By N. D. Brown
Not that long ago a surefire way to buckets of gold was to own an FCC license to broadcast. Those who owned radio and television stations were raking it in. Now, there are social media, iPhones, iPads, YouTube, plus and more and more. All of them are competing for the same customers, so what has happened?
The other day I received a blog from one of the guys I worked with negotiating to buy time for our advertising clients. Today, he teaches at a university and consults with advertisers and station owners. His blog discussed broadcaster investors had decided that the buckets are filling with brass.
Here are some reasons:
Not that many years have passed since a television program could be expected to reach 9 percent to 10 percent of the population. Shows in primetime reached in excess of 20 percent! In those days, a program that was watched by 3 percent to 4 percent of the population would soon be pulled off the air. Today, shows that deliver 3 percent to 4 percent are now a solid buy in primetime television!
Yet, the cost to reach that diminished audience has not decreased; it has increased. It costs more for programming that delivers smaller audiences and investors are not lining up to buy what used to be a sure way to get rich.
Running a profitable station is complicated but my point is about our insatiable need to grow. Everything is based on growth. Why? This is where I get what might be considered a little controversial. I don’t think growth is necessarily a good thing.
Wall Street analysts make Daedalian predictions on corporate projections of costs and revenue to determine profitability. What can stakeholders expect to get after all the bills are paid? What should the company be worth? In addition, every year Wall Street always expects more.
Let’s say your company has had an excellent year. You have strong margins and have held costs in check and added new revenue streams. You draw a nice salary, pay bonuses, and there is a little left over to invest in a new piece of equipment. If you have investors, they say “Thank you very much” and then ask “What about next year? How much of an increase should we expect?”
Why can’t the expectation be to do as well as this year and why can’t it be expected to repeat that year after year?
The answer: We are addicted to growth. It’s what we are supposed to do.
You own and operate a small business, perhaps a Mom and Pop operation, and you are the Mom and the Pop. You are not working to be in the Fortune 600. You love the business and the life it lets you live so why drool over growth that might kill you and put your business at risk?
Back to our once fat cat broadcast station owners mentioned in the beginning of this article. The truth is, every year there are more and more ways to reach consumers. Once television was the medium that reached just about everyone; now everything television can do, such as offering entertainment and news, is on your phone, laptop, or iPad. You don’t plan your schedule around when your favorite show will be on; you make your favorite show come on when you want it to come on. Television audiences are shrinking but advertising media is growing.
Now you know more about operating a broadcast station than you cared to know but it makes my point about growth. Broadcast is actually doing very well by almost every standard so why do pundits predict its demise? When is the last time you heard about a television or radio station going off the air? You haven’t. Yet, the negative people are fixated on growth so they predict the end of the medium.
You started your small business because you love the work. If you are making a healthy living, paying all your bills and your company’s bills, and you have enough money left over to stay even with or a little ahead of your competitors, why stress yourself worrying about growth?
This scenario is saleable when you get to the point in your life when that makes sense. If you want to sell your company in a few years, then forget all this and do whatever it takes to get double digit gains every quarter.
So here is my heretical position:
Should you ignore those who predict if you don’t chase as much growth as you possibly can you won’t achieve all that you should? I admit I started my small business thinking the only way to run a business was to grow it as fast as I could. I missed many little league games, dance recitals, and a few birthdays. Then I started another small business thinking that I was going to enjoy my work and my life. So I decided I will never retire to the leisure life but whatever I am doing will be something I enjoy and won’t require me to run after growth.
Growth can be an exciting challenge. As a small business owner all you have to do is decide. Think of Robert Frost who wrote, “…Two roads diverged in a wood, and I — I took the one less traveled by, and that has made all the difference.”
The good news is, unlike the prophecy of Mr. Frost’s journey, you will have many diverging roads and you, not the road, will make the difference.
- D. Brown is a Principal of Brownchild Ltd. Inc. You can reach him by phone at his office at 713-807-9000 or mobile at 713-822-8370, by email at don.brown@brownchild.com, or visit his website at www.brownchild.com.
