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[Real World Analysis] How a Business with 12 Million Followers Went Bankrupt

[Real World Analysis] How a Business with 12 Million Followers Went Bankrupt

Before I get to the story about the business with 12 Million followers, I want to start by discussing a Facebook ad about the “truth around building an audience” that drives me bonkers every time I see it, so I decided to share my analysis around why I think it’s extremely misleading (and could even be dangerous to your financial and business health).

In a nutshell, the ad makes the claim that if you have a business, building an audience is a waste of time. You should immediately stop all of that blogging and podcasting and shooting videos nonsense, and instead, just follow this particular guru’s simple formula to immediately fill your business with high-paying clients. No audience required.

Simple as that. No mess, no fuss.

Now, a few disclaimers before I get into my analysis. First off, while yes, I’ve obviously read the ad, I have not actually watched this person’s webinar, so I don’t know what his simple formula actually is. If I were to guess, I would assume he teaches how to use some form of paid ads (most likely Facebook ads) to attract prospects into a funnel that ends in a sales call.

If that’s what he’s teaching, it’s perfectly legitimate, and I’m sure it does work.

I’m also a big believer that businesses should be profitable and make money for their owner. If his system works as advertised, the fact that he’s selling it isn’t the problem.

It drives me bonkers because it’s incomplete. And because the claim the ad makes is incomplete, it has the potential to hurt entrepreneurs.

Here’s the truth:

In order to have a successful, profitable business, you need both long-term and short-term marketing strategies.

Long-term marketing strategies are for audience and platform building. That includes those pesky tactics such as blogging and list building.

Short-term strategies are to generate cash now. So, any type of sale emails or, in the case of this Facebook ad, a paid advertising strategy designed to generate prospects so you can close them on a sales call.

Focusing mostly on long-term strategies (especially before you’ve built up a big platform) could lead to big time cash flow challenges.

Focusing on short-term strategies could lead to a massive feast/famine financial cycle. Plus, if your short-term marketing strategy stops working for some reason, you could lose your entire business.

The Internet is littered with stories about entrepreneurs who built their platform around (or had most of their income coming from) one source, and when that source dried up, their business tanked—sometimes as fast as overnight.

This is especially true if your short-term marketing strategy is linked to something you don’t control. For instance, let’s look at this strategy of using Facebook ads to close high-ticket clients.

* What if Facebook suddenly jacks up the rate of those ads overnight. How will you then get a high enough return on your investment, to make this particular strategy worth it? (Yes, I’ve seen this happen.)

* What if Facebook bans you from advertising? (Yes, I’ve seen this happen.)

* What if something happens to Facebook? (As I write this, Mark Zuckenburg is testifying in front of Congress about Facebook’s privacy policy. What if Congress decides to regulate? What if Facebook becomes less popular?)

Now, maybe none of these “what ifs” actually happen, but the point here is that you don’t know.

Things change at lightning speed in the age of the Internet, which means if you aren’t spending time building your presence on a platform you control (such as a blog or website) in addition to building your audience and growing your subscriber list, the more vulnerable you are.

It doesn’t matter if you have thousands of followers on your Facebook page or YouTube channel. You have no way of contacting them if Facebook or YouTube changes the rules.

Which means, if the rules DO get changed, you’ve just lost your audience.

For example, there was once a little publishing company that built up a Facebook following of 12 MILLION followers. They posted daily videos that were liked and shared and followed.

Then one day, Facebook changed their algorithms to show more posts from personal contacts than businesses, and they lost over 75% of their organic traffic.

Just. Like. That.

That little publishing company didn’t recover. It went out of business.

The worst part of this story is it didn’t have to happen. This company had a ton of content. Why wasn’t it posted on YouTube? (At least then there would have been a second platform to turn to.) Why wasn’t it posted on a company blog?

In this case, the work was already done. It wouldn’t have taken much effort at all to put a little love into building up a couple of other platforms. It wouldn’t have taken much to invite their Facebook fans to opt in to an email list.

But, it wasn’t a priority for them to build a platform outside of Facebook. Likely, the owners never even considered that Facebook would change the rules overnight. Maybe they even thought it was a waste of time and energy to do anything else, when they were getting so much traction and momentum from Facebook.

Anyway, let’s get back to you.

As a busy entrepreneur (who maybe doesn’t even like marketing all that much), you may be reading this right now while experiencing sinking feeling in your stomach.

Where will you find the time and energy to create both long-term AND short-term marketing strategies?

Well, here’s my answer—you get help.

I’m a big believer in focusing your time, energy, and love on what you most enjoy. Find the marketing tactic you love and do that. (My “Love-Based Online Marketing” book includes a “Love Your Marketing Assessment” that can help.)

You also may need to put some time into the cash flow part of your business as well, to make sure it’s running smoothly.

Then, hire a team member (or members) to help with the long-term marketing strategies.

You don’t have to do it fast, or dedicate a lot of time to it. If all you can handle right now is a weekly article, then do a weekly article (or a weekly podcast or video).

Commit to what you can. And budget what you can to get help.

And, take a deep breath. You’re in this for the long haul, right? So, know the long-term marketing strategy may take a little longer to see results, but at the end of the day, you WILL have a stronger, more stable and more profitable business because of it.

And, if you’d like to dig more deeply into online marketing, including putting together an online marketing plan, my “Love-Based Online Marketing” book may be perfect for you.

[Video] Flip It! Are You Using the Wrong Marketing Strategy?

[Video] Flip It! Are You Using the Wrong Marketing Strategy?

If you’re not seeing the success you want to be seeing in your business, it’s very possible it’s because you’re using the wrong marketing strategy .

Let me explain: There are two types of marketing strategies — long-term and short-term.

Long-term strategies are designed to build your business over the long term. The benefit of using them is you can be reaping the benefits of what you built for a long time — months or even years — even if you stop using it. Examples of long-term strategies including blogging, SEO, podcasts, other types of content marketing and even list-building.

Another way of looking at a long-term marketing strategy is any strategy that focuses on building a community. You aren’t making an immediate sale, instead you’re focusing on building a solid, loyal community that will buy from you over and over again.

Hence the weakness of long-term strategies — there’s no focus on cash flow.

That’s why you need short-term strategies. Those are designed to make a sale right now. Product launches are short-term. So is any sort of sale.

All healthy businesses need both long-term and short-term strategies. The problem happens when you are either focusing exclusively on one marketing strategy or you’re focusing on the wrong strategy for your goals and where you’re at in your business right now.

For instance, if you’re focusing solely on long-term strategies when you really need cash now, you can be creating a lot of financial stress. However, over-focusing on short-term strategies can trade short-term profits for long-term disaster.

But, I’m getting ahead of myself. Watch and decide for yourself:

 

(And if you’re wondering exactly how you can get everything you want simply by flipping your perspective? Check out the first episode here.)

If you liked this episode, you may also like my “Love-Based Online Marketing” book — you can check it out here.