Mooo! Don’t overmilk your cash cow

When you sell a variety of goods or services, you’ll probably find that one or two of them will emerge as your big profit-makers. The tendency is to focus on these cash cows and neglect the introduction of new products. While it’s understandable to want to profit from the winners, be careful of committing all your resources to milking the cash cows.

Markets change, and you don’t want to be left with nothing appealing to sell.

Don’t get caught short if your cash cow dies. They don’t live forever.

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Good idea for a new business? Absolutely yes…but maybe not

When I ran my ad agency, I had the opportunity to talk with many entrepreneurs getting ready to start new businesses. I found that many of them, pumped up with enthusiasm and ready to take on the world, could recite all the reasons their ideas were good ones — and had no notion of reasons why their projects might fail.

They came to me to get my ideas on how to promote their new companies, and ended up doing their best to sell their own ideas to me. They were stuck in positive mode, and didn’t always take it kindly when I got into the problems they might face. I knew that if an idea failed, an entrepreneur was likely to put a big share of the blame on the ad agency. I’d rather risk offending a prospective client than going down with the ship six months or a year later.

My point is, if you have dreams of glory, that’s great — but don’t kid yourself. Never lose sight of the fact that many new businesses fail for the simplest of reasons: they were lousy ideas to start with. Consider all the negatives, as well as the positives. You must be prepared to answer the question, “Have I fallen in love with a bad idea?”

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Marketing today: Are you stuck in the middle?

If you don’t have a strategy for competing in your market, you could end up fighting a losing battle.

There are basically two ways you can go: You can compete by selling at low price. To be successful. you must live with small margins, sell to a broad market, and depend on big sales volume to earn decent profit. You must also hold your own costs to a bare minimum.

Or you can differentiate your company from your competitors, convince buyers that you provide goods or services they can’t easily get elsewhere, and sell to a smaller, specialized segment of the market – that is, be a big fish in a smaller pond. Your volume is less, but your margins are better, so your profit is healthy..

Many marketers don’t think about strategy, and never make up their minds which way to go. They get stuck in the middle, confusing the buyers, and never making the sales they’re capable of. If you get stuck in the middle it’s almost certain your profitability will suffer.

It’s the wise marketer who analyzes the market and the competition regularly, and decides which way leads to the best opportunities. And who recognizes that markets and competition change, and every smart company should stand ready to change focus.

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