Strategy Change: Make Money

Rich Tehrani : Communications and Technology Blog -
Rich Tehrani
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Strategy Change: Make Money

In my conversations with a number of CEOs of small tech and communications companies, one thing has become clear. The market for exiting businesses has become tougher. This is common sense and the added challenge is with today's stock market valuations, there are thousands of bargains out there. This just means the odds of a start-up or existing concern getting picked up at significant valuations has been considerably decreased.

There are a number of company heads who have recently come to the conclusion that while hoping for an acquisition by Google, Cisco and others they need to simultaneously work on getting customers.

For most logical and sane people in any other market, this is business as usual. For some reason, in tech, you can have an interesting technology, have almost no customers (or focus on getting them) and get purchased for a nice valuation.

It is worth mentioning however that this is changing... and fast. A record number of CEOs are calling me to ask how TMC can help them with customer acquisition and branding.

There was a period of time when companies really didn't care too much about getting customers. This is especially true of serial entrepreneurs who sold their last company before they even hired an accounts receivable clerk.

What we are seeing in this economic slowdown is that the communications market is resistant but not immune to the slow down. This means we may seem intensified competition for customers and if your company's exit strategy has recently become questionable, it may be time to start rethinking your model and figuring out how to monetize as much as possible while waiting for that special call from Armonk, Redmond or Silicon Valley.

Oh - and one last point... Start-ups have added pressure on them because I expect a number of them to go belly-up as they run out of financing. As this happens, the remaining start-ups will become potentially toxic and customers could very well wait to purchase from them. This cycle of waiting will drive more small companies out of business.

In fact, more than once this past week, people have told me customers today would rather buy inferior technology from a well-known company than superior technology from a company they aren't familiar with. This marks a big change in thinking and you need to be prepared for this change by focusing on getting your name out in front of potential customers more often.

I saw this very thing happen in 2001. I believe history has a good chance of repeating itself in the next 18 months.

There is one way to combat this cycle.

Come out strong. Daily press releases help and so do customer win announcements. You need deployment stories, case studies and smart but effective marketing to show strength in the market. Now, more than ever, you need to show your company is strong and will be around for the long-haul. If the news section on your website hasn't been updated in weeks or months, potential customers could think you are about to close the doors.

The era of engineering-run companies hoping for a buy-out may not be at an end but for sure it will be hibernating for at least a few quarters or more. If you are engineering run and want to make it through this slowdown, now is the time to get the marketers involved. The engineers need to go back in the closet where they belong.

Rich Tehrani regrets the fellow-engineer bashing that took place during the writing of this article. No actual engineers were harmed during the writing of this piece.

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