businesses are those that both know the right risks to take at the right time and learn from past mistakes in order to move forward.
3. Take Advantage of Business Cycles
Another common factor among failed businesses is a lack of appreciation for the cyclic nature of business trends. While I can’t predict exactly when the stock market will again go up, I am confident it will, along with the improvement of business conditions, an increase in venture capital investments, and even the creation of favorable conditions for successful initial public offerings (IPOs) among technology companies. Businesses that recognize this reality and take advantage of an upturn cycle will not just survive but thrive — and surpass their competitors.
It is precisely during weak market conditions that it is easiest to grab market share and grow inexpensively. Investors recognizing this opportunity are willing to buck current trends and strategically invest in the right businesses now, while valuations are low. They will end up being the biggest winners.
Businesses that react defensively and wait for clear signs of economic improvement will most likely be left in the dust by better-prepared competitors.
We find similar lessons observing evolutionary biology. When conditions are good, there is safety in numbers and an adaptive advantage to blending in with the pack. But when conditions become stressful, those who are different and able to use their differences to an adaptive advantage are the ones that will most likely survive.
4. Bigger Does NOT Mean Better
Neither employee headcount nor revenue size is a good measure of success. The large Internet consulting and development companies that didn’t understand how true value is achieved are now crumbling from their lack of perspicacity. They are like a piece of sticky flypaper no one wants to touch. Nothing can save them, not even gobs of money. A bad business plan can suffocate your business.
So if money doesn’t work, what does?
5. Build Online Communities
The most successful brands in the future will be those that strategically and cost-effectively use the Internet to build relationships with large numbers (millions) of individuals.
For example, Tenagra demonstrates — both with the past Year2000.com venture developed in conjunction with Peter de Jager, and with the current Online Advertising Discussion List community — that the Internet is an exceptional tool for building communities around specific topics of interest. Communities can be operated profitably when the medium is utilized appropriately. The larger brick-and-mortar global brands aren’t yet very good at using the Internet to build communities.
The process of building these kinds of relationships takes years — even on the Internet. So the time to start building communities is now.
6. Know When to Hire an Expert
An analogy I often use is that Internet marketing is a lot like photography.
Just because you can buy a disposable camera and shoot decent pictures doesn’t make you a professional photographer. Being a professional photographer requires knowledge of image, composition, perspective, exposure, and light. You wouldn’t hire someone to shoot photographs for your company’s corporate brochure if you knew they’d be using a disposable camera, right?
Well, online marketing is similar. Almost anyone can purchase an inexpensive piece of software that will help create Web pages. But only a marketing professional has the expertise to design and use a Web site to build global brand, create online communities, and effectively market products and services. Knowing how to effectively offer quality customer service requires seasoned skills that must be acquired over time — not bought.
Businesses have one big advantage over organisms in an evolutionary scenario — they can both learn from experience and acquire new traits over time. However, businesses that learn from the experiences of these difficult months and adopt the necessary survival skills have a much better chance of increasing their fitness and ending up survivors of this dot-com downturn.
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