Question

Topic: Strategy

Debt Loaded Web Dev Firm Needs Cashflow

Posted by Anonymous on 12/28/2009 at 12:54 PM ET 250 Points
I am closely associated with a web dev firm that has been around for 15 years or so. The company has been working largely with non profits and has recently begun to focus on small business associations, travel agencies and educational organizations. It has had cashflow problems for many years but a very loyal client base. Product/service portfolio includes, web design and dev, using typo3, hosting and some web strategy consulting. What other products/services could it offer, clients could it go after, or internal stategies could it implement to get some solid cashflow?
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RESPONSES

  • Posted by Jay Hamilton-Roth on 12/28/2009 at 3:41 PM Accepted
    Has the firm's clientele been in a single region that could be branched out (using the past clientele as leads into other regions)?

    Regarding the cash flow - is the problem that the company has too many people, too much technology, or bad investments?

    If the firm needs cashflow today, why not look at elance.com, etc. to place its people there?
  • Posted by Chris Blackman on 1/3/2010 at 10:25 PM Accepted
    It's time to stop guessing and start working on facts.

    Before you can move this business forward you need to fully understand - and get the management to admit to - what's been holding it back.

    Why has this firm been having cash flow problems for so many years? Is it afraid to collect debts that are owed to it? Is its pricing strategy wrong? The costs too high? The working processes inefficient?

    Are the customers satisfied? Is the firm targeting the wrong customers to sell services to?

    Unless you get answers to all these questions you cannot determine how to move forward. It's like when your vehicle has a flat tyre. Changing the wrong wheel will not improve your gas mileage or top speed.

    ChrisB
  • Posted on 1/3/2010 at 10:40 PM Author
    I think you touched on a few citical points. The firm USED to be shy about collecting debts. It has 1 dead beat client that is actually owned by the firm which owes it about 40k. It's business model is SOLELY focused on building web sites. No marketing, no significant web strategy and doesn't really provide products that create or add revenue to their client base. Their present client base is now travel agencies, news oriented sites and business bureaus.

    I think the heart of the problem is that the company is tryin to make money exclusively off of web development. Other than a small build, 5k or so for a site and the occassional redesign, it has very little money coming in. Maybe it should investigate other revenue streams!
  • Posted by Chris Blackman on 1/3/2010 at 10:59 PM Member
    What's the reason for owning this dead beat client company? Is it some kind of operational subsidiary?

    You say they focus on building web sites, but they have no marketing, no significant web strategy and don't really provide products that create or add revenue to their client base.

    Sounds like they need to do some serious work on their product portfolio, the services they offer, and the way thay package those services to clients.

    Nothing wrong with building websites if they also charge a monthly service fee for support, hosting, e-mail hosting, etc, etc. Most SMEs want to have everything looked after by one provider and they could easily handle all those services for clients.

    The business also needs to branch into content management, blogging set up and support, and other social networking tools.

    But first, they need to write a plan to set these things up for themselves so they can get first hand experience in their use and application. And some additional customers through the door!
  • Posted by NatashaChernavska on 1/5/2010 at 8:08 PM Accepted
    Collecting debts can bring a lot of cash flow. Use help doing it.
  • Posted on 1/5/2010 at 9:11 PM Author
    I spoke with the CEO today. They have a hole in their portfolio. I think someone mentioned data analysis and marketing. This company has virtually no investment capital so I'm trying to come up with ways they can get a low budget marketing department underwat to build a new revenue stream. I am finishing up my my masters in marketing and think it might be wise to invite in a team of grad students to do a needs assessment for the current client base and see how a marketing program can satisfy those needs. Executuion has to be extremely low cost to free. Maybe using college interns for the initial execution until it makes enough money to bring in a pro. So the value add would be some marketing campaigns, SEM/SEO and marketing strategies to build revenue for the clienteles web sites. Hate it? Love it?
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