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John literally helped define the concepts of Internet marketing and SEO. A true Internet pioneer, John founded one of the first interactive agencies in 1995. He currently handles Finance & Operations at AudetteMedia. More about John here.

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As a serial entrepreneur with a high level of risk tolerance (and severe ADD), I never thought I would write a post like this. I’m typically more Ready - Fire - Aim. But these are not typical times.

If you’re reading this you’re probably engaged in some type of internet business, perhaps ecommerce, perhaps online marketing, perhaps technology. If so, you are among some of the most fortunate people in the United States as internet business is one of the few bright spots in today’s economy. Report after report speak to the growth of internet related endeavors, while most of the economy is deep in the throes of recession.

The Wire

The perimeter of military outposts is called “the wire.” Going off the base is called being outside the wire. Being outside the wire is usually dangerous and troops don’t venture there without the proper training, conditioning, and armament. The same applies to the current economic situation in the United States - the present economy is loaded with hazards and it’s dangerous to go there without being just as equipped as the soldier going into battle.

The key is to stay where it’s safe - inside the wire. Most of us don’t have any control over the things that impact our economy the most: we don’t have any control over the political machinations by the government; we don’t any control over the greed games played by Wall Street; we don’t have any control over the idiocy of many of the banks. Of course you need to keep an eye on those things, to be aware of what those with the power to really change things are doing. But the key strategy, particularly for those of us fortunate to be involved in internet related businesses, is to stay inside the wire.

Build a perimeter for yourself and your business that is inside the wire. Where you set the boundary depends on your training, your experience, your expertise, your financial situation, your risk tolerance level - a multitude of factors that you are in the best position to evaluate. Set your perimeter realistically and, once it’s set, stay inside of it. It’s dangerous out there right now and the risk:reward ratio can be asymmetric to your disadvantage.

Here are 5 ways to stay inside your wire:

1. Stay Lean!
Control your expenses. Minimize your debt. As the VC’s say, keep your runway as long as possible. This can be a very positive thing. It forces us keep our eye on economic viability (i.e. profitability) and to keep our expenses as low as possible. Too much capital can cause the operators of a company to forget that profitability is their central mission. When capital is abundant it’s easy to do stupid things with it (remember the stupid lavish parties, $50,000 conference room tables, leased automobiles and poorly thought-out marketing plans that wasted millions during the first dotcom bubble and bust?). When your funds are limited you are forced to think in terms of ROI (return on investment) for every single expense. A lack of capital demands focus and forces discipline.

2. Emphasize Vertical Growth
Make sure your business stays true to its core competencies. You always want to work at growing a business horizontally as well as vertically, but now is a time to emphasize building on what you’re best at as opposed to adding to your competencies. Budget allocation between R&D and Marketing is always a judgment call, and of course it depends on the nature of the business, but at the moment I would move the needle more toward marketing than normal.

3. Apply Your Energy Efficiently
We’ve all seen the following by Reinhold Niebuhr:

Grant me the serenity
to accept the things I cannot change;
the courage to change the things I can;
and the wisdom to know the difference.

It’s easy to get worked up over things being done outside the wire. Of course we should stay informed. But the unfortunate fact is, other than an occasional election, there’s not really much that we can do about those things. We will receive the highest return on our efforts taken inside the wire where we our actions directly affect outcomes. It takes lot of positive energy and effort to create and run a successful business - don’t waste your energy and effort on things you can’t control.

4. Give, Then Take
I have discussed the Data -> Information -> Knowledge - Wisdom (DKIW) curve before. I find it especially important during these economic times when it’s easy to believe that we live in a world of scarcity rather than a world of abundance. Base your value proposition in your business on positioning yourself as high as possible on the DIKW Curve - and give everything else below it away free. Your generosity will be appreciated, especially at a time like this, and your business will benefit.

5. Explain & Deliver Value
People are being more careful than ever about spending their money. But they will spend it where they perceive that they are receiving commensurate value. Identify the essence of your value proposition, communicate it clearly to your customers, and they will buy your product or service.

Build your perimeter carefully - and then stay inside the wire for now. We can venture out when things become a little less dangerous.