Porter's 5 Forces -Barriers and Threats to Entry © Jeff Miles Business Doctor Secrets

Today we will look at one of the five factors in the Porter's 5 Forces Analsys:  Barriers/Threats to Entry

When analyzing threats to entry, it isn't just existing competitors that are a threat. The possibility of new companies entering the industry also affects the competition.

In most markets, any company should be able to enter and exit a market and profits should usually be steady. But in reality, some markets have the ability to inhibit new companies from entering a market and protect existing companies. These are called barriers to entry.

Barriers to entry are more extreme than just the normal everyday adjustments that markets have to mark. For example, when profits increase in an industry, new firms typically enter the market to take advantage of the high profits, which drives down profits for all firms over time. When profits decrease, some firms exit the market and this restores the equilibrium.

Falling prices, or the anticipation that prices will fall in the near future, keeps rivals from entering a new market. Companies can also be reluctant to enter markets that are unknown or uncertain, especially if start-up costs are high. All of these adjustments to a market are normal.

 

Sometimes, however, firms will keep prices artificially low. They can't do this as a group (that would be illegal collusion) but they can individually decide to keep prices low to prevent new rivals from entering a market. This is called "entry-deterring pricing" and is considered a barrier to entry.

Barriers to entry are unique to each industry. They reduce the number and rate of new rival firms entering the market and protect those already in the market.

These barriers come from several sources:

1.   The Government. Even though the government seeks to preserve competition, the government also restrictions competition through granting monopolies and through regulation.

For example, utilities are considered monopolies because it's much more efficient to have one utility company providing service to a community than several utility companies.

To keep utilities from exploiting this monopoly the government enforces certain regulations. So this is a barrier to entry the cable industry is another example of this. When a cable franchise is granted to a company there are regulations to protect the consumer so that the cable company can't gouge the consumer with unfair pricing, etc.

When the government deregulated the banking industry in the 1970's, this greatly intensified the rivalry and created new uncertainties for banks as they scrambled to maintain their market share.

2.   Patents and Other Proprietary Knowledge. Special knowledge and ideas that give a company competitive advantages are treated as private property and protected by patents. This prevents others from using that same knowledge and this creates a barrier to entry as a result. If a competitor tries to use this knowledge they can be sued.

For example: Polaroid acquired the patent for instant photography in 1947. When Kodak sold a similar camera in 1975 they were sued and lost, thereby keeping Kodak out of the instant camera market.

3.   Asset specificity. In other words, special technology that is expensive or difficult to acquire. This inhibits potential companies from entering the market because they are reluctant to commit to investing in the specialized technology. It would be difficult to resell the equipment if the business was to fail and it wouldn't be possible to use the same equipment in a new business.

When a business has these assets they aggressively protect them. To return to a photography example, Kodak invested a lot of capital in its photographic equipment business. It resisted efforts by Fuji to enter this same market. These assets are highly specific and can only be used in this industry.

4.   Economies of Scale. The most cost efficient level of production is referred to as Minimum Efficient Scale (MES). The MES is the lowest minimum at which a unit can be manufactured. It is the most cost efficient level of production.

If the MES for a firm is known throughout the industry then it is possible for competitors to determine how much market share they would need to enter the market and how much it would take to maintain the same MES.

For example, in the telecommunications market, a 10% market share is necessary to maintain MES. If a company fails to acquire 10 percent market share then the firm is not competitive.

Therefore the MES economy of scale creates a barrier to entry for new companies. The greater the difference between an industry's MES and the entry unit costs, the greater the barrier to entry. Industries with a high MES discourage the entry of new, start-up businesses into a market.

To operate a business at less than MES the firm must have the ability to sell their goods at a premium price to make up for the lack of market share.

There are also barriers to exit in addition to barriers to entry.

If there are difficult exit barriers, it can prevent a new company from entering the market in the first place.

If a company is inhibited in their ability to leave the market it increases rivalry because in order to stay in the market the company has to compete.

Exit and entry barriers can be summarized as follows:

Easy to enter if there is:

*Easy to acquire technology
*Easy access to distribution channels
*A low scale threshold

Difficult to enter if there is:

*Patented or proprietary knowledge
*Difficulty in switching brands
*Limited distribution channels
*High scale threshold

Easy to exit if there are:

*Low exit barriers and costs
*Independent businesses
*Assets that can easily be sold

Difficult to exit if there are:

*Highly specialized assets
*High exit costs
*Businesses that are inter-connected and interrelated

Any analysis of an industry has to keep in mind that business is not static. Change is constant. Even industries that are easy to generalize, like the automobile industry, are prone to change. New technology and frequent mergers keep everyone on their toes. The Porter analysis places an emphasis on understanding these dynamic forces that are always at work.

Porters 5 Forces Analysis - Understanding Rivalry © jeff Miles Business Doctor Secrets

A Porters 5 analysis focuses on five factors: rivalry, threat of substitutes, buyer power, supplier power and barriers to entry. Today we will focus on one of these five factors: rivalry.

Rivalry

Traditionally, competition among rival companies can cause price wars and a race to the bottom that drives profits to zero. Now firms strive for a competitive advantage over their competition. The degree of the intensity of rivalry among firms varies from one industry to another. Strategic analysts that use SWOT and Porters 5 analysis are interested in these differences.

Economists measure rivalry by certain indicators. The Concentration Ratio (CR) is one of the indicators and is reported by the bureau of census.  The CR indicates the percent of market share held by the four largest companies.

A high concentration ratio means that a high concentration of market share is held by the largest companies. In other words, the industry is concentrated and possibly saturated. With only a few firms holding a large market share, the competitive landscape is more like a monopoly.

A low concentration ratio means that the industry has many rivals and none of them has a significant market share. These are called fragmented markets and are thought to be competitive. The concentration ratio is not the only measure of rivalry.

If the competition among companies in an industry is low, the industry is considered to be "disciplined."

When a competitor acts in a way that triggers a counter-response by other firms, rivalry intensifies. In pursuing an advantage over its rivals, a firm can choose from several competitive moves:

•     Changing prices - raising or lowering prices to gain a temporary advantage.

•     Improving product diversification - improving features, implementing innovations in the manufacturing process and in the product itself.

•     Creatively using channels of distribution - using a distribution method that is unique to the industry. For example, when high-end jewelry stores did not want to sell Timex watches so Timex moved into drugstores and other stores and dominated the low to mid-price watch market.

•     Exploiting relationships with suppliers - for example, from the 1950's to the 1970's Sears, Roebuck and Co. dominated the retail household appliance market. Sears set high quality standards and required suppliers to meet its demands for product specifications and price.

The intensity of rivalry is influenced by the following 10 factors:

1.  A larger number of businesses increase rivalry because more companies have to compete for the same customers and resources. The rivalry intensifies if the firms work in the same share of the market.

2.  Slow market growth causes businesses to fight for market share. In a growing market, firms can improve revenues simply because the market is expanding and they don't have to fight with competitors as much for market share.

3.  High fixed costs increase rivalry. When a company has mostly fixed costs, the company must produce high quantities to obtain the lowest unit cost. As a result the company has a large amount of inventory which leads to an increased need for market share. The result is increased rivalry with everyone trying to sell their large amount of inventory.

4.  High storage costs and/or highly perishable products require that a business sell goods as soon as possible. If other producers are attempting to quickly sell their products at the same time this increases competition.

5.  Low switching costs can increase rivalry. When a customer can freely switch from one product to another there is more competition because it's easier to lure a customer when there is less loyalty.

6.  A low level of product branding is associated with increased rivalry. Strong brand identification, however, increases loyalty and decreases competition.

7.  Stakes are high when a firm is losing market position or has potential for great gains. This increases competition because the firm will try to mount a comeback.

8.  High exit barriers mean that there is a high cost on abandoning the product. The firm must compete. High exit barriers can sometimes cause a firm to remain in an industry, even when the venture is not profitable. A common exit barrier is asset specificity. When the plant and equipment required for manufacturing a product is highly specialized, these assets cannot easily be sold to other buyers in another industry.

Litton Industries' acquisition of Ingalls Shipbuilding facilities illustrates this concept. Litton was successful in the 1960's with its contracts to build Navy ships. But when the Vietnam War ended, defense spending declined and Litton saw a sudden decline in its earnings.

As the firm restructured, divesting from the shipbuilding plant was not feasible since such a large and highly specialized investment could not be sold easily, and Litton was forced to stay in a declining shipbuilding market.

9.  A diversity of rivals with different corporate cultures, histories, and philosophies can make an industry unstable. Mavericks can come onto the scene and make business decisions without proper analysis. 

As a result of upsetting the market in this way, rivalry can become intense as competitors respond to these maverick strategies.

The hospital industry is an example of an unstable industry. In one community you can see different types of hospitals with different philosophies: for-profit hospitals, university hospitals, hospitals affiliated with religious or charitable institutions.

This sometimes leads to intense struggles between the hospitals over who will get expensive diagnostic equipment, etc. There can also be disagreement about how to respond during emergencies and times of crisis.

10.       Industry Shakeout. A growing market and the potential for high profits attracts many new companies and motivates existing companies to increase their production. Eventually the market becomes crowded with competitors supply exceeds demand.

There are too many products and not enough consumer dollars to go around. The growth rate may slow as the market becomes saturated. A shakeout will occur and this creates price wars, intense competition and company failures, leaving only the strongest companies.

Bruce Henderson created the Rule of Three and Four which states that a stable market does not have more than three main competitors. The largest competitor will have no more than four time times the market share of the smallest.

Media scanning and competitor analysis © Jeff Miles

It is important to pay close attention to your competitors' marketing campaigns. If you discover a change, you will then need to thoroughly re-evaluate their business and how their change may affect your business.

This change in your competitors' marketing campaign could indicate a management change, a new strategy, a change in their target market, increased pressure from competitors, etc.

Your competitors will go to almost any lengths to guard their marketing strategies. But sooner or later they will be made public because they run ads, re-design their web sites, or make presentations and sales pitches.

You need to be tuned in to the signals your competitors are sending through these strategies.

It's crucial that you constantly monitor your competitors' marketing strategy and ad campaigns for two reasons.

1. First and foremost, this is the only way you can determine how they are promoting their products and positioning their company in the marketplaces. This is how you will find out whether or not your own positioning strategy is unique.

2. Also of great importance is that a new marketing message is a signal that something might be changing in your competitor's camp.

Once you have determined how your competitors are positioned, you need to remain vigilant. Continue to monitor on a regular basis their marketing campaigns, Web site content and press releases. If you detect a change, it signals the need to thoroughly reevaluate the competitor and how the change affects your marketing and sales.

It could be a clue that will help you compete more effectively, and stay one step ahead of the competition.

When performing a competitor analysis, media scanning can sometimes be an important element.

Media scanning is the study of competitors' ads. You can learn a lot about your market by scanning competitors' ads. Ads reveal much about a business’s marketing strategy and their target market.

Changes in ads can reveal the following:

* New products.

* Changes in ad strategies.

* New production techniques.

* New branding strategies.

* New positioning strategies.

* New pricing strategies (such as product bundling, price skimming, penetration, etc.).

* New distribution strategies (such as new distribution partners, more extensive distribution, change in geographical area, etc.).

 

A competitor's media program also reveals:

• Budget distribution and line items
• Segmentation and targeting strategy
• Focus and selectivity.

From a tactical perspective, it can also be used to help a manager implement his/her own media plan.

By keeping an eye on your competitors' presence in the media this will help you time your own media campaigns so they don't occur at the same time as your competitors’.

Other things worth keeping an eye on are trade shows, patents, customers that you have in common, annual reports, and trade associations.

 

While you're at it, you should also scan your competitors' websites. This is as important as studying their ads.

First take a look at their source code. What keywords do they use in their meta tags? You should also look at who is linking to their sites.

You can create a Google Alert or other similar alert for each of your competitors’ names and the names of their products. Google Alerts is a powerful tool and it's free.

It should also go without saying that you should create Google Alerts for your own name, business name and product names too.

You can then use the information from the alerts to adjust your Pay Per Click or other ad campaigns.

Or if you have affiliate marketing partners you can notify them of any changes in your competitors so you can team together to make adjustments in your strategy.

You can also find data on the search engine optimization histories of your competitors by looking at their Alexa rankings, link lists or blog rolls, Google page rank, etc.

Of course, even if you gather all this data, you need to know how to respond to whatever strategic moves your competitors make. In some cases, you might want to remain quiet and respond discreetly so that you don't tip your hand to your competitors and let them know what you know about them.

Also take a look at what your competitors' customers are saying about them. Look at blog comments, comments on social bookmarking sites, blog posts about your competitors, reviews on Amazon and other review sites. Knowing what customers think about your competition is just as important as knowing what your own customers think about your business.

Don’t forget to search your industry for new potential competitors every month or so. Web-based IPOs happen frequently and it's hard to keep up with them. Putting together a list of competitors and a comprehensive description of their motives could take weeks.

Keeping up with everything on the internet can be overwhelming. Use a site like RentACoder.com or Elance.com and outsource this work if you can.

You need to synthesize your competitor reports and descriptions into information you can actually use. A consultant can do this work for you as well.

This will give you the ability to take action to counter your competitors’ moves into your turf rather than just passively watching their strategies from the sidelines and failing to take action.

Above all, remember that competitors can be useful sources of information and can be your allies. You can't be a friend to everyone, of course, and you should not be naive.

Keeping a keen eye on your competition's ads and websites can yield rewarding insights into your market and target audience. Of course, while it’s tempting to view any local merchant in your industry as an obvious rival, remember that competitors can also prove to be helpful sources of information and even support in difficult economic times.

While the web may seem like the Wild West it really isn't an "every man for himself" environment. Befriending your competition can neutralize rivalries and help both parties involved divide up the customer markets more efficiently.

Who knows, maybe even some joint ventures will evolve from this.  Keep this in mind as you scan and study your competitors' actions.

What do you think?

Using Consumer Generated Media to Grow Your Business  © Chris Bloor

When a consumer writes about your products or services on the internet (in forums, blog posts, discussion lists, wikis, etc.) this is called Consumer Generated Media.

As a business owner you can use Consumer Generated Media to your advantage. You can start by encouraging it.

Undoubtedly you've noticed how Amazon encourages customer reviews for each of its products. Many customers make their purchase decisions based on these reviews because they are perceived as unbiased reviews. 

Even if there are negative reviews, customers are smart enough to sort through both the positive and negative reviews and make their decision accordingly.

A smaller business can also encourage reviews of their products.

1. You can create a forum for your business or product. This is one of the best ways to have conversations with your customers. Make sure you have enough moderators on hand to keep an eye on the discussions and to delete any spam posts or other inappropriate posts.

Before too long, you'll find out what common questions people have about your product. You'll be able to make the appropriate adjustments the next time you update your product.

You might even find brand new products ideas as a result of what customers say in the forum. You'll also be able to find many testimonials for your product in the forum and can use those on your main website or other promotional literature.

2. Another way to encourage consumer generated media is to create a blog and invite comments. End your blog posts with a question, such as "what do you think?" This will help invite comments and spark conversations within your comment threads.

Make sure you have a "subscribe to comments" feature activated for your blog so that people will get e-mail updates each time there is a new comment.

3. Wikis are another way consumers will write about your product. Wikipedia is the most well-known but there are countless other wikis on the internet. A wiki is a collaborative website, with multiple users creating pages and adding content. You could create a wiki for your market and encourage customers to contribute entries.

4. Videos are yet another form of consumer generated media. If you aren't careful, people might make videos that criticize your products.

There are countless videos on You Tube about the horrors of certain fast food meals, for example. Or if there is a negative news report about your product, someone will post the clip on YouTube where it will get yet more exposure again and again. You'll want to keep an eye on what's happening on You Tube.

If appropriate, you might even want to make You Tube videos about your product or business and invite your customers to view the video and leave comments.

In conclusion, don't isolate yourself from your customers and remain distant. This no longer works in the Web 2.0 environment we now live in.

Be respectful of consumer generated media and actively encourage it.  Your business will grow as a result.

 

Here are some tips for how to put together a competitor profile:

1.  First write down a summary of your business. Include your company history, mission statements, financial analysis and a summary of your marketing plan and strategies.

2. Write an analysis of your weaknesses, strengths, opportunities and outside threats.

3. Now you can make a list of all your competitors. List all the companies that are a threat to you and your market.

4. Make a detailed analysis of each competitor's services or products. Describe their features, how the products are marketed, advertised and distributed. Also be sure to analyze the way customers perceive those companies.

5. Objectively study the weaknesses and strengths of your competitors. Analyze with their products are popular and find out if their customers are unhappy with the products in any way. If they are unhappy, find out why. Look at their target market. Is there an area of the target market that they have overlooked? If so, is this an area your business could capitalize on?

6. Analyze and research the strategies your competitors use and how they market themselves through advertising and press releases.

7. Make a complete analysis of your market. Investigate whether or not your market is becoming stale or if there is room for more growth. If the market is breaking into niches try to steer your company toward the niche that suits you best.

When you find your competitive advantage you should develop it to the maximum.

A good competitive analysis will help develop a new and improved marketing plan. Using all the information from your competitor profile, you can compare your company with your competitors in the areas of product, distribution, price, advertising, etc. You will see exactly how your business measures up to the competition.

Once you gather all the information and analyze it, you can help your business gain an advantage over all your competitors. 

This will create a better market for your product.

If there are specific niches that you can enter without much competition, take advantage of the opportunity to help your company grow.

Only after first understanding your competitors will you be able to formulate your own competitive strategy.

This necessitates that a thorough competitive analysis is conducted not only at the start of a business but even at other times during ongoing business.

Database Marketing Secrets © BusinessDoctorSecrets

It may not be flashy or exciting, but database marketing is one of the most effective ways to keep in touch with current customers and also to reach out to potential customers. It is just as effective for small businesses as it is for large corporations.

Database marketing lets you target highly specific groups of customers.

This way you aren't wasting resources contacting customers who aren't interested in your products and it serves the customer better because you are providing them with information about products they are actually interested in.

When a customer has repeated exposure to your products it increases the likelihood that they will buy from you. You can send out all manner of advertising using database marketing: postcards, catalogs, brochures, flyers. Through this you can test new products and get valuable customer feedback in the form of surveys and questionnaires.

You can buy new lists and test the lists using database marketing. You can experiment with these new prospects and quickly find out if these new customers lead to new sales. Even if you have plenty of customers and have strong sales you should also be looking to add new customers and grow your mailing list. More customers equal more profits.

Database marketing gives you the opportunity to try a wide variety of marketing approaches. Don't hesitate to try more than one method when experimenting with a new list. You might even stumble across a new product idea this way.

Quantity leads, quality targeting. That's what you get from a database.

A database goes far beyond the marketing, too. There's no limit to the amount of data you can keep for each customer. For example, accounts receivable, membership information if you sell memberships, and much more.

It is helpful to create a plan for your database and determine how all of the categories will relate to each other and what type of reports you'll want to create and print on a regular basis. Have as many one-click tasks and shortcuts as possible. Who will collect the data and who will enter it into your database and keep it current? You should address those questions, too, before launching your database.

Put plenty of time and thought into your database creation before you launch your marketing campaigns and it will serve you well for many years and help you build relationships with clients. It might seem incongruous that a database can be a tool for building relationships but it can. When you think about it, even non-business owners use databases and they don't even realize it. An e-mail address book is a database of sorts. The more organized you are with address books the more you are able to remain in communication with friends. The same is true with databases and customers. The more information you have about your customer, the easier it is to contact them more frequently and build relationships.

Before spending big money on consultants, hardware and software, first invest in a database. It's the best investment any small (or large) business can make.

Porter's Five Forces Analysis © Jeff Miles

Porter's Five Forces Analysis was developed by Michael Porter of Harvard Business School in 1979. He based his analysis on the idea that a company gets a competitive advantage if it gets a quicker return on investment than its competitors do.

This analysis uses Industrial Organization economics to select five forces to determine whether or not a particular market is attractive. These five forces affect a company's ability to serve its customers and make a profit. When there is a change in any one of the forces the business has to adjust and re-assess accordingly.

Five Forces Analysis focuses on a single business or market rather than on a particular product or group of products. Three of the forces are horizontal: threat of substitute products, threat of established rivals, and the threat of new competition. The other two are vertical: the power of buyers and the threat of entry.

Here are the five forces and a summary of each:

1. The threat of entry:

This examines the threat of potential competitors as well as existing competitors. The threat of new entrants is based on the market entry barriers. These barriers can take a variety of forms and exist to prevent a surge of new firms into an industry whenever profits rise above zero.  The most common forms of entry barriers (excluding legal and physical obstacles) are as follows:

• Economies of scale: for example, the benefits of bulk purchasing
• Cost of entry: for example, how much one would have to invest in new technology in order to compete
• Distribution channels: for example, competitors' ease of access
• Cost advantages that aren't related to the size of the company: for example, connections/contacts and expertise
• Government legislation: for example, new laws that might weaken a company’s competitive position
• Differentiation: for example, a certain brand that cannot be copied

 

2. The Power of Buyers:

Buyer power is one of the two horizontal forces. The most important factors that determine buyer power are the size and the concentration of customers. Buyer power is high when there are only a few large players in the market, such as large grocery store chains. It is also high if there are a large number of small suppliers supplying the large grocery store chains.

3. The Power of Suppliers:

This tends to be the opposite of the power of buyers. The switching costs are high (for example, switching from one software to another). The power of suppliers is also high where the brand is powerful (Microsoft, Mercedes, Pizza Hut, etc.).  If the customers are fragmented and not in clusters they will have little bargaining power (i.e. a gas station in a rural area).
 
4. The Threat of Substitutes:

The threat that substitute products pose depends on the price-to-performance ratios of the products or services. The threat of substitution is also affected by switching costs. In other words, the costs in areas such as redesigning and retraining that happen when a customer switches to a different type of product or service. It also involves:

• Product-for-product substitution (email replacing mail and fax) and substitution of need;
• Generic substitution;
• Substitution of products that people can do without (cigarettes, alcohol).

5. Degree of Competitive Rivalry:

The intensity of rivalry is probably the most obvious of the five forces. It helps determine to what degree the value will be affected by competition. The Porter's five forces analysis says that competition is only one of several factors that determine an industry's strength.

This force is always located at the center of the five forces chart.  It is bound to be high in those industries where there is a threat of substitute product and an existing concentration of suppliers and buyers in the market.

Competitor Profiling Secrets © Jeff Miles

Competitor analysis is an important element of corporate strategy. Compiling a profile of your competitors should be done regularly and systematically.

According to Michael E. Porter, author of Competitive Strategy: Techniques for Analyzing Industries and Competitors, most corporations don't do this enough and instead rely on "informal impressions, conjectures, and intuition gained through the tidbits of information about competitors every manager continually receives."

 

Competitor profiling provides the following:

 

1.  Reveals weaknesses in your competitors' strategies and these are weaknesses that you can, in turn, exploit.

2.  Helps you predict how your competitors will react to your strategies and strategies of other competitors.

3.  Makes your firm nimble in the marketplace because, as you plan, you'll be able to dodge your competitors. Both offensive and defensive strategies can be put into play more quickly.

 

A competitor profiles also

 

Other firms are doing competitor profile on you, too, remember. So the more advanced and the more systematic your profiling is, the better. Just like in chess, a good offense is the best defense. By constantly remaining one move ahead, checkmate is that much closer.

A good profile gives in-depth detail about the competitor's finances, products, personnel, history and more. This includes:

•    Financials

•    P-E ratios, dividend policy, and profitability, financial ratios, liquidity, and cash flow

•    Profit growth profile; method of growth (organic or acquisitive)

 

•     Background

•    office locations, plants, and website

•    history (key personnel, dates, important events, and trends)

•    ownership, corporate structure, and organizational structure

 

•    Products

•    products offered, depth and breadth of product line.

•    new products under development, new product success rate, and R&D weaknesses and strengths.

•    brands, brand portfolio, brand awareness and brand loyalty.

•    licenses, trademarks, and patents.

•    quality control compliance.

 

•    Facilities

•    plant capacity, plant efficiency, age of plant.

•    location, shipping, and products by plant.

 

•    Personnel

•    number of employees, key employees, and employee skill sets.

•    strength of management and management style

•    compensation, types of benefits, and employee morale, employee retention rates

•    Marketing plans.

•    Market shares, growth rate, customer loyalty and customer base.

•    promotional budgets, ad agency used, success rate of the sales force, online promotional strategy.

•    distribution channels used, exclusivity agreements, alliances, and geographical areas covered.

•    pricing and discounts.

 

•    Corporate and marketing strategies

•    objectives and goals, mission statement, growth plans, recent acquisitions.

•    Marketing plans and strategies.

After you put together a profile have your business coach give feedback on it.

A profile is not a one-shot deal; it needs to be updated. Assign this task to someone and tell them the intervals at which this needs to be done.

Too often a profile goes into a file and is never looked at. So before making the profile make sure you know what decision needs to be made that requires a profile in the first place. There are, of course, competitor profiling consultants that you can hire to assist with this task.

What do you want to know about your competitors? What damage can they do to your business? What do you wish you knew about your competitors? Do a competitor profile and find out.

E-mail marketing: Making it Viral © Chris Bloor

There's one element of e-mail marketing that isn't discussed much but it's an important one to consider: the viral nature of it…

By now you probably know that e-mail marketing is ultimately relationship marketing. You are building long term relationships with your clients and prospects through your mailing list.

When the average person is at home sitting at their computer and checking e-mail they aren't thinking about shopping or buying something. They are looking through their inbox and looking at their fun e-mail first. They are going to first look at an e-mail from their friend and bypass the e-mail from businesses that they know are just trying to sell something. They will also bypass the boring e-mails in order to go straight to the fun e-mails.

The ideal goal is for your e-mails to land in the coveted "Friends/Fun" category in the inbox.

At the very least, you want your e-mail to not be deleted unread.

How is this possible if you are selling, say, widgets? Is this only possible if you have a "fun" product or service?

First, it helps if you can develop a persona, even if the persona is just in your newsletter/e-mails and not on the main site. Even if you are selling widgets it's possible to use humor and deliver the information in an upbeat, helpful way.

Also, remember than an e-mail is one person communicating to another. It's person to person. Therefore, try to send e-mails that the reader enjoys so much that they forward it to their friends. Their friends read the e-mail and then go sign up for your mailing list.

This is how e-mail can become viral. Let your readers doing some of the work for you by spreading the word about your website.  An e-mail can be forwarded indefinitely and at no cost. Your readers will only do this for you if you provide engaging, interesting information.

This is one of the best ways to build your list and if you try this, you'll be amazed at how quickly your list can grow. If they get your e-mail from a friend they will be eager as they sign up and will pay attention to your e-mails as they arrive.

To get inspiration, just pay attention to the e-mails in your inbox that you ignore or that you like and think have clever subject lines, etc. If you have a company newsletter and more than one writer involved with each newsletter, you can have dialogue between the different writers and spark reader interest that way. You can solicit reader responses and input. Make your newsletters and e-mails as much of a two-way conversation as possible. You can post a link to the newsletter online and invite comments, similar to a blog post.

There are any number of creative ways to spice up your newsletters, regardless of your product. If you've used newsletter techniques that prompt your reader to click "forward" instead of "delete" feel free to share them below.

Elance for outsourcing © Jeff Miles

Books like The Four Hour Work Week by Timothy Ferriss have underscored the importance of outsourcing, even to the point of being able to run a multi-million dollar business alone from anywhere in the world without any employees.

One good place to turn for outsourcing is www.elance.com. Elance was founded in 1999 to help businesses efficiently find freelance help for their projects. It also helps entrepreneurs all around the world help their businesses grow by providing services to clients.

So, essentially, Elance is a virtual workplace and it’s considered the leading website for hiring and working on demand. 

At Elance you can hire freelancers in the following categories:

•    Web and Programming.

•    Design and Multimedia.

•    Writing and Translation.

•    Administration Support.

•    Sales and Marketing.

•    Finance and Management.

•    Legal.

•    Engineer and Manufacturing.

If you are trying to find someone to do some work for you, first you have to create an account, of course.  Then, let's say you need someone to write a sales page for your website. You have two options. You can browse the provider list and see if a particular person specializes in the type of service you want. You can read their profile, look at their feedback, look at their samples. You can contact them directly and make arrangements. Payments go through the elance site. You'll usually have to pay 50 percent up front. Elance gets a commission, so that is how they are able to provide this service.

Your other option is to post your project and accept bids. You provide a description of the service you need. If it's a sales page you post that in the copywriter section (make sure you post in the proper category so that you attract the right bidders). You can post your budgeted amount for the project but that's optional. Elance will display the number of bids you've received and the time that the bidding will close.

As bids come in you review them, look at the person's samples and feedback. Sometimes the bidders will ask questions so it's good to log in every day and check for questions. If you write a clear, detailed description of the project at the beginning, this will help cut down on questions.

If you are having a hard time choosing from several qualified applicants, you can ask them to take a test of your choosing, if you'd like. You can also give a test if you want to make absolutely sure the person is trust-worthy and has the necessary skills.

Even though Elance is a place to get work done at an inexpensive rate, you shouldn't pick a bidder solely based on price. Look at the way the bidder presented themselves. Were they friend and articulate? Did they following your instructions?

When you've picked one bidder you make payment arrangements and set a deadline. Be sure to leave feedback after they complete the project. Feedback is crucial to the Elance process. It's how clients know that you are trust-worthy and vice versa. The more feedback you have, the better, so you can attract quality bidders.