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Chapter 1
Opening Your Own Online Business in Ten Easy Steps

In This Chapter

  • Taking one step at a time toward starting an online business
  • Developing practical strategies for turning your ideas into realities
  • Getting connected and creating a commercial Web site
  • Marketing your business to your targeted customers
  • Evaluating your success and revising your site

 

These days, virtually every existing company seems to be adding a Web site with an address like www.company.com to its arsenal of business tools. But the steps required to conduct commerce online are well within the reach of individuals like you and me who have no prior business experience. Companies are continually releasing new programs that make creating Web pages and transacting online business easier than ever. All you need is a good idea, a bit of start-up money, some computer equipment, and a little help from your friends.

One of my goals in this book is to be one of the friends who provides you with the right advice and support to get your business online and make it a success. This chapter gives you a step-by-step overview of the entire process of starting an online business.

 

Step 1: Identify a Need

 

Statistically, the Internet is a hotbed of commerce -- and it just keeps getting hotter. Listen to what the experts are saying:

·         eMarketer (www.emarketer.com) estimates that as many as 130 million individuals use the Internet worldwide and that this number will balloon to 282 million users by 2002, including 88 million users in the U.S. alone.

  • The director general of a Canadian electronic commerce task force recently estimated that electronic commerce conducted in that country will to grow from $1 billion in 1998 to $13 billion by 2002. Worldwide, revenues from e-commerce are expected to grow from $20 billion to $300 billion over the same period.

 

Check out the Starting an Online Business For DummiesŪ , 2nd Edition, Internet Directory, later in this book and on the accompanying CD-ROM, for more sites where you can gather "fast facts" and background information on doing business online.

But all this online buying and selling doesn't mean that starting an online business is a sure thing. After all, you can't expect Web surfers to patronize your online business unless you identify services or items that they really need. Your first job is to get in touch with your market and determine how you can best meet its needs.

Seeing what's out there

Many people decide to start an online business with little more than a casual knowledge of the Internet. The Internet is a worldwide, interconnected network of computers to which people can connect either from work or home, and through which people can communicate via e-mail, receive information from the Web, and buy and sell items using credit cards or other means.

But when you decide to get serious about going online with a commercial endeavor, it pays to get to know the environment in which you plan to be working. The more information you have about the following aspects of the online world, the more likely you are to succeed in doing business there:

·         Other online businesses that already do what you want to do

  • The kinds of customers who shop online and who might visit your site
  • The special language and style of online communication -- in other words, the culture of the Internet

One of your first steps should be to find out what it means to do business online and to determine the best ways for you to fit into the exploding field of electronic commerce. For example, you need to realize that the Internet is a personal place; that customers are active, not passive, in the way they absorb information; and that the Net was established within a culture of people sharing information freely and helping one another.

 

Some of the best places to learn about the culture of the Internet are the newsgroups, chat rooms, and bulletin boards where individuals gather and exchange messages online. Visiting discussion forums devoted to topics that interest you personally can be especially helpful, and you're likely to end up participating yourself. Also visit commerce Web sites, such as online shopping malls, making note of ideas and approaches that you may want to use yourself.

As you take a look around the Internet, notice the kinds of goods and services that tend to sell in the increasingly crowded, occasionally disorganized, and sometimes complex online world. The things that sell best in cyberspace are

·         Items sold at a discount

  • Hard-to-find or unique items
  • Items that are easier to buy online than at a "real" store, such as a rare book that you can order in minutes from Amazon.com (www. amazon.com), or an electronic greeting card that you can send online in seconds (www.greeting-cards.com)
  • Publications available by subscription, such as newspapers and magazines, or electronic publications (e-zines) that exist only online

 

Visit one of the tried-and-true indexes to the Internet such as Yahoo! (www.yahoo.com) or About.com (www.about.com). Enter a word or phrase in the site's home page search box that describes the kind of goods or services you want to provide online. Find out how many existing businesses already do what you want to do. Better yet, determine what they don't do, and set a goal of meeting that specialized need yourself.

Figuring out what's missing

After you take a look at what's already out there, the next step is to find ways to make your business stand out from the crowd. Direct your energies toward making your site unique in some way and providing things that others don't offer. The things that set your online business apart from the rest can be as tangible as half-price sales, contests, seasonal sales, or freebies. They can also involve making your business site higher in quality than the others.

What if you can't find other online businesses doing what you want to do? Lucky you! In electronic commerce, being first often means getting a head start and being more successful than latecomers, even if they have more resources than you do. (Just ask the owners of the online bookstore Amazon. com.) The whole field of online business is still in its pioneering days, so don't be afraid to try something new and outlandish. It just might work!

 

Step 2: Determine What You Have to Offer

 

Determining what you have to sell, another early step in the process of putting together a new business, often occurs before or at the same time as the previous step -- identifying your likely customers. That's what business is all about, either online or off: identifying customers' needs and figuring out exactly what goods or services you're going to provide to meet those needs.

Make a list of all the items you have to put up for sale, or all the services you plan to provide to your customers. Next, you need to decide not only what goods or services you can provide online, but also where you're going to obtain them. Are you going to create sale items yourself? Are you going to purchase them from another supplier? Jot down your ideas on paper and keep them close at hand as you continue developing your business plan.

 

The Internet is a personal, highly interactive medium. Be as specific as possible with what you plan to do online. The medium favors businesses that specialize. After all, the more specific your business, the more intimate you can be with your customers.

 

Step 3: Set Your Cyberbusiness Goals

 

The process of setting goals and objectives and then designing strategies for attaining them is essential when starting a new business. What you end up with is called a business plan. A good business plan applies not only to the start-up phase but also to a business's day-to-day operation. It can also be instrumental in helping a small business obtain a bank loan.

Creating a business plan

To set specific goals for your new business, ask yourself these questions: Why do you want to start a business? Why do you want to start it online? What would you want to buy online? What would make you buy it?

Sure, I can give you plenty of reasons for setting up virtual shop on the Internet. But only you can answer these questions for yourself. Make sure that you have a clear idea of where you're going so that you can commit to making your venture successful over the long haul. (See Chapter 2 for more on coming up with goals and envisioning your business.)

To carry your plan into your daily operations, observe these suggestions:

·         Write a brief description of your company and what you hope to accomplish with it.

  • Draw up a marketing strategy (see Chapters 7 and 11 for tips).
  • Keep track of your finances (see Chapter 14 for specifics).

 

Consider using specialized software to help you prepare your business plan. Programs such as Business Plan Pro by Palo Alto Software (www.palo-alto. com) lead you through the process by asking you a series of questions as a way of identifying what you want to do. The program retails for $89.95; however, you can find a version of this highly regarded software right on this book's CD-ROM.

Working without a storefront

Although doing business online means that you don't have to rent space in a mall or open a real, physical store, you do have to set up a virtual space for your online business. You do so by creating a Web site and finding a host for your site. (A host is a company that, for a fee, makes your site available 24 hours a day by maintaining it on a special computer called a Web server.)

Chapter 2 describes two methods for selling your wares online that don't require a Web site -- online classifieds and auctions. But most online businesses find having a Web site indispensable for generating and conducting sales.

In addition to your virtual storefront, you also have to find a real place to do your business. You don't necessarily have to rent a large space with both men's and women's bathrooms, as the Podrazas did. Many online entrepreneurs use a home office or perhaps a corner in a room where computers, books, and other related equipment reside.

 

If you set aside part of your home for business purposes, you are eligible for tax deductions. Exactly how much you can deduct depends on how much space you use. (For example, I have a nine-room house, and one room serves as my office, so I am able to deduct one-ninth of my utility and other housing costs.) You can depreciate your computers and other business equipment, too. On the other hand, your municipality may require you to obtain a license if you operate a business in a residential area; check with your local authorities to make sure that you're on the up-and-up. You can find out more about tax and legal issues, including local licensing requirements, in Chapters 13 and 14 of this book.

 

Step 4: Assemble Your Equipment

 

Not all businesses cost thousands of dollars to start up. As many of the entrepreneurs profiled in the case studies throughout this book report, you can start an online business with an investment of only a few hundred dollars, or perhaps even less.

Finding a Web host

Any business needs a place to call home. In the offline world, stores rent space in malls or other buildings. In cyberspace, your landlord is called a Web hosting service. Your Web host is a company that makes your online store accessible to shoppers who connect to you by using Web browsers or other software.

A Web host can be as large and well-known as America Online, which gives all its customers a place to create and publish their own Web pages. Some Web sites, such as Yahoo! (www.yahoo.com), GeoCities (www.geocities. com), or Tripod (www.tripod.com), act as hosting services and provide easy-to-use Web site creation tools as well. In addition, the company that gives you access to the Internet -- your Internet service provider -- may also publish your Web pages.

Make sure that your host has a fast connection to the Internet and can handle the large numbers of simultaneous visits, or hits, that your Web site is sure to one day get. You can find a detailed description of Web hosting options in Chapter 4.

Getting the hardware you need

For doing business online, your most important piece of equipment is your computer. Other hardware, such as scanners, modems, and monitors, are essential, too. You need to make sure that your computer equipment is up to snuff, because you're going to be spending a lot of time online: answering e-mail, checking orders, revising your Web site, and marketing your product.

 

The Podrazas, profiled earlier in this chapter, decided to make a substantial commitment to the success of their online business by investing in a solid hardware system. Dan Podraza says they spent about $6,000 on purchasing and setting up computers to handle orders. They have six computers in their business that are networked together so that they can all access the company's database.

Computer-related equipment will probably be your main expense. It pays to shop wisely and get the best setup you can afford up front so that you don't have to purchase upgrades later on. (For more suggestions on buying business hardware and software, see Chapter 3.)

Choosing your software

For the most part, the programs you need in order to operate an online business are the same as the software you use to surf the Internet. You do, however, need to have a wider variety of tools than you would use for simple information gathering.

Because you're going to be in the business of information providing now, as well as information gathering, you need programs such as these:

·         A Web page editor: These programs, which you may also hear called Web page creation tools or Web page authoring tools, make it easy for you to format text, add images, and design Web pages without having to learn HTML (HyperText Markup Language), the set of instructions that Web browsers use to present those pages the way you want them.

  • Graphics software: If you decide to create your business Web site yourself, rather than find someone to do it for you, you need a program that can help you draw or edit images that you want to include on your site.
  • Storefront software: You can purchase software that leads you through the process of creating a full-fledged online business and getting your pages on the Web.
  • Accounting programs: To keep track of expenses and income, you can use software that acts as a spreadsheet, helps you with billing, and even calculates sales tax.

 

The CD-ROM that accompanies this book includes a good selection of easy-to-use software. For this disc, I picked out programs to help you create Web pages, do accounting, download software, and accomplish many other essential online business functions.

 

Step 5: Find the Support You Need

 

Conducting online business does involve relatively new technologies, but they aren't impossible to learn. In fact, the technology is becoming more accessible all the time, thanks to more powerful and affordable software.

Many of the people who start online businesses learn how to create Web pages and promote their companies by reading books, attending classes, or networking with friends and colleagues. Of course, just because you can do it all doesn't mean that you have to. Often, you're better off hiring help, either to advise you in areas where you aren't as strong or simply to help you tackle the growing workload.

Hiring technical consultants

It often pays to have professionals point you in the right direction and help you develop an effective Web presence. Many businesspeople who usually work alone (myself included) hire knowledgeable individuals to do design or programming work that they would find impossible to tackle otherwise.

 

Don't be reluctant to hire professional help in order to get your business online. The Web is full of development firms that perform several related functions: providing customers with Web access, helping to create Web sites, and hosting sites on their servers. The expense for such services may be considerable at first (Dan Podraza estimates that the Collectible Exchange's start-up costs were $12,000, not counting hardware purchases), but they can pay off in the long term. As I write this, he's shopping for a Web designer himself who can provide 24/7 support, set up profiles of customers, and create a site with online credit card and order-tracking capabilities, among other requirements.

Another area where you may want to find help is in networking and computer maintenance. As Dan Podraza points out, "Along with having the knowledge of your product, you have to know how to keep your computers running. Find out if you have a computer expert in your neighborhood."

The point about finding someone right in your own neighborhood is a good one. In my own case, I work with a graphic designer who lives right around the corner from me, and he uses a consultant who lives across the street from him. Ask around your school or church, as well as other social venues. Your neighbors may be able to help you with various projects, including your online business . . . and your online business just may be able to help them, too.

Businesspeople who provide professional services also commonly recommend other consultants in the course of e-mail communications. Don't work in a vacuum. Participate in mailing lists and discussion groups online. Make contacts and strike up cooperative relationships with individuals who can help you.

 

If you do find a business partner, make sure that the person's abilities balance your own. If you're great at sales and public relations, for example, find a writer or Web page designer to partner with.

Gathering your team members

Many entrepreneurial businesses are family affairs. For example, a husband-and-wife team started Scaife's Butcher Shop in England, which has a successful Web site (www.jackscaife.co.uk). The Collectible Exchange is another example: Besides Dan Podraza, his wife, Diana, and their children, Bradley and Jennifer, the company employs Grandfather John (bill payments), Grandma Jean (receiving), and son Christopher (straightening up and day-to-day maintenance). (Michael, who is now 13 years old, is too young to be a paid employee.) Two friends of the Podrazas, Veronique and Mike, function as the Collectible Exchange's office managers, performing essential functions such as downloading orders and answering e-mail inquiries. Another friend, Mike, is the company's Beanie Baby Specialist.

Don't be surprised if you don't feel a need to hire team members early on, when you have plenty of time to do planning. Many people wait to seek help until they have a deadline to meet or are in a financial crunch.

 

Find people who are reliable and can make a long-term commitment to your project. Because the person you hire will probably work online quite a bit, pick someone who already exhibits high-tech experience. Online hiring practices work pretty much the same as those offline: You should always review a resume, get at least three references, and ask for samples of the candidate's work. Pick someone who responds promptly and courteously and who provides the talents you need. If your only contact is by phone and e-mail, references are even more important.

 

Step 6: Build a Web Site

 

A Web site is pretty much indispensable for any online business these days. Fortunately, Web sites are becoming easier to create. You don't have to know a line of HTML in order to create an effective Web page yourself. Chapter 5 walks you through the specific tasks involved in organizing and designing Web pages. Also see Chapter 6 for tips on making your Web pages content-rich and interactive.

 

Make your business easy to find online. Pick a Web address (otherwise known as a URL, or Uniform Resource Locator) that's easy to remember. You can purchase a short domain-name alias, such as www.company.com, to replace a longer one like www.internetprovider.com/~username/companyname/ index.html. See Chapter 9 for more information.

Creating compelling content

Content is the most important part of any Web site. The more useful information you provide, the more visits your site will receive. By compelling content, I am talking about words, headings, or images that induce visitors to interact with your site in some way. You can make your content compelling in a number of ways:

·         Provide a call to action (such as "Click Here!" or "Buy Now!").

  • Explain how the reader will benefit by clicking a link and exploring your site ("Visit our News and Specials page to find out how to win 500 frequent flyer miles").
  • Briefly and concisely summarize your business and its mission.
  • Scan or use a digital camera to capture images of your sale items (or of the services you provide) as described in Chapter 5, and post them on a Web page called Products.

 

Don't forget the personal touch when it comes to connecting with your customers' needs. People who shop online don't get to meet their merchants in person, so anything you can tell about yourself helps to personalize the process and put your visitors at ease. An "About This Company" Web page is often helpful. The Collectible Exchange has just such a page, which tells how its business got started. It also has a humorous "Where's Michael?" photo of the Podrazas' son nearly engulfed by Beanies (see Figure 1-1). Let your cybervisitors know that they're dealing with real people, not remote machines and computer programs.

 

It's only natural to peek in on other businesses' Web sites to pick up ideas and see how they handle similar issues. In cyberspace, you can visit plenty of businesses from the comfort of your home office that are comparable to yours, and the trip takes only minutes.

Establishing a graphic identity

A site with an identity looks a certain way. For example, take a look at Figure 1-2, as well as Figures 1-1 and 1-3 elsewhere in this chapter. All are pages from the Collectible Exchange's Web site. Notice how each has the same white background, the same company logo, and similar heading styles. Using such elements consistently from page to page creates an identity that gives your business credibility and helps viewers find what they're looking for.

 

The Collectible Exchange's Web pages look simple because they are uncluttered and use a clean white background. But the pages, which are created by their consultant, are actually pretty complex. They use advanced layout options such as image maps (images that have been divided into clickable regions), tables, headings that are actually graphic images, and interactive forms. See Chapter 5 for more about such advanced layout options.

 


Figure 1-1: Personalize your business and use humor to connect with customers online.


 

 

 

 


Figure 1-2: Through careful planning and design, the Collective Exchange maintains a Web site with a consistent look and feel, or graphic identity, on every page.


 

 

 

 

Step 7: Set Up Systems for Handling Sales

 

Many businesses go online and then are surprised by their own success. They don't have systems in place for finalizing sales and tracking finances and inventory.

 

Early on, the Collectible Exchange found itself in just such a predicament. It operated on a low budget and initially suffered from insufficient inventory. To reiterate Don Podraza's point (see the "Keeping track of supplies" sidebar earlier in this chapter), make sure that you have the goods you advertise. Plan to be successful.

An excellent way to plan for success is to set up ways to track your business finances and to create a secure purchasing environment for your online customers. That way, you can build on your success rather than be surprised by it.

Providing a means for secure transactions

Getting paid is the key to survival as well as success. When your business exists only online, the payment process is not always straightforward. Make your Web site a safe and easy place for customers to pay you. Provide different payment options and build customers' level of trust any way you can.

Although the number of people doing shopping online is increasing steadily, plenty of Web surfers are still squeamish about submitting credit card numbers online. Make them feel at ease by explaining what measures you're taking to ensure that their information is secure. Such measures include signing up for an account with a Web host that provides a secure server, a computer that uses software to encrypt data and uses digital documents called certificates to ensure its identity. (See Chapters 8 and 12 for more on Internet security and secure shopping systems.)

 

To maximize your sales by reaching users who either don't have credit cards or don't want to use them on the Internet, provide low-tech alternatives such as toll-free phone numbers and fax numbers so that people can send you their information using more familiar technologies.

 

One reason the Podrazas' business succeeds is that it inspires the trust and confidence of its customers. The home page of the Collectible Exchange Web site, for example, contains the following messages: Licensed-Bonded-Insured" and "A Better Business Bureau Program." The site also provides a secure way for people to make electronic purchases by providing online forms, such as the one in Figure 1-3, where people can safely enter credit card and other personal information. The News and Specials page (www.beaniex.com/news .html) contains detailed instructions on how to place orders and check on the status of those orders.

 

Safeguarding your customers' personal information is important, but you also need to safeguard yourself. Many online businesses get burned by bad guys who submit fraudulent credit card information. If you don't verify the information and submit it to your financial institution for processing, you are liable for the cost. Strongly consider signing up with a service that handles credit card verification for you in order to cut down on lost revenue.

 


Figure 1-3: A secure electronic commerce site lets shoppers submit information that is encrypted so that criminals can't access it.