How to Read Financial Statements

This post is for people who don't have a financial background, but still need to analyze corporate financial statements from time to time.

Like a lot of people, you don't deal with finance most of the time. When you do need to review statements it can seem intimidating and confusing. Even after you figure them out you are left with the question: are they good? Or are they bad?

I Googled for a good simple explanation for how to read Financial Statements. The best result I got was this one from the SEC - but it's still pretty complicated! The following is an attempt to describe them in basic terms so that you can get a quick understanding about what is going on in a company - and to give you a guide for how to ask intelligent questions.

Step 1 - Focus. Financial statements are often divided into four reports, but for an initial quick overview, we only need to look at two. Look for the Balance Sheet and the Income Statement (sometimes called Profit & Loss)

Step 2 -try to get a sense of the big picture before you drill down on details. Look for subtotals. If you need to compare companies to each other, you can only do this with the bigger groupings of accounts.


The main groupings and sub-totals of an income statement

Step 3 - look at profitability. Turn to the Income statement. The income covers a period of time. At the top is the total revenue that the company took in, at the bottom is what is left over as either a profit or a loss during that period of time. In between there are some very important sub-totals:

• The first expenses at the top apply to the expenses incurred to deliver the product or service. Often there is a sub-total for 'Cost of Goods Sold' and 'Gross Profit'. These lines give you a good sense of how profitable the 'business' is.
  
• Underneath the 'Gross Profit' section are listed all the other expenses of the company. Here you can see what management is doing with expenses that are somewhat discretionary. Are they investing in the business? Do you think management is being wasteful in certain areas? Or are they under-investing in others?
  
• The net profit is the 'bottom line' - the amount of profit that is kept in the company over the period of time that the statement covers. A decent number here can either mean a good profitable business, or it could mean a business that is being milked for cash. Don't look at this number before you understand the numbers above!

Typical main sections of a balance sheet statement

Step 4 - look at financial health. Turn to the Balance Sheet. This is a very confusing statement. It is stacked as two sets of accounts that add up to the same number. Unlike the Income Statement (which covers a period of time) it is a snapshot of the company as of a specific date.

• To understand this statement, you have to understand the concept of the Fundamental Accounting Equation: Asset = Liabilities + Shareholders Equity. The way to think of this is like this: what a company owns has to equal the way in which the company paid for what it owns. Assets are all the valuable things in a company: cash, receivables, inventory, furniture, land and property. The company acquired these assets either by taking a loan (liabilities) or by using the owners capital to pay for them. The capital can be the cash invested originally or it can be profits that have been left in the company. The Fundamental Accounting Equation says that the assets have to equal the debt and equity used to pay for the assets.
  
• How do you determine the financial health of the company? You need to look at the at the 'short term' debt - which means things that have to be paid soon such as payables and compare it to liquid or near liquid assets - which are cash and receivables. For these items liquid assets need to be a fair bit more than short term debt for the company to be comfortable.
  
• You should also look at the ratio of total debt and equity, but there is no absolute rule about the best relationship. Too much debt can be risky, but too much equity can be inefficient. The ideal balance can depend a lot on the industry and the type of business. If these seem out of wack, you should find out why.

Step 5 - Put the pieces together. Think about the net income on the Income Statement. Think about the liabilities on the balance sheet. Is the company earning enough to pay its obligations? And now think about the business itself. Will the income be steady or variable? If the revenue grows, will more capital and debt be required?

I hope these very basic steps will allow you to leverage Financial Statements into useful management tools that can help you better understand the workings and performance of a company.

In a future post, I will cover financial ratios which are very useful in comparing two or more companies in the same industry.

Google Presentation Widget

Here's an interesting new feature from Google. We have seen how common embedded YouTube videos have become on websites and blogs. Google have now applied the same concept to Google Docs. If you create a presentation in Google Docs (or upload one built in PowerPoint), you now have the option to publish it with a viewer widget.

This is very easy to do:

1. Log into docs.google.com
   
2. Select 'New' from the menu bar and click on 'Presentation'
   
3. The tools are very simple. It's like using a minimalist PowerPoint.
   
4. You can add images either as uploads or as URLs that point to images on the web.
   
5. Click on the 'Publish' tab on the top right.
   
6. Copy the code in the text box and paste it wherever you want on the web.
   
7. You now have a nifty presentation widget!
   

Online Reputation

The internet has changed over the last few years. Four years ago there were around three million blogs on the internet, now there are well over a hundred million. The number of blogs has doubled every six months. Each one of these blogs acts as a personal forum for the author to publish their opinion on everything and everyone. Other web users can also chime in with their opinions. In addition there are the large social networks such as MySpace and Facebook. Millions of people are not only browsing - but also posting. The website eMarketplace estimates that currently 13% of U.S. web users have their own blogs.

With so many authors - how do you know if anyone is commenting on you?

The internet can have a profound effect on your reputation - both positively and negatively. There is a whole new class of businesses that offer services to establish and protect your online reputation. But there are several things you can do yourself to build, monitor and protect your reputation:

1. Google your name periodically to see what your reputation looks like.
   
2. Set up your profiles on such sites as LinkedIn, ZoomInfo, and Xing. Make sure that when someone searches for you, they will find information that you want them to see.
   
3. Use your real name when you post and comment on subjects on which you are knowledgeable. These posts will appear in searches and will help build your reputation.
   
4. Don't post anything that could be embarrassing. Even if you use a pseudonym, it could be uncovered.
   

Remember that the internet is a very public place. Online content is difficult to remove. A positive online reputation is a great benefit. A negative reputation can be damaging and very hard to repair.

New Del.icio.us Links

A new feature of this blog is that I will be sharing my Del.icio.us web links as blog posts. These will appear as a daily compilation on any day after I have added these links. At the bottom of the blog you will find a tag cloud of topics in my Del.icio.us account.

Tech Note - how I set this up:

Del.icio.us has a tool called a 'Thingy' that is supposed to publish a link compilation automatically to a blog - but it does not seem to work for this platform (Blogger). But if you know of a way - let me know!

Here's the work-around that I used. It is based on a solution by
Anand Kishore. Here's what I did: How to get Del.ico.us daily blog posting to appear in Blogger:

1. Set up a new blank blog in Blogger. This blog won't be used for anything so it does not matter what it looks like. It's only role is to be the root of an RSS feed.
   
2. Configure the blog where you want these posts to appear to receive posts by email. (i.e. not the blank one you just set up) You can find this under "Settings/Email". Click on "Save emails as draft posts" you might want to edit what these look like before the world sees them.
   
3. Next pick up the feed in Feedburner. This is a feed from an empty blog so it will have nothing in it.
   
4. Under the "Optimize" tab, I turned on the "Link Splicer" feature. This allows you to tap into your Del.icio.us account and add your new links as an item in the feed.
   
5. Open up the RSS feed in your browser (the RSS icon at the top left of the page) You should see a compilation of your Del.icio.us links.
   
6. Click on the "Get … delivered by email" link. Enter in the email of your blog. If you add any links to Del.icio.us, you should see this as a draft post the next morning!
   

Again, if you know of a simpler or better way of doing this, please post a comment!

Audio Blog Posts

Did you notice the little button at the top of each post: 'listen now'? Go ahead, give it a click. This button comes to you courtesy of Odiogo. This is a web based service that reads blog content, converts it to spoken words and delivers it back to the browser. It allows you to listen to my blog as spoken by a robot voice!

It's remarkably simple to set up. You simply sign up at Odiogo, provide your rss feed and your email. An hour or so later you receive an email letting you know that the audio files are complete. It is then very simple to add a button to link the file from your blog.

So is this simply a novelty? Or are there other benefits? One key advantage of this tool is that it also generates mp3 files. You can access these from the 'listen now' button. You can quickly save audio versions of blog posts that you can listen to later.

Any Password

Like everyone else these days, I have a ridiculous number of user names and passwords. I have passwords for a bunch of websites, email accounts, services, network accounts and software. It's really hard to keep track of all of them and next to impossible to remember.
One strategy would be to make all of your user names and passwords the same, but this would not be advisable. What if a website somewhere turned out not to be as reliable as you thought? What if you had typed in the same information as you use for online banking? It is a very good idea to use as many different user names and passwords as possible to keep all of your accounts 'firewalled' from each other.

So how do you keep track of everything? For the last two years, I have been using a software called AnyPassword. There are several versions. The most simple and basic one - which I use - is free.

The program consists of a simple directory structure of user names and passwords. For each log in, you can store your user name, password, a URL, as well as notes. All of this information is protected by a single password. Now you only have to remember one thing. To keep the information safe, the file is encrypted using IDEA/MD5 algorithms.

A word of common sense advice: keep a backup copy of the installation software and always backup the data file!

Speedtest

Here's a great little tool to test the quality of your internet connection. Go to http://www.speedtest.net/ . You will see a map of the world. The pyramids are points on the internet to which you can test your speed. The yellow pyramid is the node closest to you.

Once you click on a pyramid, the application will first test the download connection and then the upload connection. Give it a try. Is your connection slow, or is it your computer? Find out what your internet service provider is actually giving you!

Your LinkedIn Profile

LinkedIn is a useful tool for building a professional network on the internet. It's a little bit like Facebook or MySpace, but without the goofy factor. On LinkedIn people post their credentials and experience. The value comes in when you link to useful and helpful people that you know, because you can then access their list of equally useful and helpful people. In this way you can leverage a network of contacts exponentially.

LinkedIn makes a point of reminding you to only connect to people who you know well and who know you. You will be sharing contacts. You may be asked about them. They may be asked about you. I would also add that it is important to think of the quality of the contacts you make. Are you connecting to people that have useful skills and knowledge? Do they know other useful people? Are they likely to be helpful in the network?

Another benefit of LinkedIn is that it can raise your own profile. Other people can find you and you can show off your expertise by participating in the Q&A section of the site. You should make sure that you have meaningful information about yourself. You should also consider posting this information on your public LinkedIn page.

Here's how to make sure you have a good public profile:

1. First make sure you fill your profile with details about your skills and experience.
   
2. Next, turn on your Public Profile - click the Edit link in Public Profile setting.
   
   
3. Choose the items you want to display to the world.
   
4. Change the URL of your profile from the default to something more meaningful:
   
   

Now you have a profile that is visible to the world and will be picked up by search engines!

The next thing to do is promote your profile. If you have a website or blog, you can easily create a link button to this page. Here's a button link to my profile:

And here is the code that you can use to link to your profile:


<a href="http://www.linkedin.com/in/YOUR_PROFILE_URL_HERE" ><img src="http://www.linkedin.com/img/webpromo/btn_myprofile_160x33.gif" width="160" height="33" border="0" alt="View YOUR_NAME_HERE's profile on LinkedIn"></a>

Good luck with building your network!

Onecle

The SEC filings is a goldmine of document templates. Search the database online at http://www.sec.gov/edgar.shtml and you will find every kind of contract. Employment contracts, leases, franchise contracts, stock option plans, and anything else you can imagine. But just as in a real goldmine, getting the value out is the problem. How do you extract and refine the value that is in there?

It seems that someone has already done the work for us! Take a look at Onecle. The owners of this site have mined the SEC filings and organized a vast number of legal contracts by category.

The site is supported by Google ads. From what I understand the name of the site is derived from OneCLE. CLE stands for Continuing Legal Education - which is ongoing study that lawyers must perform to maintain their credentials.

This site is a great source for document templates and contract precedence. It's not enough to fire your lawyer, but it may still be useful to read and review contracts used by publicly traded companies. Chances are they are using good legal advice!

Leases Are Confidential?

It's common knowledge that leases are highly confidential. They are one of a landlords most carefully guarded assets. Leases are secret. Everyone knows that.

Except for publicly traded companies! They have to file everything with the SEC. And the SEC posts everything online at http://www.sec.gov/edgar.shtml If, for example, you want to find out what Corel is paying for space at 1600 Carling Ave in Ottawa, you can find it here. It's $22.03 a square foot plus operating costs of around $16.77, by the way. It's the whole lease, so you can see all the terms and conditions.

Clearly the SEC's EDGAR system is not easy to search - it's not exactly user friendly. It's not easy to find loads of lease information, but it's there. If you are curious what tenants are paying in a building, take a look and see if there are any publicly traded tenants and do a search.

Interestingly, I looked to see if I could find leases on the Canadian system: www.sedar.com/ I could not find them there. I'm not sure if the disclosure rules are different, or if they are just filed differently. But chances are that any large public entity will have to file with the SEC anyway and the information will be on the U.S. system.

Secure FTP Software

We are testing a system of secure file transfers over the web. To maintain up-to-date copies of servers and data we need an automated and secure system to move new and updated files.

There is quite a wide choice of software in this area so we have had to a bit of research.

At the receiving end - the secure remote server - we are using a product called Gene6. http://www.gene6.com/ This software can accept secure encrypted connections and we are able to set up these transaction on custom, non-standard port numbers. This software has been working very well. It accepts up to twenty five concurrent connections and has several nice reporting tools to monitor traffic and bandwidth.

At the client end we have had to do a bit more work. We originally set up a software that was recommended to us: BatchSynch. This software is designed to first make a secure connection, then analyze the files at either end and build a list of files that need to be transferred. Like Robocopy, it will then only copy new and updated files. The program works well during the comparison stage but it had a tendency to crash during the transfer phase. As these initial copy jobs could be very large: ten to twelve hours, this was very annoying.

I spent a lot of time obsessively watching the band width graphs and restarting jobs remotely. Of course, jobs would inevitably fail as soon as I stopped watching them!
Here is an example. The red line indicates the number of threads running - the scale is on the right. The other lines reflect the amount of data being transferred. You can see that at 10:48 the jobs crashed and had to be restarted. Everything is running fine at 11:15 PM:

And here is the chart from another night. A job I had hoped would run all night crashed just after midnight. It was restarted at nine and then crashed again while I was at lunch!

This was wasting a lot of time and was not a reliable solution. I searched for other software and found Other contenders:

• Acronis: http://www.acronis.com/enterprise/download/ATIESWin/
  
• Backup Platinum: http://www.backup-platinum.com/
  
• Almersoft: http://www.almersoft.com/products/backup/
  
• CuteFTP Professional. http://www.cuteftp.com/
  

Acronis offers a suite of network backup and restore software that sounds very powerful. We could not find a way to make it work over our secure FTP setup however.

Backup Platinum is another backup software. One of the features is that it can send a backup image to an FTP site. But we could not get it to work using secure FTP. It would not log in to make the connection.

Almersoft also provides a backup software. As with Backup Platinum, we could not find a way to configure it to connect to our secure FTP server.

CuteFTP is a popular software that has been around for a long time. CuteFTP Professional was a solution that looked like to could work for us. This software is similar to BatchSync. It can communicate through secure FTP. It does not build a list of changed and new files first, but it can be programmed to skip unchanged files. Functionally, this delivers the same result. So far CuteFTP has not crashed during an upload, but the interface does have a tendency to freeze during long sessions. After it freezes, one cannot get a report on whether the job ran successfully or not.

Both BatchSync and CuteFTP can be scheduled, which is very important for our application. BatchSynch uses Windows task scheduler to run a command line version of itself. It can also be set up to send email reports on the success of failure of tasks. CuteFTP uses it's own scheduling tool. It appears that CuteFTP requires the local user to be logged in for the scheduled task to run.

Both of these tools accomplish the same thing in slightly different ways. We will be using CuteFTP for the simple reason that it is more stable in our environment. Testing before selecting software is economical in this case as all the products mentioned above are available in thirty day trial versions.

Keep in mind that our testing was only on our network and we evaluated these products based on our criteria. You may have different needs and a different environment. You should take the time to evaluate each product for your specific needs.

I would think that this type of software will become more common. Replicating data to a live, web accessible server is a far superior solution to using backup tapes or removable drives. The cost of hardware and bandwidth capacity now make this a cost effective and viable.

ISO Re-Registration

To maintain ISO registration we are required to conduct ongoing internal and external audits throughout the year. Every three years we must submit our management system to a full re-registration audit. We are very pleased that we have successfully passed this audit without any non-conformance issues, and we will now retain our registration for another three years.

At this point it is worthwhile to consider what we have learned over the three years that we have run the system. There are three significant points:

Error tracking is a valuable input for system improvement.

When we first set up our processes, we determined the best practices for every activity and set these as standard procedures. We identified key control points and created checking and review steps to manage these procedures. We also instituted a fairly rigorous quality control process at the end of projects, and we established a central repository to record all of our 'non-conformances'. We used this list to investigate the root cause of problems. Was there a problem with training? Methodology? Or were there extra steps that could be taken to reduce the chance of errors? All of the problems that we have encountered during the three years that the system has been in place have contributed to the improvement of the system. We have tweaked the system not in a random or hap-hazard manner but in response to problems and opportunities for improvement that we have discovered through the course of running our systems. You can learn from your mistakes - but only if you have method to catch and analyze them in the first place.

ISO management processes can - and should - be applied beyond the scope of registration.

We originally set up ISO processes to improve the quality of products and services we provide to clients. This is still the scope of the registration. But, as we have been running our system, we have started to expand the management system to other areas. At first we applied it to IT, security and network management. These are routine, yet critical processes that support and protect our organization. We found that we could best manage them with documented procedures and controls very similar to our product and service control systems. We are now expanding these management concepts to more loosely defined activities such as sales. And this is also quite successful. The main lesson here is that an ISO registered management system is not designed just to satisfy ISO auditors - it is built to run a real business. It is not just the ISO management system, it is OUR management system.

An ISO registered management system is not just about quality control.

We have found that our ISO system has improved quality, but it has also given us additional, valuable insight into our business. A very basic quality control system would simply involve inspection. One would look at a product at the end of the process. Errors would be caught and fixed and rework would be done. ISO requires more than this. It mandates that we design processes to reduce or eliminate errors when the work is done. This makes a lot of sense. It costs less to prevent errors than to fix them. A stitch in time saves nine! By documenting our processes we get a much deeper understanding of our business. By recording data and setting measurable objectives, we get a clear sense of what is working and what is not. Besides improving quality, our management system has made our business more efficient, much easier to scale and easier to manage.

Spyfu

Here's another useful competitive web analytics tool.

You may be curious about web advertising and what it could do for you. You may be even more curious about how online advertising is working for your competitors. How much are they spending? What kind of results are they getting? Well, there is a site that can answer these questions: www.spyfu.com

Type in any url to find out what they spend on key-word advertising. I typed in spyfu.com to see what they were doing themselves and here is what I got:

You can see what their daily budget is, how may clicks they get as a result and what this clicks are costing them.

Another interesting feature is that you can see what the search terms are that they are paying for. What their most successful AdWords are:

Try it out on your competitors. Try it out on your own company and let us know - is it accurate?

Open Office Shortcomings

I've been using open office for about a month now. In general it works very well, but I am experiencing three problems:

Gradient fills in Impress (the PowerPoint equivalent) do not display correctly. When I open a file previously created in PowerPoint, rectangles that contain gradient fills display in the wrong direction. For example a rectangle that contains a gradient of white to grey that goes left to right will display as grey to white. I can make the changes and save them, but when I reopen the file the problem comes back. I have not found a way to work around this.

Connectors in Impress diagrams re-route themselves in awkward ways. If I draw diagrams with connecting lines it seems to work exactly as in PowerPoint. When I

save, close and then reopen the file, the connectors are often moved into rather strange configurations. After I move them back and resave the file, the program still re-routes the lines when I open the file again.
I cannot seem to find the data analysis tools in Calc (the Open Office equivalent of Excel). By default the data analysis tools are not installed in Excel and it is not commonly used by most people. This module is used for statistical work such as regression, histograms, calculating standard deviation and so on. Unfortunately I have to revert to Excel to get these tasks done!

These three issues should not be critical for most people and I believe that the Open Office package would work well for the majority of users - and chance are the existing short comings will soon be addressed.

Open Office Excel & Calc

So far so good. I have been using the open source equivalent of Excel: 'Calc'. I have used it to update a rather complex financial model originally built in Excel. This workbook has several inter-related spreadsheets and complex calculations. I put some care into the layout. I've also used some more advanced features such as conditional formatting and I have several charts. The workbook was created in Excel 2007 and saved down to Excel 97-2003 format.

In Calc, the document opens and displays fine. Even the conditional formatting survives. Some of the charts are formatted awkwardly but they are still meaningful. Editing and updating the file went very well. Menus and buttons work almost exactly the same way as in Excel 2003.

Once my changes were made, I was able to save the file back to the Excel 97-2003 format. When I shared the file, it opened and displayed without any problems on Excel 2003 and on Excel 2000. However - and this is a big catch - when I opened the file in Excel 2007, it did not go so well. I got this message:

(It says: "Excel found unreadable content in [file name]. Do you want to recover the contents of this Workbook? If you trust the source of this workbook, click Yes.")

After clicking yes, the file opens but all of the formatting has been lost and the charts have disappeared!

Interesting… If OpenOffice is able to save a file that can be opened in Excel 2000 and Excel 2003 why would this compatibility not work in the 2007 version? You do not have to be a conspiracy theorist to see that it is not in Microsoft's interest in to allow OpenOffice to freely exchange data with MS Office products. So for the time being if you need to open an OpenOffice in Excel 2007, you will have to open it in an earlier version of Excel first, save it and then open it in Excel 2007!

Living With Open Office

Microsoft Office is by far the most popular set of business applications in use today. By 'most popular' I mean most commonly used rather than 'most liked'. I believe it has become a standard for two reasons. First, there are what's called Network Effects. The value to me as a user of using Office increases based on the number of other people that are using Office. There is a great deal of value to being on the same platform as the people that I work with and exchange data with. The second reason that MS Office is so ubiquitous is due to learning. Once people are familiar with a way of doing things, it is difficult to change. Microsoft has historically benefited from the fact that users are familiar with their tools and have invested in learning how to use them.

I've got the new version of Office and it looks like Microsoft has abandoned the second reason for their success. The interface is not familiar and everything is in a different place! The suite requires a learning period that can be frustrating. The concept of tool-bars has been replaced by the 'ribbon'. In many ways it is an improvement on the interface but it can be frustrating to try and find the tool you need. We have not deployed this to anyone else in the office as I am worried about getting inundated with calls for help and I worry about the wasted productivity as users struggle through the learning period.

The cost of using MS Office is high. Not only is it several hundred dollars for each machine, but it will also be expensive in lost productivity if we are forced to upgrade to the new interface.

So what are the alternatives? There are two that I will be investigating. The first is Google Docs - a free web based suite of programs. The other is Open Office - a free open source set of applications. For the next while I will try to set aside my MS Office and use only these free tools. I will report back here!

Wikimapia

Wikimapia is a very interesting 'mashup'. It is a great example of how sophisticated applications can be created on the web using other, existing online technology and just a little bit of programming to customize a unique solution. In this case, the creators have used Google maps to deliver the map content and have layered over their own markup layer. Where available, places on the map are linked to articles in Wikipedia. They have used two existing content services and put them together to create a useful new tool.

The site creators have not had to do any of the data entry. Every day new and interesting places are added. The content and place descriptions are created by users of the site. Anyone can add a place and it becomes permanent once other visitors have given it enough positive votes.

And how is the site supported? How do they make money? Again, they have used an off the shelf solution by incorporating Google AdSense in the detailed place descriptions. Because these ads are content aware they will be relevant to whatever a visitor is searching for, and therefore most likely successful.

With some good ideas and just a little bit of know-how anyone can built really useful web tools - you just have the be the first to think of the idea!

Movin' on up!

Although the Alexa rankings may not be too reliable for a couple of reasons, we seem to be getting some results! Today our ranking is 2,644,108 which is up from 3,851,993 when we started tracking our position. Basically, this means that we are now slightly more popular on the Internet. there is over a million more websites that have less visibility than ours.
Is Alexa reliable? Yes and no. Alexa figures out how popular sites are based on the sites visited by users who have installed the Alexa tool-bar. Because only a small fraction of browsers have this installed, Alexa suffers from a 'small sample size'. On the other hand, Alexa is the only web traffic tool that follows actual users, so even if it is not perfect, it is the best tool available.
In any case, I believe that our change in ranking show that there has been some positive results of our web visibility improvement efforts that we described earlier this year!

Website Optimization

We want to use our website as a marketing tool. We need it to reach the right people. We need it to be found by more people and ultimately we want to be read by more of the right people!

So I've done a bit of research on how search engines determine which are the most relevant results to display for a search term. By its very nature this a is black art - search engines will not tell you exactly how this is done, but here is the basic idea.

Search engines crawl through the web on a regular schedule and read all of the text. They then index all of the words. They have a cached (saved) copy of the entire web in memory and can find the words in websites that match what you are searching for. To make the results meaningful, the search engine will try to display the 'best' results first - at the top of the list. So the big question is - how does it decide?

Keywords - one way to prioritize results that the search engine uses is to see how often in the page text the keyword is used. The more often a keyword appears, the more relevant the page is considered to the topic. Apparently the engines can detect 'keyword stuffing' - it will know if you are intentionally overusing a word either visibly or invisibly on a site!

Our keyword strategy should be:

• Don't use flash! Because search engines cannot read any of your flash content.
  
• Find out what keywords people are using to find your site - we use Google Analytics for this
  
• Use words and terms that are specific to the industry.
  

File names, urls and ALT tags - besides the text content of the site, search engines take into consideration the names of the files and folders of the site. You will find that you often get results based on the address of the page. ALT tags are textual descriptions of the images in a page. This text displays for the user if there are image links in the page.

Our naming convention should be:

• Use relevant and meaningful words for file and folder names.
  
• Include meaningful alt tags on images that are links
  
• Use the TITLE tag to display a succinct description of the page
  

META tags - are not important! At least they are much less important than they used to be. The reason for this is that they have historically been abused to fool search engines. And they have been a primary means for 'keyword stuffing'. Search engines now prioritize the value of text that users can actually see.

Our META tag strategy?

• Keep META tags short and simple and don't get caught 'stuffing'!
  

Links - to your site. One of the ways that search engines determine which site is the 'authority' on a particular topic is by analyzing the links to site. If a site is referenced by other sites, it is considered to be more important - their 'ranking' will increase. If the sites from which the links originate are high ranking sites, then the links will confer even more value.

Our linking strategy should be t0

• get links on relevant directories and related sites.
  
• Avoid links from the dark side of the web and artificial gimmicks that will lower our rank.

Change - the more a site is updated, the more relevant it is considered. If a search engine finds that the site changes frequently, it will consider it more relevant and improve the ranking.

Our content strategy should be to:

• Update the front page at least once a month
  
• Add new content as our development continues
  
• Make the site interesting for our clients!

As we implement changes to our website we hope to see our results improve. We have installed widgets that tell us the Alexa scores for our site and our competitors as well as a tool that gives us our Google rank every day. Currently we are ranked as site 3,851,993 by Alexa and we have four sites linking to us. We are considered a page rank 3 out of 10 by Google.

We've got some work to do - Let's spread the word!

Web traffic

In our recent marketing website upgrade we have taken a serious look at our web traffic. Historically our marketing efforts have focused on networking and selling to individuals can companies that we have specifically targeted. We have not focused on the web as a primary marketing tool but rather as a support where people can find additional information about us.

Now I would like to put this site to use and help it generate business for us. It's time for the website to get to work! But how do I make our site easier to find and more useful to potential clients?

The first thing that I needed to do is study our current traffic. How were people navigating our site? How did they find us? How popular were we?

It used to be that you had to use special software to analyze your log files to determine the behaviour of visitors. This is no longer necessary. There is a free tool from Google - 'Google Analytics' that allows you to automatically track user behaviour by just adding a small piece of code on your pages.

With these reports I could also see what visitors searched for to find our site and how they navigated the site. It is interesting to see what people click on - it was not what I expected! This information was very informative for the site redesign!

The next thing I wanted to know was how we compared to our competitors. Was our site more of less popular than theirs? Again, there is a useful web tool to help us figure this out. Alexa at www.alexa.com tracks and maintains statistics on web traffic for several years back. The site allows comparisons of different sites so we can see how we fare against our competitors.

First of all, the results tell us that we are in a very small niche. In terms of popularity rank on the internet here are some of our clients:

• Traffic Rank for cadillacfairview.com 756,450 - (756,450th most popular site on the web)
• Traffic Rank for oxfordproperties.com: 2,347,908 -
• Traffic Rank for redcliffrealty.com: 4,276,079
• Traffic Rank for dundeerealty.com - insufficient data!
  

And here are the results for service providers - including us:

• Traffic Rank for realnet.ca: 2,587,071


• Traffic Rank for spacedatabase.com: 3,851,993


• Traffic Rank for xmeasures.com: 6,076,412


• Traffic Rank for lasertechfloorplans.com: 8,924,117


• Traffic rank for stevensonsystems.com - insufficient data

As you can see, we are doing quite will without any web marketing or search engine optimization! There are, I believe two reasons for these good results. First, many clients log in to our online system to manager their files. Second, we are embedded in many client sites and serve up reports and drawings that would count to our web traffic.

If we look at the web traffic analysis, we find that less than 25% of our visitors reach us through a search engine. Without our web applications, our popularity would be much lower. We clearly have some work to do if we are to raise our web profile.