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Is business getting easier, or harder?

This is aviation related because that is how most of us (at least those working in the private sector) are paying for our flying

Just some random thoughts… I started in business in 1978. Departed that one and started a 2nd company 3 days later, in 1991 (the 1st one crashed 2 years later). Always in electronics and always B2B, not public/retail.

Until about 10 years ago, business was fairly straightforward. You booked a 1/4 page advert in one of the trade mags, line card rate £700, actually paid £400 (just like when booking a felucca on the Nile). The orders would come in…

Until the 1990s a small firm could sell to the biggest firms directly. That then changed, with empire builders building “approved supplier” lists. Getting onto these used to be “interesting”, with corruption not uncommon until the 1980s and continuing in the public sector for another decade or two. But basically a small firm could not do it, unless it ticked a lot of boxes, starting with ISO9000, and sometimes accepting 120 day payment terms. But still life wasn’t difficult.

Then about 10 years ago the internet came, as we know it today.

The printed trade mags shrank and filled up with garbage and “advertorials”. They are still there but almost nobody reads them. They go straight in the bin. That 1/4 page ad is now £120 but when almost nobody sees it…?

If you didn’t have a website you didn’t exist. We had one since 1995…

The first problem was that people didn’t phone you up anymore. They went to your website and if they didn’t find what they wanted, they went to the next website. So superficially life was easier and the phone rang a lot less, but the longer term problem was that you no longer got the priceless market intelligence leading to new products which somebody actually wanted.

Today, everybody uses google to find stuff, so you have to pay them x00/x000 per month for a ranking. If you are not on page 1 you don’t exist…

One can sell via Ebay and Amazon. Ebay is not treated seriously; it is seen as a dumping ground for cheap junk. Amazon is “cleaner” but right under your product they list a dozen cheap competitors, so if your business is premium quality stuff, you won’t sell much via Amazon. Some report good results with facebook adverts. But none of these are B2B.

Someone said LinkedIn works well for B2B; I am now looking at that. I always thought the main use of LinkedIn was for programmers (whoops I should say software architects ) to find the next job while working on the current job, and for CAA employees to list all their past jobs while looking for the next one.

One remaining issue is launching a completely new product. Google is not much good because unless the product has an existing popular function nobody will be searching for it. And all the advertising channels (above) are directed by the server (e.g. FB) to go to people with specific interests and profiles. There seems to be no way to reach people in say food manufacturing.

Well, actually there is: trade exhibitions. And guess what? That business has exploded. There might have been 3 a year. Now there might be 20. At 10k and a week of your life wasted, you can’t do that…

What do people here – those who actually make something – do to promote their widgets, and to launch new widgets?

Administrator
Shoreham EGKA, United Kingdom

I cannot provide the answers you are looking for but completely recognise the points you make.

My experience is in the service sector and this is rife with all the same issues. I previously worked in a small firm providing very specialist services to large utility companies including FTSE100. The hurdles get higher each year. Yes, it used to be that all you had to do was obtain ISO9001 accreditation which, to be fair, is a good system largely. Then came 14001 and 18001. Next came the additional scrutiny from purchasing departments who had to justify their roles by raising the bar year after year. Next comes anonymous bidding whereby your identity is stripped from your bid in an effort to choose bids purely on their merits. The goals are worthy but are, in the end (like communism), self defeating due to the complexity it creates.

The procurement industry grows to the point it is larger than that it is procuring from. You can now do university degrees in procurement. There are multiple chartered institutions of procurement professionals. The list goes on and on.

Other people then, spotting gaps in the market, open ‘brokering’ or ‘agency’ type concerns which offer to take the hard work away from the customers to do all the due diligence for them. Great idea for sure, except that the customer’s procurement departments hang on in there so you end up having to jump through even more hoops since ‘membership’ of the ‘agency’ is mandatory and yet then still must answer all the same questionnaires and supply the same documents direct to the customer.

It takes ages then, and huge cost, to get through the door and win any work at all. A company has to operate a whole department dedicated to dealing with the customer’s procurement department and their ‘agencies’. This sets a lower limit for company size to be able to carry such non-productive roles and in then end is what led to my firm being sold to a larger player.

Of course it doesn’t end there because having done all their due diligence in awarding work a customer, and agency, then has to ensure that it is being carried out as agreed and that all the various policies are actually in place and are being followed etc. So they send auditor after auditor to site to ask questions and inspect the same documents. Of course you soon learn their methods and it becomes almost a game in setting out what they want to see in order to tick their boxes. The auditors know this is what you do but appreciate how you make it ‘easy for them’. They don’t really care what goes on at all. The whole thing is a farce.

It’s no different with the customer’s project management people. Once in the door you get to know them, make an effort to get on with them and then they give you the work directly and somehow bypass the procurement department by saying the work is essential and that there are no other firms who are capable.

At the end of the day it is quite simple. People want to do business with people they like and get on with and will somehow find a way to do it. The procurement departments will aim to frustrate these efforts and vice versa in a constant battle of wills. Look at any large company and the admin of all forms have a higher headcount than the actual boots on the ground.

The only saving grace here is that if you started a long time ago, as we did, you grow with the system and can adapt to it. The barriers to entry for new competitors are so high to be prohibitive. My industry was almost entirely made up of the same three companies for decades until the last few years when it finally toppled.

I now operate in a retail environment and also smaller B2B but see a lot of the same themes. The ‘work provider’ companies are plenty, as are the trade associations, the auditors and all the rest of it.

The only advice I can offer is that if you are able to offer a quality and specialised product/service that people/businesses need to buy then they will find a way to cut through the BS and buy it from you.

S57
EGBJ, United Kingdom

S57 wrote:

The only advice I can offer is that if you are able to offer a quality and specialised product/service that people/businesses need to buy then they will find a way to cut through the BS and buy it from you.

This is what it boils down to for me. Sell commodities, get pushed in the commodity corner…

LFHN - Bellegarde - Vouvray France

There are two distinct issues.

One issue is dealing with a customer who already knows about you – S57’s scenario above. Purchasing has indeed become a farce. One of our customers had a “supply chain manager” whose favourite approach was to (metaphorically) bang his fist on the table while saying that any price increase will totally terminate the relationship. I asked if even 0.1% would do it and he said Yes. So I said this means eventually all their supplies will go bust (due to inflation) but he didn’t agree; his view was that one must make continuous savings The growth of the “purchasing agencies” is merely a manifestation of the stupidity of the company board, presented with a sales pitch by the prospective agent saying that if their purchasing dept budget is (say) 1M and they have 1k suppliers then each of those suppliers is costing them 1k to buy from…

The other issue is getting customers who don’t already know about you, to find your product. Basically, advertising/marketing has become quite difficult. Unless you just make (read: import from China) cheap junk, cheap enough to undercut the competition, and then you just stick it on Amazon.

Administrator
Shoreham EGKA, United Kingdom

Peter wrote:

One can sell via Ebay and Amazon. Ebay is not treated seriously; it is seen as a dumping ground for cheap junk. Amazon is “cleaner”

Amazon is a hotbed of fakes, too.

I use ebay and Amazon only for cheap stuff I need a few of (e.g. I need a handful of small transistors or something, and I’m not going to make anywhere close to the minimum order threshold for Farnell or RS).

Andreas IOM

From a somewhat different standpoint, I’d say at least two excellent means of marketing remain completely valid. One is being generous with meaningful and reasonably unbiased information (as opposed to marketing drivel): speaking publicly, answering forum questions, putting up white papers on one’s website, etc. The other is seeing your customers face to face – but instead of paying big money for a trade exhibition, doing your own roadshow instead. The kind of direct contact you can get this way is worth every penny.

Last Edited by Ultranomad at 15 Aug 13:13
LKBU (near Prague), Czech Republic

There is no doubt that the business market has changed markedly. In essence business has actually gotten easier, but far more difficult to get the message to your intended customer. With the move by larger corporates to outsource, HR, Purchasing, Distribution, the key to the individual who makes the decisions is even harder. You have to dig deep.

I also think that old fashioned loyalty, both ways, has gone out of the window. The last 10-15 years has seen a race to the bottom with the corporate aspirers trying to wring the last penny out of suppliers. This has made the business environment a challenge. My business portfolio was very varied and I have had the opportunity to see it from different sector perspectives. Overall I still maintain, this is a UK view, that there is very little money in the economy. It is worse with the Covid19 situation, and with 2021 looming god knows where the UK will sit.This remains one of the biggest challenges for UK based business.

Example. I have a Scotch Whisky company. We are dealing with some Kenyan guys at the moment. i provide full CIF for them, to Port of Mombassa. They complain they are in Nairobi.I ask them for their transparent costs, landing cost adding Kenyan internal taxes, and transport from port to the city. Only with this can I look at the overall cost related to RRP. They are loath to give it, but still happy to tell me I am too expensive. We are supposed to be collaborating, and yet without a clear understanding of cost it is impossible to give an accurate quote and discount. I will keep trying!!!!

Now all of this is being done on video conference Whereby. This discussion would have been impossible a few years ago but we are talking and this makes life easier, but not the negotiating bit

Fly safe. I want this thing to land l...
EGPF Glasgow

I’m on the other side of the fence as a supply chain professional trying to increase opportunity for local companies in developing countries. For example, the LNG mega-projects in Mozambique have the “once in a generation” potential to develop a competitive local market in multiple sectors from construction and industrial services to materials and equipment (agency) supply.

Unfortunately, the procurement departments of major operators and contractors are usually a significant barrier. The bar is often set too high for local companies who frequently need help and training – they barely know what an HSEQ plan is, and fail to prequalify. Or they struggle with onerous due-diligence requirements designed by risk-averse corporate lawyers with little regard for commercial practicalities and the realities of the local environment. Even if local SMEs survive the initial hurdles, project managers tend to want the perceived lowest risk solution (i.e. import contractors they know) for project delivery.

But long-term project value, and “licence to operate”, depends on the development of a vibrant local supply sector. A good example of this is the North Sea. In the 70’s the hotels of Aberdeen were full of transatlantic voices as US companies were brought in to provide the technology and expertise for offshore oil and gas development. A generation or two later, the UK energy supply chain is a major success story, one of the main global hubs. Norway had a similar experience and is now a recognised centre of excellence for marine and sub-sea technology.

I have been struck by the similarities between the experiences of SMEs in dealing with large companies, regardless of whether they are in Maputo or Manchester. Suppliers need information on opportunities well in advance so that they can plan, invest, partner and position. They need to meet the buyers, understand project requirements and standards, and get on company supplier lists. Then, if they are lucky enough to prequalify then win a contract, they deserve performance feedback during the job. And not least, they need to be paid on time.

On the buyer side, good supply chain managers will ensure opportunities are publicised through multiple channels, meet with potential suppliers at “share fairs” and events, work collaboratively with the trade associations, clearly communicate standards and requirements, provide training and assistance where necessary, maximise inclusion on supplier lists (avoid “preferred supplier lists” which limit competition), strip out unnecessary hurdles and bureaucracy, use industry-standard contract forms where possible, actively manage performance on both sides, and ensure payment on time. In other words, their strategic objectives will be to develop competition and value, not to drive down or “strip out” cost. Quite a challenge for most large companies.

NeilC
EGPT, LMML

I’d say at least two excellent means of marketing remain completely valid. One is being generous with meaningful and reasonably unbiased information (as opposed to marketing drivel): speaking publicly, answering forum questions, putting up white papers on one’s website, etc.

Indeed; this is also done. For example, if you do industrial electronics, there are various forums. Most are oriented to the US. I export a lot to the US and have a good agent there. There are ones in Germany which has a lot of that stuff made there but then you need to participate in German and have a 100% “German-looking” local agent to actually do business. I had a close look at these. The participants are fairly well separated into two buckets. One bucket is people who are totally confused e.g. bought kit from two companies and it doesn’t talk to each other (well of course it won’t; that’s the whole point of standards like Modbus ) and they post questions like “I have item x from Siemens and item y from Mitsubishi and I plug in dis cable and it won’t work, sez Error 23, help me”. The other bucket is equipment manufacturers plugging their products while not trying to help anybody but playing it as close to overtly as they dare without getting kicked off but they don’t get kicked off because (a) their company buys banner ads there and (b) the forum needs the traffic regardless of where from. So the scope for some sort of intelligent participation is limited.

This is the nature of today’s B2B marketplace, in strong contrast to say 20 years ago. Back then, say you had a factory making cakes. You would have a guy who knew the whole production line, who set up all the instrumentation. Then he retired, and could not be replaced. The “engineer” has in effect “gone thick”; now it is a chap with a fake MBA who buys a turnkey solution with a service contract, for millions, and you the boss think he has the sun shining out of his ar*se

One can play in it but the products have to be increasingly specialised, because turnkey solutions, from a very small number of companies, have taken over the world.

The other is seeing your customers face to face – but instead of paying big money for a trade exhibition, doing your own roadshow instead. The kind of direct contact you can get this way is worth every penny.

That I am sure but how would you organise that? The days of the travelling salesman are long gone. Everybody hates them

In essence business has actually gotten easier

Exactly. I have two sons, 24 and 27. Both have own businesses. 100% online, retail facing. Virtually zero direct customer contact. Yes, indeed, it is so easy to set up a website with a shop, payment processing, etc. You will need a lot of IT skills if you want a slick site, especially with functions for e.g. repair job bookings and the ability to run it all remotely on a phone, but – at a hefty daily rate – there are plenty of people who provide that.

If you don’t like dealing with the public – and dealing with the public is actually pretty unpleasant a lot of the time; ask anybody who does it – then retail facing business has never been easier. You just need to build in a certain % of hassle.

but far more difficult to get the message to your intended customer.

Both seem to have got the message out via google search rankings, and (in one case) going viral on mountain biking social media, but that’s a young person domain which doesn’t exist in B2B.

old fashioned loyalty, both ways, has gone out of the window. The last 10-15 years has seen a race to the bottom with the corporate aspirers trying to wring the last penny out of suppliers.

Yes, though that trend is a lot older, I think. Aggressive treatment of suppliers has always been there. For example supplying the big retailers has always been an extremely smelly game, but if you want to sell 10,000 chinese made gardening spades a month, or you make shampoo, this is where you have to do business.

If you have a niche product, good quality and at the right price, life is a lot easier. You still get screwed but you can sit tight until their stock runs low and they cave in

I still wonder what channels work well for advertising, to replace the old B2B printed media…

Administrator
Shoreham EGKA, United Kingdom

I could go on for hours on this topic. I do find it really interesting. When I sold up the farm (a lot of differing business) my wife had worked alongside me. I had planned to consult, but had had enough of the public, and people in general. I ended up in scrap. Now that is a story………

Anyway my wife was unemployable. Over qualified for this, under qualified for that. Usual bollox. Even Waitrose dissed her….a 19 year old idiot who suggested she was to old for Waitrose..she is 51.

We sat with our kids and reckoned on line was the way. Question though. What sells well on line. Well there are only two things. Dog treats and sex. We also had to dropship. As an experiment she set up an adult store, and a dog accessory business. Both dropshipping. The adult store sells way more than the dog treats. It gives us a great laugh and some really funny moments. I am a supposed RBS Mentor for young aspiring entrepreneurs. I was at a session talking to a senior bank guy and he asked what my wife did and could RBS assist? I could not resist. Sex on line says I and could we get a starter current account going.

I thought he was going to choke on his canape. Sorry he stuttered the bank could not look at a business like that and he walked away. Still savour that moment.

I have tried almost all channels for business promotion. Google Ads, horrifically expensive and a con IMO. Instagram, Facebook, Linkedin, blah blah. I have found Facebook quite productive over the piece but very much depends on what you are trying to sell.

I lie awake at night wondering how you get 100k followers on Instagram though.

Fly safe. I want this thing to land l...
EGPF Glasgow
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