Cash

I was reading, I believe, Businessweek on a recent weekend trip to Connecticut and I highlighted an interview that Maria Bartiromo did with Carlos Ghosn, CEO of Renault, France and Nissan of Japan.

There was one question she asked the CEO and his answer, to me, could be applied to almost any small or large business that is having some challenges on account of this cruel economy. The question was, "What must a car maker do to survive and prosper?"

The CEO answered: "First, you need to [weather] the next two years. That's a basic condition. To get through them, you have to make sure you have a positive free cash flow. Or to put it another way, avoid burning cash that's very fundamental. You must be able to still generate cash, even with a market as treacherous as the one we'll be facing.

There is an end to any crisis and this one is no exception. There will be an end. And you want to be ready. You want to have innovative products and strong fundamentals, a team that believes in the brand and believes the company will be ready to fight again. I don't think everybody is going to make it through this period of time, but those who survive will have a boulevard in front of them because people will still need to buy cars."

I thought this answer was quite brilliant, given that all indications are that cash is still king. What do you think? Is he right? And how is your cash flow situation? Are you generating enough of it?

Marketing

Back in June, before Bear Stearns, Lehman Brothers and Merrill Lynch did their final tap dance, Kelly K. Spors wrote an article in the Wall Street Journal in which she interviewed Stefan Tornquist of Marketing Sherpa Inc. The gist was the importance of small businesses expanding their marketing efforts in a downturn. At the time, I thought it counter intuitive. After all, during a downturn, most people and small business owners are looking for ways to trim the fat, cut costs and otherwise conserve cash. Marketing is usually one of the first places people look to make strategic budget cuts.

Now, after Wall Street has literally been turned on his head, I am starting to re-think that position, and I wonder whether Mr. Turnquist's observations don't make sense after all. It was basically his position that the reason to increase one's marketing at a time like this, is because the competition is usually going to decrease theirs; so it's a great time to really develop a brand, and a great time to get some attention from new and existing customers and rev up sales.

Mr. Tornquist was big on internet marketing as an inexpensive alternative to traditional paid print media for small businesses. However, it seems that he advocates a combination of both forms of marketing. He does not eschew one for the other.

It is not that he speaks of anything that is out of the ordinary, though. Every idea he discussed, most small business owners have probably heard a million times. Fundamentally, a small business needs a website. That's just basic common sense at this point. Check out www.ebranz.com to get ideas of how to optimize your website. Tornquist discusses direct mail - in fact he says that direct mail is still a "larger industry than all online put together." He also talks about "local-search marketing [results that appear where people search for local businesses]" as being a smart investment for small businesses right now.

There is also the pay per click google adsense advertising that small businesses can affordably add to their marketing efforts. If all esle fails, small business owners can start a blog. Just make sure to optimize it.

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11/3/08. Here is an additional thought. Have you ever heard the concept of "multi-sensory marketing?" Well, I was browsing through this book called Whiff by C. Russell Brumfied and in it, he suggests that the new direction of marketing is something called "Scent Marketing." He advocates creating a scent that is part of your company's brand and using it in all your marketing materials including business cards, stationary, everything. He says scent marketing is definitely a trend to watch. You be the judge