Decisions You Make Today Shape the Future of Your Business...Whether You Know It or Not!

About that last post...

There was enough interest in - and questions about - the last post on web-business structure, that I decided to write an addendum about centralized vs. decentralized structure.

Seems like every city has a "Spaghetti Junction" - an interstate interchange that makes you question the highway engineer's genetic heritage with involuntary comments like,

"What were they thinking when they created an 'X' traffic interchange?"

Atlanta's Spaghetti Junction is 73 miles of road where I-285 meets I-85 in a series of long, sweeping aerial overpasses that feel similar to a loop-to-loop ride at Six Flags.

If you miss your exit, it's a 30-minute gauntlet to get back to where you began.

Stay with me...in a minute, you'll see the connection between your business structure and the interstate exchanges...

Probably the worst-designed interstate I've ever experienced was called the "Can of Worms" in Rochester, NY. During the 6 years  that I lived there in the 70s and 80s, going through that interchange was a crap shoot:

Will or won't I make it without an accident?

Several major 4-lane roads criss-crossed so that you may have to cross 4 lanes or more to exit. Scary business indeed.

During my three years of programming experience, I learned very quickly about Spaghetti Code - if you've been a programmer, you know exactly what I'm talking about.

If not, you'll still relate after I explain it.

Spaghetti Junction, the Can of Worms, and Spaghetti Code all result from not thinking ahead.

Here's how it happens:

You start down one path that seems correct, then you get to what you thought was the end and realize, "Uh-Oh, but it needs to do this..."

Every corporate project is rife with new better ideas that people didn't think of in the beginning. Adding those necessary requirements to projects cause them to balloon from thousands of dollars to millions of dollars in delayed cost, and cause nearly 75 percent of all corporate projects to fail.

Often, our internet business infrastructures resemble spaghetti code. We start with an autoresponder and bolt on a shopping cart when we have multiple products.

Next, we decide we need adtrackers. After searching for the best software package, it gets shoved into our system and we begin referring tracking URLs by the dozens. But what happens? The more tracking URLs we use, the more we're committed to the infrastructure path...even if it's not the most efficient path.

But now, we're stuck with products that may not be simple to maintain, implement or integrate.

Eventually, you might have a dozen products that you've somehow wired together to make an organizational flowchart that looks like...well, a bowl of spaghetti. Hence...spaghetti code.

I've done a lot of things wrong in building my online businesses, but I'm so thankful that I chose 1ShoppingCart as my core system because it does 80-90 percent of everything I need for my infrastructure.

A spaghetti structure was appearing in my hosting accounts, domains and affiliate programs, but because my core system is 1ShoppingCart, I nipped it in the bud and without losing any of my important data.

Consequently, I don't scurry around to find:

• autoresponders
• shopping carts
• affiliate programs (although 1ShoppingCart's affiliate module needs some serious work)
• client management software
• e-mail monitoring programs
• and support for all the applications

I could easily spend $1000s on multiple applications and the webmaster support to hook it all together. In the end, I would have created a discombobulated hodge-podge infrastructure with a gazillion breakpoints.

Breakpoints?

Don't gloss over that point. Everytime you combine two processess, programs or resources, you're creating more failure points. If your business structure is cobbled together with multiple programs, languages and technologies, managing the breakpoints can become a full-time job.

Not me, though...I'd rather pay the very reasonable monthly or annual fee for centralized infrastructure and management.

So, the lesson today my friend is about centralized business structure vs. decentralized business structure.

I've watched my main consulting client (so big that they have a single letter as their stock ticker!) go from centralized to decentralized and back again.

Always, the efficiency of the centralized model wins out over time because of tools management, process standardization, and shared knowledge across diverse resources.

The image above represents a typical decentralized business infrastructure.  Each company department is responsible for its own profit and loss which usually means they are "empowered" to control how they use typically shared resources or shared tools.

In a graphic example such as the one above, quickly you'll see the folly of this approach.

Needless redundancies: Too many people and resources perform the same tasks.

When we read about major corporations gobbling up other companies, the first thing promised to shareholders is that the company will "consolidate" their "resources" to achieve "synergies" and reduce "redundant inefficiencies."

Not long after the acquisition, layoff announcements proclaim that 10 to 25 percent of the work force is being "surplussed" because of job redundancies. Eliminating the redundancies and stashing the cash savings is one sure-fire technique that companies use to improve the stockholders' return.

After that process is complete, a centralized organization follows with a structure like the one below:

What do you notice first?

All the business departments operate with the same set of pooled resources including tools. What you can't see in this picture is that more is done with less. And there are fewer breakpoints.

So, you're an internet marketer. You don't have departments or a Finance shared service. How does this apply to you?

All businesses share the same goal: Increase revenue, decrease expenses and keep more of what's left as profit.

The only difference between you and General Motors is the number of zeros attached to your goals.

For little guys like us, the only way to grow a business exponentially is with help. That comes in two ways:

1. Outsource everything (still managing multiple outsource partners can be very difficult)
2. Build on a centralized toolset that does almost everything you want and grow as you go

I chose number 2!

The downside of centralization is that you're drinking someone else's Kool-Aid. For example, I hate 1ShoppingCart's affiliate software. It's not intuitive and the affiliate must do way too much work to get promotional links and material.

But I've chosen 1ShoppingCart as my centralized core system. In all the other areas of my business they were tops...until the business changed drastically after Butterfly Marketing last year.

When that shift in the marketplace happened, I felt constrained by 1ShoppingCart's business processes. It appeared I might have to change eCommerce providers. 1ShoppingCart fell short in this one area.

Membership sites are the most profitable online business models on the web for the small business. Yet, 1ShoppingCart didn't integrate well with any outside tool except VisionGate. And too many of my friends who used that tool called it Vapor Gate - all talk, no substance.

Membership software that used the same client database that I had in 1ShoppingCart was important to me. That's information I want centralized and managed well.

In the spring of 2007, 1ShoppingCart announced an integration with the best membership software on the planet - aMember. A small one-time fee and a free plug-in and we're in business.

When you choose a partner for your business, be sure that partner will respond to changingg business conditions just as 1ShoppingCart did for me.

In about 10 days, I'll launch my first membership site - and it will be a free resources site loaded with great tools for you read, use and prosper with.

Stay tuned for that.

Comments

[Blase]

David,

I think you should make a report out of this.
Add a video that shows exactly how to use 1shoppingcart.
Give the whole thing away with your affiliate link in it.

A least you know I read your mail.

[HP van Duuren]

Hello David,

Your story about 'Business Goals', about increasing revenues, decreasing expenses to keep more of what's left as profit does remind me of a specific little story.

A story about an old man with a successful Hamburger Restaurant. One day his son with a 'Business Degree' gets in control of 'management'.

'He does all the 'right' things'.

Gets rid of all the unnecessary expenses, the 'unpractical' (but cute) little curtains that frequently need cleaning, and all those expensive fresh flowers all the time just screamed to be replaced by fake ones! And dozens of other great improvements!

'You know where this is heading...,'

Nowbody enjoyed comming to the Restaurant anymore, because they came because of the cute curtains, the fresh flowers etc. etc.

(BTW on my Blogspot, you can find an interesting blogpost concerning this kind of - lack of - "Consioussness", posted
May 25th 2007)

[John Vanse]

Great stuff David
Those that don't open/read your emails don't know what they're missing.
Maybe they are so busy stuffing around with their dysfunctional business models they feel they don't have the time to open emails. But they don't realize that they may find the solutions to their business problems by reading advice like you give.

regards
John Vanse

[Richard Price]

Hi Dave,

Richard here, a loyal reader and subscriber to your newsletter. Even though you said your loyal readers need not read your rant, I read it anyway just to see what it was about. I truely appreciate all of the free tools and things you giveaway.

One thing that I needed to say though is that I seem to be about a week behind on all of my email reading so I don't always get to things right away but I read everything because there is so much good stuff out there to read.

So on those circumstances I hope you'll keep me on your list and in your prayers as well. I'm just trying to say thank you for all the great gifts and good advise.

Sincerely,
Richard,
bipkie@gmail.com