Industry Standards – Sure you want them?

Disclaimer:  The following relates primarily to U.S. based business, although most Countries have similar agencies and regulations to follow.

Industry Standards.  What are they?

Standard Industrial Classification (SIC) Codes and the recently adopted North American Industrial Classification System  (NAICS) is a listing used by business and Government to identify the type of operation.  These affect various regulatory and legal aspects of being in business under that classification.  Almost every business falls under one, or more, of these at some level.

Not only could you be required to follow what is outlined for the classifications above, there can be a multitude of other aspects established by  Federal, State, and Local oversight agencies and {business associations} model specific applications, usually referred to as Industry Standards, to comply with.

If you are in business, then you know the importance of determining what your Capital Expense (CAPex) and Operating Expense (OPex) impact will be on income projections.  We often -trade- initial upfront CAPex with our ongoing OPex to manage costs more effectively.  Being able to do so may mean the difference of being in business tomorrow, or not.  What it costs to start a business may pale in importance when compared with how much it takes to STAY in business and make a profit.  Industry Standards, both those imposed by Statute and related business affiliations, can impact that dramatically through legal compliance costs, fees charged, and time management expense.

 

Recently we have seen how aspects of the TE business model has created some consternation amongst the people that own – and use – them.

TEs would, in general, fall under the Advertising Industry Classification in NAICS, albeit somewhat loosely.  Here again, it would depend on the business model.  The greatest factor TEs face is the scrutiny of those related businesses, and the Industry Standards associated with them.  Payment processors being the dominant force currently.

Since TEs themselves have no established Industry Standards (other than base business constraints) and are shaped by an ad-hoc group of various design and business acumen, defining what they -are- can be difficult for those directly involved at best, and almost impossible by outside sources.  As such, when being investigated (by PayPal for example), their viability is forced to be judged by the Standards established for the business doing the review and are compared to the lowest common denominator amongst the TE group.

In other words, since every owner does what they want with no cohesive oversight, the poorest examples have an equal (and in most cases, greater) impact with those that do try when being evaluated by non-TE entities.  When something like Traffic Monsoon makes news, ALL businesses in the associated model are lumped into, and judged by, their outcome.  Add in the fiscal value of TEs as a group (the average TE probably makes LESS than $10K a year gross), and the -value- of differentiating the various models becomes moot to the examining entities.

Is this fair?  I would have to say that yes, it is.

When considering starting a business you decide what model you will use.  You should have taken into consideration the type of business and the associated requirements, or lack of, within that model and how it may impact your efforts through some form of SWOT(T) analysis.  It is from this determination that you begin to develop your Business Plan, calculate CAPex, and make OPex/income projections.  Lack of Industry Standards, or the understanding thereof,  may make it easier to enter the model but should have also factored into some potential problems.

Many different things can impact profit ratios.  The actions by PayPal may mean seeking out a different processor with higher fees, greater limitations on transactions, or, having no viable means to receive income.  Obviously, impacting the bottom line of a profitable business, possibly forcing restructure or closure.

Ok, so now what?  Do I want “Standards” to follow?

By now, I would think it obvious that you do, in fact, need Industry Standards, and to follow them, at some level within the model.  They assist in providing the means to validate the businesses intent, establish legitimacy, and position it above those with less regard toward compliance.

The question is, and one that has been debated time and again over the past decade, WHO sets the Standards?

As an owner or user of TEs, you need to meet/exceed the stipulated business laws in your area, be familiar with what is regulated by such entities as the FTC/SEC with regard to what, and how, you can advertise, and so forth.  You should also have an understanding of the process you use to manage payments, and how their regulations affect your business.  But what about that next step?  Trade and business established protocols and specific Industry Standards of excellence?

Figure that out, and your businesses will become the leaders, heads above those that choose not to take action.

Here again is an opportunity for the few to take and move beyond the many.

.

homage-to-the-sponge

With Sincere Thanks

Richard Taylor

“The only limits we have are those you impose upon yourself. Remove the limits!”

Follow my current adventures on Twitter

2 thoughts on “Industry Standards – Sure you want them?

  1. Hi,

    Glad America catching up. My country got burned by the “Pyramid”, schemes of old and regulated. I hope this now creates a level playing field for all those involved in any form of “Web/Marketing, selling” and as some re-course for those whom, were UN-educated. Glad to see an industry mostly self-regulate. But looks like the “Cowboys”, and dishonest, have stolen our choice from us. Once again. John, your longevity is “Testament” to your belief. In what you do. The selling of ideas if I may be so bold. Was there for the introduction of the Internet. A technologist and a Pioneer at the time. Didn’t know what it meant, for me, from my humble beginnings. Now do. Please never give up. This is our best, peaceful future. I now study “Cyber Security”. Just to be safe to do my business. At least it is only digital. I have been exposed to so much physical violence over the years, just to have a pay cheque. I have always found this easy. We have matured. Let us bring the change we need for all. Not just some? You are in a country that has voiced that this week. Let it please mean something other than war. FOR THE LITTLE GUY, TO HAVE A CHANCE!. WE NEVER KNEW WE WERN’T LITTLE. NOW WE DO.

    🙂 The politics of small business.

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