Wednesday, May 26, 2010

What Happened to the Entrepreneurs?

During every past American Recession, the recovery was always led by the return of the entrepreneur. People would move from the large companies and jump into their own startup which would fuel the next expansion. However, there doesn't seem to be a resurgence of the start-up during this recovery.

Now, this may be because this recession was pretty bad or it may be due to a lack of demand for new services which startups would find. I think it has to do with the lack capital available to the entrepreneurs. In the past, they would get a business started by running up credit cards or pulling cash out of their home with a second mortgage. However, across the nation, housing prices have dropped about 30%, which would be enough to wipe out most 30-something's equity. Add that to the tight lending environment, and you kill off new business startups.

In some cases, there will be startups funded by a third party. For instance, where people get tired of watching their stocks portfolios drops or of getting 1% on CDs, they might lend it or invest in someone's startup. But this cuts out the first-time entrepreneurs since they are not likely to get private funding without a track record.

The fix on this would be an expanded and simplified lending system for startups. The SBA has some programs out there, but they are slow and difficult to get going. A better method might be to bring back the business plan competitions of the 90's.

Saturday, May 08, 2010

The Limits of Social Networking

As a practical matter, I have been using facebook to both build buzz and gain market knowledge for my new Zeus Digital Theater project. I started the facebook page in November at the behest of my 15 year old son, John.

John was right that it would be a good way to reach out to the theater's main demographic, teenagers. With the facebook page, I have been able to get teen boosters talking about the new theater which should open October 1st this year. In addition, I have been able to gain significant insights into how people viewed the new theater, what they expected from it and what they disliked about the competition.

While the Facebook page works for the market analysis and the buzz building, it fails in the traditional "call to action" marketing. If I put up some call to action on the page, I do get some response. However, without a strong reward (such as a t-shirt give away), it does not register as high as one would expect from "fans".

As a result, I believe the theater will need to use a reward based call to action system that is based upon email and text messages instead. You see, with facebook, fans see a stream of updates on their wall. If you post something on the Zeus page, it is posted by date (default) which means that if the fan has lots of other activity after my post, then my post will be buried way down their wall. If the fan only gets on their page once or twice a week, then they don't see it at all. In other words, Facebook has lots and lots of noise. Noise, as any marketer knows, is the enemy of messages.

So while Facebook gets lots of press, it is only one tool in the arsenal of the modern marketing package. And just like any marketing message of the past, a call to action must have some time related benefit to the consumer. Otherwise, it is just noise.

Saturday, May 01, 2010

A Little Discussion on Planning

Over the past 8 months, I have been involved in the planning of my new theater. Unlike my other businesses where I could make adjustments and investments as I went along, the theater requires that all the investment and planning take place at the beginning.

For instance, I started RentQuick out of my basement in 1998 with $3,000 worth of investment. As I went along, I would use income to buy new equipment which I would then rent. There were times when I had orders for rentals and did not have any equipment. So I simply bought a projector or two on a credit card, had it shipped to the location of the rental, then figured out a way to get it back to me.

The theater project is completely different. With Zeus Digital Theaters, I need to build the theater, put in every single seat, then run it. Once it is open, it will be very difficult to make major changes since the theater is open every day. Yes, even Christmas!

So now the pressure is on to not only make all the investments from the start, but to get it all right. It is a fine line between what I can afford to put in and what I want to put in. The sign is a great example. Would I like to put in the mac-daddy of all signs on the street? Sure! Can I afford it on my budget? Nope. So I have been spending the past couple of days trying to come up with a workable solution.

Where the investment affects the quality of the experience to the visitor is where I put the money. As a result, we have nice carpeting, great projectors, fantastic sound, top-end seating.

Of course, there will be some things I can change after the theater is open. I am really interested in getting the thing put together as nice as I can with what I have available.

As I have said, my first theater is likely to be a Chevy, not a Cadillac.