Buffett's advise in year end memo: guard the reputation of your business and plan for the future

Memos have lost their place in the business place for the most part. I'll send a broadcast email, which is just another name for a memo I guess. I think when social media started compiling the worst / meanest memos of the year is when I officially stopped using the Microsoft Office template for memos and opted for gentler emails.

But the era of the company memo is alive and well in some businesses, including the empire of Warren Buffett and Berkshire Hathaway. Late last week, Warren sent out a memo to his 'All Star' managers throughout the Berkshire Hathaway portfolio including their media properties. 

Buffett hit the nail on the head in my opinion. 

Reputation is a top priority for any business, especially for journalist. Given the scandals that have impacted some publications, including recently with Rolling Stone magazine, managers and especially publishers must guard the reputation of  their outlet. Buffett's words struck such a chord with me that I read parts of his memo to some of my staff this week. I think parts of his semi-annual address should be shared with newspaper operations throughout the country.

The second big point in the Buffett memo was the need to plan for successors in your operation. This is another area for consideration by media outlets, especially newspapers. What is the average age of your newsroom and advertising department? In many newspapers across the country, the answer likely older than ever. The industry, largely because of its own bad press is struggling to attract young talent. At age 47, I still think I'm a younger leader than many in this business. 

What we are doing to attract and retain the best of the best? In my new position, I've been told repeatedly that recruitment is a top job priority for me. Just like sales for advertising, it is important to have a prospect funnel for new employees. It is not that you want to turn over your entire staff, but rather that you're prepared with when turnover happens. 

The Berkshire Hathaway memo talks about finding the next leader for the various business units receiving the note from Buffett. But that need to have plans in place for the next man (or woman) up should be the goal for your entire org chart.

The Wall Street Journal's Erik Holm and Anupreeta Das did a good job on the story. There is also a full reprint of the Buffett memo available at http://blogs.wsj.com/moneybeat/2014/12/19/buffett-reminds-his-top-managers-reputation-is-everything/?mod=e2fb

It is time for newspaper publishers to again hold their head high and regain a little of the old swagger

When I started selling advertising, for a radio station against newspapers, I found it easy to sell against newspaper reps. I worked harder and was more creative which gained the respect of accounts. There was no sense of entitlement in my eyes for the customer to get their business.

Newspaper reps were more into servicing their accounts, managing what they had which at the time was plentiful. Creativity happened occasionally but don't get use to an idea too often. Newspaper reps could be arrogant and felt all they needed to do was show up at the account to get the business. These bad habits, allowed for generations by newspaper publishers, is in part to blame for the situation newspapers find themselves.

Early in my sales career, at the very first daily newspaper I worked the publisher was not a people person. A chain smoking, hard headed liberal, the publisher was always in conflict with a more conservative community in which he did business. One afternoon, he made his way to my second biggest account; a furniture store run by a local Republican party leader. They have their words with each other with me watching. Finally the publishers turns to my customer and says, "Tom, if you don't like it get $3 million and start your own G** damn newspaper." And then storms out. The ability to control a small town by being the only media around created arrogant bullies, and made the newspaper business a quick and easy target for upstarts.

Clearly the world has changed since that time. Marketing and advertising has been turned upside down through a number of disruptive forces. Few newspapers and newspaper sales reps can continue with the old mentality and be effective in today's environment. The future of any media outlet rests in its ability to innovate and change as fast as it can. For media sales reps, being adaptive means learning new technology and finding ways for it to solve customer problems. The days of merely showing up and getting the money has past, but there is still money to be earned if you show up with good ideas and solutions.

I do long for some parts of the old days however. This industry must be more outward facing, and trying to help the community's we serve and the advertiser's we partner with if we are going to find success. But I do believe a little bit of swagger, if done in moderation and kept in check by reality would help!

Newspapers have beat themselves up to the point of being apologetic. The industry gets hung up on all that is wrong, and forgets what is right. In most cities and towns across the country, newspapers still hold a lock on the largest audience, the most influential audience with disposable income. The newspaper is still vital to the daily lives of millions, helps keep government in check, chronicles the success and failures in our communities and champion causes to make a difference. Newspaper websites are a main stop for people when they go online, and coupled with print provides as broad a coverage as anyone in most markets. http://www.naa.org/Trends-and-Numbers.aspx

My head is not in the sand. There is still plenty wrong with the current newspaper business model, and swift action is necessary. But in the midst of all the negative that surrounds the future, the legacy product still has a lot to offer.

Facebook posts by well-known brands are only reaching 2% of the page fans; Forrester Research

It has been nearly a year in the making, and by mid January the marketing landscape will change significantly for many small business operators. Many businesses have built up and now rely heavily on organic reach of their audience through their Facebook page.

It's hard to imagine that the reach of Facebook posts would get worse,though that is the expected outcome. This past week, Forrester Research said that posts to Facebook by well-known brands are only reaching 2% of their fans and followers currently. That is a significant drop from a year ago, before Facebook started to put a squeeze on business pages.

The Wall Street Journal this weekend did a fabulous piece on this topic, and the possible impact on small businesses. Written by Angus Loten, Adam Janofsky and Reed Albergotti, the article goes into some depth on the Forrester Research and other facts surrounding this change.

This isn't really a surprise. When Facebook became a publicly traded company, many experts started questioning and pushing for more and more monetization of the platform. Facebook has responded with strong advertising platforms for desktop and mobile. So forcing businesses to pay to promote their posts isn't a stretch, and is still likely a good marketing choice for some businesses.

But this does open up the door for a lot of healthy competition between digital options and legacy media. As I've been out on sales calls over the past two years, the number one competitor that I've faced has been free posts on Facebook. It is hard to beat free.

Now that those posts are going to fewer consumers, and eventually to none without paying to promote, the playing field is a little more even. Newspapers have seen this type of disruption before, with private party classifieds going the free route to CraigsList. But in this local battle with Facebook, they are taking the free option off the table, and we can now compare value and reach side by side.

In the experiments I've done with placing Facebook ads, the results were quite mixed. Specific to Facebook, I found that people who went there were there to be social, not shop. I think Facebook has done some refinement and increased targeting since I first tried those ads, but the fact is still that Facebook is first and foremost a social platform.

If you are going to be targeting customers, search engine marketing (SEM) might be a better options. Facebook is a cold call, while Google key words are a hot prospect who has already specifically reached out for information by search.

Whatever your feelings are, the approach for media reps in 2015 has to be aggressive with small and medium businesses that have relied on free Facebook for marketing. The free option is going away, but the need to speak to those customers has not. The question now is whether that option remains with Facebook or other media options; all of which now will cost the business.

American Express hits gold with their annual day after Thanksgiving Small Business Saturday event

Various newsrooms across the country and preparing for their coverage of Black Friday spending. Retailers have been preparing, some since last January on their planned coverage for Black Friday. And consumers are plotting their store coverage, anxiously anticipating the arrival of their newspaper on Thursday with specific inserts to get those big deals.

The good news is that spending is predicted to be up in 2014, compared with last year, with a 3% gain predicted. The average American will spend $720 on gifts this year, that is up from $704 according to a recent Gallup Poll. Lydia Saad's article on Gallup's website offers some keen insight on consumer habits and plans for the holiday shopping season, which officially opens on Friday; or Thursday night in some cases.

The malls will be crowded on Thursday night and Friday. But hopefully consumers will also take some time and flood small local mom and pop retails on the new tradition for the holiday, Small Business Saturday. The Shop Small movement has had an impact on Main Street in many communities.

Media companies live and die by big box stores, and frankly lately it has been tough. They continue to squeeze and leverage rates down without apology. The opportunity for media's bright future rests with the success of local stores owned by local individuals. Small towns to medium sized cities also rely on the stability and strength of small business owners to employ people and to pay taxes. It is vital for the strength of the media industry and the communities we serve to have a vibrant business base. Take a few minutes this weekend and spread some love to a non-mall, non-chainstore merchant.

What the newspaper industry can learn from The Profit's Marcus Lemonis and Warren Buffett

I guess I've become a business TV junkie.

It started a couple years ago with "Shark Tank" every Friday night on ABC. Every sales rep should be required to watch this show and then be able to walk up and offer a short and concise sales pitch for their product or service. Perhaps "Shark Tank" was a gateway show to deeper addiction.

Next was "Celebrity Apprentice" with Donald Trump. All businessman should study this show and learn how to work under pressure and with a team. It will make you a stronger manager, and will help you to see the performance level of you and your team.

But my favorite now is "The Profit" on CNBC. Marcus Lemonis walks in and does a quick assessment of an operation from top to bottom, and then offers to invest in a real life struggling business. During the opening of the show, Lemonis states that he wants to save jobs and make money, and he has done this through a variety of small retail and service businesses throughout the US.

I would absolutely love to see Marcus Lemonis take the newspaper industry on in one of his episodes. Every operation needs to have some self examination time, and I believe the way he goes about this business-autopsy would prove extremely beneficial and profitable for newspaper companies.

Lemonis exams the causes of lost business, finds ways to improve cash flow and improve the core business of the investments he makes. The common thread of all of the episodes I've seen is that the basic business is solid, but the focus has been lost by leadership. Lemonis and the show's producers find a way to unlock the inner-passion that the owners and employees of these companies still have. Isn't that what the newspaper industry needs to do?

The business landscape is quickly changing, I fully realize. But the basic model of business can still work as we continue to move and adapt to the emerging digital changes. Inland Press Association had an article that featured Warren Buffett and the future of newspapers.

"Warren Buffett: What Newspapers Need to Do to Survive" goes over some fundamental things newspaper publishers need to do to survive and thrive in the short term and long term. My favorite passage from the story hits directly on finding that passion, in the newspaper employees and the communities we serve.

"Passion does matter, and the proof is in the revenue trends that some newspapers show.    When those dedicated editors gather a team that cares, the community cares right back and shows it in readership."

 

I will rely on business minds like Lemonis and Buffett, and try to follow their lead. Their business principles will work for a small flower shop, a hair salon and I believe, the newspaper industry.

Comparing newspaper ad spend vs. time spent with media per day

There are a bunch of charts out there that are designed to scare anyone associated with the newspaper business. OK, they are designed to give you a quick snapshot of the industry, which might be scary to some in the industry.

The decline of circulation is a tough chart to review. The rise of other media and  their increases in revenue can be hard to swallow. For me, the toughest chart is the ad spending vs. time spent with media chart. Newspapers, despite the tumble of revenue, still brings in a lot of revnue. Unfortunately that revenue not in proportion to the amount of time people spend with a newspaper.


So what can be done?

To me, this is not an audience or revenue issue. Clearly the business needs to hold to and grow when possible revenue. The audience needs to be cultivated, especially a younger audience to help secure long term relevance. But the answer to me is better audience engagement!

Content is king. Too many newspapers are still producing the same basic product that they did in 1984, completely forgetting that it is 2014. Content tastes vary by market, but editors need to keep their ear to the ground to find out what works locally.

Tell a story, but do it efficiently. Too many times you still see newspapers devoting 40" of content for stories that were told in 15". Tell the story in a timely manner too. There are still newspapers that provide indepth copy of sporting events that are 36 hours old (or older) when they finally reach the end user. That NASCAR race or baseball game might not warrant game coverage if it doesn't make that next day's paper.

More details on Harrison Jacob's story on the newspaper's horrible 10 year run can be found at http://www.businessinsider.com/brookings-essay-on-decline-of-newspapers-2014-10

Four great business tips from Disney Cruise Lines

This past week, I've been fortunate enough to spend a week on a Disney cruise. It was great to spend time with my family and unplug from the daily grind of work. But even in those 'unplugged' moments, I could help but think about good business practices.

Disney is a great example of a high standard, high profit organization. Walt Disney was a true innovator, but let's also give the man credit for some solid business practices. Walt has been dead nearly 50 years, yet his legacy continues as do some great business lessons.

During the week, I jotted down several really good practices / ideas. Here are just four of the best from my week floating around the ocean.

1)  Don't just be very good, be excellent -- After our first dinner on board, the head server came to our table to see how service was, how the food was and to introduce himself to our table of seven. He asked the group if dinner was 'very good'. All of us were eager to say yes, because the food and service was at a very high level. As we all agreed that it was 'very good', he let us know that the next night the goal was to be 'excellent' and not just 'very good'. No matter how good the product or service, the sites for your performance has to  be higher. You will never achieve that perfect product, but striving for more even when your customers are thrilled is a noble pursuit.

2) Identify your key customers -- My wife and I debated just how many Disney cruises we have been on. We've decided it is now up to seven. I'm sure Disney knows, as they do an excellent job of identifying repeat customers through small tokens of appreciation like small carry-on bags and lanyards that designate your level of achievement in their loyalty program.. We are gold members of the Disney Castaway Club. When you're on a cruise ship,  your room key is your cash, your ID and of course your room key. The gold member lanyard, besides being a nice little perk is a great way for them to identify their key customers. And they do recognize you if you're wearing these. Not that they don't ask a first time passenger, I'm sure they do. But knowing who the core customers are, and insuring their satisfaction is a business basic to have a healthy business.

3)  Active management looking for feedback -- I mentioned the very good to excellent manager experience on night one. That is really just the tip of the iceberg, so to speak! Every manager is on the prowl for feedback. They also have a formal feedback system in place, where good and back customers experiences are recorded. Employee recognition and rewards are based in part on customer feedback. Disney does a good job of this on their boats and in their parks. Another theme park operator, who I believe does a good job of taking the best from Disney and putting it to work is Holiday World in southern Indiana. Talk about manager's on the prowl for feedback! Most every time I've been to this themepark, at least once a year for the past ten years in fact, I've seen the owner sweeping the sidewalks, talking to customers and employees. Remember, there are internal and external customers that you need to get feedback from to be successfull.

4)  Constantly and openly improving your product -- I've been reading the Mark Twain classic "Following the Equator" over the past month or so. I've read it in small bites, but will finish it! In that book, Twain taught me that a ship must always be being painted or it is bad luck. I never knew that. Disney does not want that bad luck either, and so the tradition continues. But even beyond the superstition, I think it is a great symbol for the company to show its employees and customers. It is an investment to continue to maintain and up grade your facility, and your product. It creates a sense of pride in your work force, which no doubt rubs off to how your customers are treated by those employees. In Disney's case, it also allows you a chance to separate yourself from your competitors. There are cheaper cruises that have similar iteneraries available, but I have developed brand loyalty in part to the experience and the quality of the product they produce.

All of those ideas can easily work into all businesses. The results, if you work hard enough, will be a better product, happy customers, happy employees and more profits!