F-Commerce a hit for small retailers

From: http://usatoday30.usatoday.com/money/business/story/2012/09/24/facebook-commerce-a-hit-for-small-retailers/57838070/1

Facebook commerce a hit for small retailers

by Oliver St. John, USA TODAY

Updated 9/24/2012 8:07 PM

Facebook is becoming prime real estate for small retailers rather than the mega-mall that the big chains had hoped it would be.

Second-quarter profits from Facebook stores were up 38% from the first quarter for the 180,000 small to midsize retailers, and have been going strong ever since, says e-commerce company Ecwid. Based on Facebook's monthly active users stats, Ecwid makes the most widely used Facebook store-building software to work across social-media platforms and websites.

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Businesses that sell on Facebook using Ecwid's app as well as on their own websites make 22% of their sales on Facebook, says Ecwid. Social-commerce gurus say small retailers have the edge over big names, because they behave more like friends on Facebook.

"This is where small business can really hit it out of the park," says Paul Chaney, author of The F-Commerce Handbook. "I connect with the guy or lady who runs the business, and that's the person who's posting."

Facebook commerce can be great for businesses such as the Apricot Lane franchise Jena Green runs with her mother, Renee Dixon, in Peoria, Ill. The boutique makes up to half of its overall sales of women's clothing, shoes and accessories on Facebook, says Green. She engages the more than 19,000 customers who have "Liked" her store by posting pictures of new arrivals, promotions and answers to customer inquiries throughout the day.

She says customers favor Facebook shopping because they're already checking the page for pictures of the new items anyway. If they see something they want, "It's just easier for them to click 'shop,'" Green says.

Many large retailers have not been able to break into Facebook commerce like Green and Dixon did. Nordstrom offered a few items for sale on its Facebook page for a limited time as part of a test last year, but "the customer didn't seem to respond," says spokesman Colin Johnson. J.C. Penney, GameStop, Banana Republic, The Gap and Old Navy all closed their Facebook storefronts, Bloomberg reported. But J.C. Penney hasn't given up on Facebook. "Our first attempt may not have been the right approach, but we're continuing to explore new ways to turn our 2.7 million followers into repeat customers," says J.C. Penney spokeswoman Daphne Avila.

Just don't put all your eggs in one online shopping basket, warns Skip Shean, CEO of 16wells, an online marketing consultant. Facebook is notorious for springing drastic changes on users unannounced. "It's a bad idea to rely on a platform you don't have any control over," he says. "You need a plan B."

Top 10 Reasons Small Businesses Fail

From: http://finance.yahoo.com/news/Top-10-Reasons-Small-nytimes-3522435825.html?x=0

JAY GOLTZ, On Wednesday January 5, 2011, 2:05 pm EST

 

One of the least understood aspects of entrepreneurship is why small businesses fail, and there's a simple reason for the confusion: Most of the evidence comes from the entrepreneurs themselves.

I have had a close-up view of numerous business failures -- including a few start-ups of my own. And from my observation, the reasons for failure cited by the owners are frequently off-point, which kind of makes sense when you think about it. If the owners really knew what they were doing wrong, they might have been able to fix the problem. Often, it's simply a matter of denial or of not knowing what you don't know.

In many cases, the customers -- or, I should say, ex-customers -- have a better understanding than the owners of what wasn't working. The usual suspects that the owners tend to blame are the bank, the government, or the idiot partner. Rarely does the owner's finger point at the owner. Of course, there are cases where something out of the owner's control has gone terribly wrong, but I have found those instances to be in the minority. What follows -- based on my own experiences and observations -- are my top 10 reasons small businesses fail. The list is not pretty, it is not simple, and it does not contain any of those usual suspects (although they might come in at Nos. 11, 12 and 13).

1. The math just doesn't work. There is not enough demand for the product or service at a price that will produce a profit for the company. This, for example, would include a start-up trying to compete against Best Buy and its economies of scale.

2. Owners who cannot get out of their own way. They may be stubborn, risk adverse, conflict adverse -- meaning they need to be liked by everyone (even employees and vendors who can't do their jobs). They may be perfectionist, greedy, self-righteous, paranoid, indignant, or insecure. You get the idea. Sometimes, you can even tell these owners the problem, and they will recognize that you are right -- but continue to make the same mistakes over and over.

3. Out-of-control growth. This one might be the saddest of all reasons for failure -- a successful business that is ruined by over-expansion. This would include moving into markets that are not as profitable, experiencing growing pains that damage the business, or borrowing too much money in an attempt to keep growth at a particular rate. Sometimes less is more.

4. Poor accounting. You cannot be in control of a business if you don't know what is going on. With bad numbers, or no numbers, a company is flying blind, and it happens all of the time. Why? For one thing, it is a common -- and disastrous -- misconception that an outside accounting firm hired primarily to do the taxes will keep watch over the business. In reality, that is the job of the chief financial officer, one of the many hats an entrepreneur has to wear until a real one is hired.

5. Lack of a cash cushion. If we have learned anything from this recession (I know it's "over" but my customers don't seem to have gotten the memo), it's that business is cyclical and that bad things can and will happen over time -- the loss of an important customer or critical employee, the arrival of a new competitor, the filing of a lawsuit. These things can all stress the finances of a company. If that company is already out of cash (and borrowing potential), it may not be able to recover.

6. Operational mediocrity. I have never met a business owner who described his or her operation as mediocre. But we can't all be above average. Repeat and referral business is critical for most businesses, as is some degree of marketing (depending on the business).

7. Operational inefficiencies. Paying too much for rent, labor, and materials. Now more than ever, the lean companies are at an advantage. Not having the tenacity or stomach to negotiate terms that are reflective of today's economy may leave a company uncompetitive.

8. Dysfunctional management. Lack of focus, vision, planning, standards and everything else that goes into good management. Throw fighting partners or unhappy relatives into the mix, and you have a disaster.

9. The lack of a succession plan. We're talking nepotism, power struggles, significant players being replaced by people who are in over their heads -- all reasons many family businesses do not make it to the next generation.

10. A declining market. Book stores, music stores, printing businesses and many others are dealing with changes in technology, consumer demand, and competition from huge companies with more buying power and advertising dollars.

In life, you may have forgiving friends and relatives, but entrepreneurship is rarely forgiving. Eventually, everything shows up in the soup. If people don't like the soup, employees stop working for you, and customers stop doing business with you. And that is why businesses fail.

Jay Goltz owns five small businesses in Chicago.