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3 minutes reading time (605 words)

Saturday Musings - Winter is Coming...

20190601_winter Winter is Coming....

Winter has come to Melbourne, Australia and not just Game of Thrones, Westeros. Outside my study window, blustery winds pelt pebble sized hail down to create a white sheet of rubbly ice on the grass. Inadvertently I pull the zip of my sweater up a little higher as if that alone will ward off the cold.

Escrow.com

This scenario is replayed out around the world but not just in the weather but in business. You’ve been working hard on your business for years and for some reason along comes an event that completely blindsides you. It could be a supplier changes the rules, a major customer moves elsewhere or even a piece of equipment breaks down. Whatever the event you find yourself thrust into winter.

It’s during times like this that businesses either remake themselves or they fold. During winter, it’s often less about profit (or loss) and more about the resilience of the balance sheet to make it through this time. For small businesses, it’s all about protecting the cash.

Winter is a time of assessing what is really important for your business and what is merely an interesting opportunity. Every expense item should come under scrutiny and it’s less about the size of the item and more about the process of asking the nasty question, “Do we really need this?”

I remember when the Global Financial Crisis (GFC) hit in 2008, marketers had their budgets cut and the bottom started falling out of the pay-per-click market. The double whammy for us was the Australian dollar rapidly appreciated against the $US and climbed to just over $1.10. It was a time of winter and one that very few predicted.

Rather than wait around to see what would happen my business partner and I immediately began taking action to shore up the interests of partners (some call these people clients – see my previous article) by focusing on diversifying their interests away from a single advertising provider (ie. Google). Our balance sheet has always been strong but despite this we also examined every expense item. The result of these actions meant that it cushioned the impact of the GFC for both us and our partners.

During the post-GFC years many domain companies have come and gone…..we watched with amazement from the side lines as they continued spending like they were in summer rather than winter. At a recent conference I had a potential partner ask me, “Why should I move my domains to you?” I replied, “Because we’re still here.” He nodded and said, "Good answer."

It’s being wise in the summertime that gets your business on the other side of winter. I’ve been consistent in saying that as long as advertisers want good quality traffic then domain monetisation will thrive. By making difficult decisions in winter a business will burst forth with renewed energy and purpose in summer.

From our perspective, since 2008 the domain traffic monetisation space has gone through a revolution with payout rates climbing. Any single advertising source only wins a maximum of 30% of the traffic….so we have diversified our partners risks considerably. It also helps that the $AU has collapsed to under $0.70.

What should you do in summer? You guessed it, prepare for winter. The trade tensions around the world (notably between China and the USA) have increased, as has the level of world debt. Everything is good right now but from my perspective this is a time to look to the horizon and see if there are clouds building as another season blows through.

This weekend, enjoy the sunshine but don’t forget that “Winter is coming.”

Michael
 

Saturday Musings - The Most Destructive Force in t...
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Comments

Guest - bob on 02 June 2019
remember...

it's always summer somewhere - walk on the sunny side of the street

it's always summer somewhere - walk on the sunny side of the street
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Monday, 24 June 2019
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