February 2004: Risk Management, Huh?
by Daniel Hicks, www.ezygo.com
I wonder in amazement at how our industry seems to be sitting idly by, as the world around us considers how to crush and destroy many aspects of our businesses.
Numerous companies, the likes of WebSiteBilling, BabeNet and PSWBilling, shut down shop with little or no notice. Spamming becomes more impossible by the day, and pop-up blockers being introduced everywhere are the issues we all ponder daily.
Then we start to hear rumors that the chargeback ratios may be dropping even lower in 2004, whilst at the same time Web savvy consumers know they can charge back a paltry $2.95 credit card trial, and get a free fix of adult content any time they like.
But, as our sign-ups still come in every day, the parties at InterNext still rock, and the girls still line up to get their clothes off for our cameras...we seem to contemplate that everything must be OK - right?
Wrong! What we don't seem to realize as an industry is that many profit centers within our business models are being eroded in both subtle and dramatic ways, to a point where certain segments within online adult entertainment will not be profitable any more.
So, what can we do? The answer is "Risk Management."
Risk management is a tool used by all major corporations worldwide to reduce or defeat the impact of negative influences reducing the bottom line.
Understanding Risk Management
Shows/Conferences:
Get together with a group of friends. Work out who is going to find out what, at the start of the show. Then meet at the end of the show, compare notes, and work out together how the information can best be used by each person in the group.
Traffic:
Explore ways of using your traffic that you haven't even considered before. There are more places you can consider sending your traffic than just another adult site. Look at all your options, and build a system to monitor the exact results for each test you perform.
Diversification:
It's wonderful to be good at just one thing (see Core Strengths below), but what if your single skill becomes redundant? Add a few extra strings to your bow, and explore other opportunities whilst your cash flow allows.
Core Strengths
Never forget your core strengths. Always look at how you can let other people add value using your core strengths, so that the combined value of your partnership/union makes more money for both parties.
Billing
Use multiple systems if possible, and spread your income and database across as many platforms as you feel comfortable. And, only choose companies that have a solid base (due diligence, folks).
Boards
Free marketing and research tools that cost you nothing but your time. Ask questions, and search for answers. Most of your questions will already be answered.
The 5% Game
An age-old remedy for any business. At least twice a year, sit down and work out how you can increase your sales by a measly 5%, and reduce your costs by a mere 5%. The impact on your bottom line will astound you.
Which way should I go?
Sometimes it appears easiest to follow the path of an apparently successful operation...Doing this could be your biggest mistake. Look to the companies that are innovating and adjusting to the market conditions swiftly and efficiently, as they are considering their future, and probably have a business model that is able to Adapt.
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