Well, most people in the industry seem to be in a bit of a panic over the recent economic problems in the US that have now begun to impact economies world wide. While I’m no economist, I’d like to offer my perspective on all this and toss out some suggestions on how everyone can weather the storm.
First, and foremost, vices have traditionally done well during recessions, and full blown depressions. People may elect to hold of on that European vacation, and cut back on those expensive dinners. They probably won’t be buying a new house, car, or big screen TV either. But most won’t give up their drugs, cigarettes, booze, or porn. These are the last things to go when tightening one’s belt.
For the most part, failing companies are those that rely on a substantial line of credit to maintain their inventories, or their sales depend on the consumer being able to secure big ticket loans, or both. This is why automotive dealerships, manufactured housing, and swimming pool companies are biting the dust left and right.
In my opinion, the greatest impact on our industry will be determined by unemployment figures. When people are out of work they’ll max out their credit cards, and that’s bad news for us.
We will have a better idea on how long this is going to last when the Christmas retail projections are announced. If they are bleak, and I thing they will be, we’re looking at about one year before things begin to turn around. As of this writing, I suspect the impact on our revenues will be much the same as the traditional summer slow down. Of course, only time will tell just how bad it’s going to be, but I choose to remain optimistic.
It is unfortunate this has happened right at the tail end of a summer slow down, as many have probably depleted most, if not all, of their cash reserves. For those with money to invest, I suggest doing so. Focus on things that will facilitate efficiency, expansion, and diversification. Most of us already work long hours, so finding ways to free up our time may be the only way to expand and diversify.
One solution for freeing up your time is to look for ways to do the work once and use it many different ways. GunzBlazing has got this down to a fine art, with the development of their affiliate promotional materials.
Those that are focused on one niche market and/or operate only one or two sites are at greater risk than operations tapping multiple markets with a suit of properties. This means the US based small to medium sized businesses, targeting only one market, are probably going to feel the pain more than others. Similar European operations will fair better, because they have more expertise on tapping their own consumer base.
The US companies will need to get smarter about penetrating global markets if they hope to offset their losses. I know of one company that just hired a guy with expertise in tapping the European market. Early projections are they will double their money within 6 months. These projections were made before the economic down turn became evident, but it will certainly give their business a much needed shot in the arm.
The number one reason businesses go under, particularly small businesses, is failure to protect their cash flow. What ever you do, make sure there’s enough cash on hand each month to cover your burn rate.
Affiliates should keep a close eye on what their sponsors are doing to siphon off webmaster traffic. Most likely it’s going to be the small and medium sized operations that will opt to start doing this, but some larger operations will fall to the temptation as well. Every single affiliate webmaster should stand up and make their voice heard loud and clear, they will not stand for sponsors surviving at their expense. If left unchecked, when things get better these sponsors will not do a reversal!
Webmasters should be discriminating about taking the advice of some sponsors, as it often comes with a self serving agenda. Be your own man or woman and make critical business decisions with your eyes wide open and focused on the big picture. If the advice you’ve been given is good, you should be hearing it from more than one source.
Affiliates should evaluate their operation for its effectiveness. Off load those tasks that are not giving you a good return for the effort put in. Then reinvest that time on things that will. It is very difficult to let go of something you’ve spent a lot of time developing, but you have to be realistic, dump what isn’t performing for you.
On the bright side, this pretty much guarantees the democrats will win the presidential election, and that should take the heat off of our industry from a legal perspective. Our industry will survive just fine. How well our country will fair is another thing, and that’s what we really should be worrying about.