Priorities, that’s what we set when we’re in business. One priority that is tricky is optimization in search of a greater profit margin. Product optimization, workflow optimization, operational optimization, and any other ways of making business more streamlined is a good thing in general, but can be a bad thing at times.

In general, optimized business means greater operating profit. But, there are some times when you should consider putting your short term operating profit less than front and center.

• When you’re launching a product.When launching a product there are a lot of concerns. First, is even getting the thing off the ground. Then there are considerations of adoption rate, market success, customer feedback, supporting operations, and quality testing are also important. At this time if you are engineering down product and operational costs you could be sacrificing a few things of value: time and money. It takes time to optimize your offering, and in the mean time you’re not in business. It takes money to streamline your business, but you may never see adoption of your product and that investment was of naught. Or, maybe worse, a competitor makes it out before you.
• When you have a market but are entering new territory.If you have a product that is successful in a market and you are looking to expand, this could be another time to consider de-prioritizing profit. Business is fast and if you’re racing to grab market share you sometimes need to put product optimization behind you so you can control a market. This can mean entering contracts with less margin. It can also mean that those plans to engineer down costs are backburnered so you can capture a new customer base.
• When the cost/benefit doesn’t work out. Often times we see the carot. We see that we can increase our operating profit by a certain percent. Or we see that we can decrease our costs by so much per unit. We get tricked into investing time and money into chasing these margins. We don’t really do a cost/benefit analysis. Look at the man-hours and money it will take to reduce costs. Try to quanitfy for yourself the lost opportunity cost of time passed. Look at your increased margin per unit. Look at your sales projections. Look at the opportunity cost. Then, decide what the best course of action is.

So, with all that said. Optimizing your offerings and operations is a great thing. It can be easy money to capture. Just be cautious of the situation you are in before pursuing optimization.

It’s tempting for startups to look for increased margins, especially if they are thin to begin with. Sometimes you have to make the investment so your business can survive. Just remember, sometimes the search for optimization can kill you. I’ve seen it a lot.

You’ll read lists and lists and lists. You’ll read advice and more advice. I’m part of the information storm, and I want to talk about it. When you’re in a startup the context of your business changes all the time. It is so dynamic that “the most important thing” never stays that way for long.

If you’ve read a lot of books and articles on business and “how to win,” or “the top ten attributes of successful businesses,” or “how to execute” you’ll notice that you get somewhere between a couple morsels of applicable information and zero. Maybe you’ll pick up the latest buzz words.

So why do we read all these books and articles if what we get seems to be very little? Well, it’s to fill gaps, to build confidence, and to reflect. There is a lot of good information out there, it’s just sometimes the context of the writer doesn’t match the context of your business.

There is a lot of context missing from business advice. What is a priority for a company, group, or individual not only changes by individual but is also a function of change over time. Funding is most important, now it’s people, now it’s a sales strategy, now it’s protecting IP, now its [fill in the blank], etc., etc.

Take time to regularly evaluate where you stand. It’s easy to get caught up in the flow of things. Every week or two take some time to slow down, sit back, and think critically about where you’ve come from, where you’re at, and where you want to be. Give yourself some context, try to recollect all the advice you’ve gotten, and then modify your plans.

And, if you find yourself needing some advice, just remember to translate all that you hear and read into the context of your business.

There are precarious times when in business. I’d like to draw attention to the two most precarious times: high growth and slow decline.

The ideal state of a business is sustained growth, a nice gentle line that trends upwards.

A bad state, obviously, is a sharp downward slope. The only positive behind a sharp downward slope is that it’s obvious, you have to react to stop the bleeding or you have to cut your losses.

A not as obvious state of danger is a slow decline. Having a metric slowly go downhill is dangerous. The trend takes longer to see. People can still remain apathetic. It’s the kind of thing where people say “how did we get here?” If your performance metrics are trending down, even just by a small amount, be on your toes.

Probably the most dangerous times are high growth. If your metrics are off the chart it’s a time to celebrate… cautiously. Growth is good, sustained growth is what we want. If you have a peak, be critical. Is it a fluke? Is it sustainable? Be conservative, put money in the bank, don’t overspend. High growth leads to high emotion and that can lead to poor decisions. Get to a sustained growth and you’re golden.

This is a short synopsis of advertising and the Internet.

There are a few direct ways to make money on the Internet. Subscription to services, sale of goods, and advertisements. For pure online plays, in other words businesses that are in the business of information, it’s either subscription or advertisement to monetize content.

As time passes, fewer and fewer companies can survive based on the subscription model. People want free access to online information. Today, advertisers provide a means for the average person to freely access online content.

This is why we see the domination of Google, a company that makes 99% of its revenue through advertising… $11.6 billion in 2007 to be exact. Advertising networks drive the monetization of today’s Internet. Content exists, people want it, producers and publishers rely advertisers to sponsor their content.

Here are some figures…

• There is $26.53 billion spent on advertising for Internet, mobile, video games and digital out-of-home
• Total Internet advertising is projected to to reach $61.98 billion in 2011, surpassing newspapers as the nation’s largest ad medium.
• Marketing segment is a $254.01 billion industry

The advertising market seems to be bubble proof and Web 2.0 proof. Regardless of the *what* and *how* of the medium, it’s going to be sponsored by advertising until there is a cultural shift or another clever way of monetizing eyeballs on digital content.

In an effort to capture this revenue, ad optimization is the game. Advertising networks such as Google, Yahoo, AOL, and Microsoft among many others are working on providing the best click-through and conversion rates to keep advertisers paying and keep content publishers paid.

Contextual targeting, recommender engines, consumer behavior tracking, and now social networking are the means for optimizing advertisements online today. Making sure the right person is looking at a relevant advertisement keeps this market growing. Undoubtedly there will be other methods of creating optimized advertisements in the future.

This article outlines categories of want for not for profit organizations. Previously I’ve written about categories of want for consumers and businesses. You can find those articles at http://blog.lowesoftware.com.

Not for profit groups are an interesting animal. They are here to meet a social goal with ultimate primary focus on that goal and not profit. At the end of the day though, a not for profit organization is very much like any other incorporated entity. It needs to make money, market, and make their customers happy to survive.

Here are some categories that not for profits want:

1. Survival – Like all entities a non-profit wants to survive and continue. This could be indefinately or for the duration of its mission or grant. Survival is usually a cost for not for profits and includes taxes, government filings, human resources, and other operational items that are required to function.
2. Stability – Stability is a category of want that a not for profit has that is somewhat unique. Many not for profit organizations are not concerned with growth or change. They reach a plateau and want to maintain. If you can help an organization to maintain it’s user base, volunteer base, funding, etc. then you can help the organization meet its want.
3. Achievement of Mission – The ultimate goal of a non-profit is to accomplish a mission. This can be a mission with an end or something that is onoing. If you can help a not for profit better fulfill its mission statement you’ve got a potential customer.

The not for profit sector is a different animal. The culture and wants and needs and problems are unlike that of traditional business. But, the not for profit sector is huge.

There are many not for profit organizations that do run more like typical businesses with profit as a focus. This is especially true with not for profit medical. There are stories about not for profit board members and executives making millions and millions of dollars personally. There are regulations that have been passed and changes continue to be made.

The entire US not for profit market is composed of 1.3 million organizations. There’s definately money to be made and problems to be solved.