Simon Baker was the CEO and Managing Director of the Australian-listed online real estate company realestate.com.au, which was the leading provider of online real estate sites – operating 22 sites in 10 countries. Simon delivered great returns for the shareholders by increasing the market capitalisation from $8m in June 2001 to over $600m in June 2008.
In this Q&A interview with Alex Pirouz, Simon talks about all the various elements required to build a great online presence, what business owners need to look for when hiring agencies to help them with their online strategy and the common mistakes most business owners make and most importantly how to avoid them.
For someone who has just started their business online, what would you say are some steps they can take in order to build a solid foundation for their business?
First things first: they must have absolute clarity in their business model and that model must be simple to understand for anyone who interacts with the website. If you can’t explain what you do in your traditional elevator pitch, probably don’t do it because you have to explain this business concept a thousand times to a thousand different people from all fields: advertisers, consumers, customers, shareholders, etc.
The second would most definitely be funding. If you don’t have the money to do it, don’t start. And it’s not a case of working out that you need $300,000 and raising that much; most often if you need $300,000, it usually means you need to raise $500,000 because you will never get the numbers right. Also make sure you have a quality team, people who are hard-working. I would rather work with quality people at a higher cost then cheap people who want equity but can’t do the job.
And last but not least make sure that you are operating a real business, one that has scalability and potential.
What are the top 4 most common mistakes business owners make while growing their online presence? How do you avoid these mistakes?
The first mistake would have to be overestimating how much revenue they are going to be generating through the business. I look at business plans all the time because I invest, and I have seen so many hockey sticks it is ridiculous. The second mistake they make is that they under-capitalize themselves.
Day in, day out, they are struggling to pay the bills, and the problem with this is that they spend more time worrying about raising money then they do on building the business. And the third mistake is that they over-intellectualize their business. I have sat down with so many people who say “I have this idea that is going to change the world”. And by the time they have explained their business model, I usually need to ask them: what is it that you do?
In their heads, they have lived with the problem for so long that somehow they have managed to come up with a solution, and for whatever reason they have become too connected or passionately involved with the problem, which is bad because they can’t seem to walk away from the business when it’s not working.
How do you go about avoiding these mistakes from the start?
The best way to avoid these mistakes from the start is to get good advisors on board early; a good advisor is not someone who simply has money to spend, it is someone who has actually done it. Once you get good advisors on board you then need to listen to them.
I can give you so many examples of when I have told business owners not to make a certain decision and they didn’t listen only to come back and say “you were right” one year later.
Why does this occur?
Because they are either too passionately involved or they overestimate their skills
Should the look, feel and functions of a website be determined by the particular industry an individual is involved in?
First of all the website is the manifestation of a business. So for example take www.Realestate.com.au: the primary business is advertising real estate listings to a large audience, and nowhere in that does it say via a website.
Once you have worked out what your core business is, you then work out a way to best manifest that model. All the businesses that are successful are simple, and the ones that fail you usually have to think about.
What do business owners stand to lose by having little or no presence?
You are better off having no presence than little presence. When customers check you out online and your presence is crap they will assume your business is crap. For example: if you go past a perfume shop and it is messy, poorly organized, low amount of stock on the shelves, you will think that they are not the best business to deal with.
This customer experience also applies online. How many websites have you been to where you think “I can’t use this site, I can’t find the information I want, it’s poorly laid out, slow to load”, etc. All this states is that the business is an amateur, and no one wants to deal with an amateur.
So the bottom line is: you should have a great presence or no presence at all.
With the Internet evolving rapidly all the time, what can business owners do to stay ahead of the game within their industry?
Honestly I don’t think businesses need to stay ahead of the game, I think you need to play well in the game and in doing so you will be ahead of your competitors. What is the game? Well, too many people think “I have to have the best website, have audio, video, Flash” and whatever else.
But the question they should be asking is: What are my competitors doing? And how am I placed with in them? And if you can deliver a better outcome than your competitors then by definition you are winning in the game.
Why do most online businesses fail?
The main reason is because business owners try to change consumer behavior. Don’t try to change consumer behavior, modify or shape their behavior instead.
Where do you see the online market in the next 3 to 5 years?
I believe mobile will become more relevant and so companies should really learn how to develop a mobile strategy and work it to their advantage moving forward.
What should a business owner look for when hiring a company to help build their online presence?
Relevant experience, Relevant Experience, Relevant Experience and Relevant Experience. Find guys who have done it before within your industry, hire them, make sure they fit the purpose and then simply listen to them.
How did you learn about all this stuff? Did you have mentors, read books, take courses, etc?
I learned a lot of what I know through trial and error
If you had to offer one piece of advice to a business owner who is looking to create a successful online presence, what would that be?
Doesn’t matter what you are doing, get professional advice. You would not go skydiving without getting instructions first; you would not get in the car without learning how to drive first. So why would you go to solve a potential problem in the marketplace without seeking professional advice first?
Alex Pirouz is the founder of RIDC Advisory Pty Ltd. A Business and Sales Advisory firm partnering with Australia’s largest and fastest growing companies to further increase their revenue. Visit www.ridcadvisory.com.au for more details.