UnofficialGuide®

the

to

Starting a

Business Online

Jason R. Rich

Second Edition

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UnofficialGuide®

the

to

Starting a

Business Online

Jason R. Rich

Second Edition

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File AttachmentC1.jpg

Copyright © 2006 by Jason R. RichPublished by Wiley, Hoboken, NJ

No part of this publication may be reproduced, stored in a retrieval system or trans-mitted in any form or by any means, electronic, mechanical, photocopying, recording,scanning or otherwise, except as permitted under Sections 107 or 108 of the 1976United States Copyright Act, without either the prior written permission of thePublisher, or authorization through payment of the appropriate per-copy fee to theCopyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400,fax (978) 646-8600, or on the web at www.copyright.com. Requests to the Publisherfor permission should be addressed to the Legal Department, Wiley Publishing, Inc.,10475 Crosspoint Blvd., Indianapolis, IN 46256, (317) 572-3447, fax (317) 572-4355,or online at http://www.wiley.com/go/permissions.

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This book is dedicated to my closest and dearest friends, Ferras AlQiasi(www.FerrasMusic.com), Mark Giordani, and Ellen Bendremer (andher family—Sandy, Emily, and Ryan), who constantly challenge and

motivate me to achieve success in whatever it is I set out to do.

It’s also dedicated to my new puppy, Rusty (www.MyPalRusty.com),who sat on my lap almost the entire time I was writing the all-newsecond edition of this book. Finally, it’s dedicated to my family for

providing me with the advantages growing up that eventually allowedme to pursue and achieve my own career goals and dreams.

—Jason R. Rich

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Acknowledgments

I’d like to thank Pam Mourouzis and Donna Wright at Wileyfor making the second edition of this book possible and foroffering me guidance as the manuscript was created.I’d also like to thank all of the people who agreed to be

interviewed for this book and who provided me with valuableinformation to pass on to you.

Some of the companies that were instrumental in providinginformation for this book include: Yahoo!, Google, ClickIncome.com, Galaxy Internet Services, Louisdog.com, SimplyCheap.com, JOriginals.com, AnglersVice.com, OnlyOneCreations.com,Fridgedoor.com, eBay.com, Adobe, Macromedia, and MicrosoftCorporation.

Finally, thanks to you, the reader, for picking up this book.It’s my greatest hope that the information you’re about to readwill be useful in pursuing your own goals and objectives forlaunching an online-based business venture or e-commercewebsite.

See you in cyberspace!

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ContentsAbout the Author ................................................xi

Introduction ...........................................xiii

I In Business, Preparation Is Everything.....................................11 Making the Right Business Choices.............1

What’s involved with starting an online business? ..................................................5Is an online-based business right for you? .....11How best to invest your time and money .....13Which business ideas are best suited to the Web? ................................................15Defining your business idea .......................19Should you give up your day job? ...............20Establishing your existing business on the Web .............................................23Be careful what you get involved in ............24E-commerce in the new millennium ............25Just the facts ..........................................26

2 Laying the Groundwork for Your Online Business.......................................27Starting your business: some considerations .........................................27Developing a business plan ........................30Getting help—people and software .............33Elements of a business plan .......................35Seeking expert business advice ..................38Setting up an office .................................39Just the facts ..........................................47

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3 Your Online Biz’s Finances ........................................49Benefits plans and compensation packages ...................50A few words about hiring employees ...........................52Should you incorporate? ............................................53Other considerations involved with launching a business ..................................................................55What needs to be done before going online? .................57Planning your business operations ..............................60Setting up a merchant account ...................................60Acquiring a merchant account: strategies from AriaFinancial Corporation .................................................62Ten strategies for obtaining a merchant account ...........63Financing your business .............................................67Just the facts ...........................................................71

4 Planning Your Site ...................................................73Making your site look professional ...............................73The first steps in developing your site .........................78Developing your site’s basic layout ..............................79Choosing the perfect content .....................................81Types of graphic files ................................................91Graphics programs .....................................................94Choosing website-creation software or a turnkey e-commerce solution .................................................96e-commerce software solutions for small online businesses ...............................................................97Complete turnkey solutions for website design and operation ..........................................................99eBay ProStores: another turnkey e-commerce solution .................................................................107eBay ProStores add-on services .................................109osCommerce: a totally free, yet powerful, website-design solution ...........................................111The scoop on copyrights ..........................................113Avoiding the most common Web design mistakes .........114Using outside creative talent ....................................119Just the facts .........................................................120

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II Getting Your Business Online........................1215 Selecting and Registering Your Domain Name...........123

Understanding domain name syntax ............................124Choosing your domain name .....................................127Domain parking is available: plan ahead .....................130Determine whether a domain name is available ...........131Registering your domain name is easy ........................134What to do if the domain name you want is taken .......136Getting help registering your domain name .................138Consider the costs ...................................................138Just the facts .........................................................139

6 Selecting Your Host: The Ins and Outs of ISPs ..........141The costs associated with going online ......................142Services you need at prices you can afford .................144A typical website hosting offer .................................146All-in-one turnkey solutions .....................................148Getting technical support from your ISP .....................149Finding an ISP/Web-hosting service ...........................150The computer equipment you need in-house ...............151Just the facts .........................................................154

III An Internet Presence for Existing and New Businesses.....................................1557 Expanding Your Existing Business into Cyberspace....157

The basic steps for getting online .............................161How virtual and traditional businesses differ ...............162Creating an online presence for a traditional business .....163Converting hard-copy assets into an electronic format ....166What features your business could offer on the Web .....169Spreading the word about your online presence ...........170Just the facts .........................................................172

8 Fine-Tuning Your Business Before Going Online........173Research: the key to success .....................................173Becoming a niche-marketing expert ...........................178Identifying the needs and wants of your potential customers ..............................................................179Beware of get-rich-quick schemes ..............................181

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Twelve common scams .............................................184Other online scams to watch out for ..........................189Always pay attention to details .................................190Making online ordering fast, easy, and secure ..............191Make building customer confidence a top priority ........192Post your privacy policies .........................................193Just the facts .........................................................193

9 Generating Revenues from Your Site ........................195Using your site to accept purchase requests ................196Selling advertising space ..........................................196Membership fees .....................................................198Selling and trading online advertising space ................199Affiliate programs ...................................................204A few words about Web rings ....................................207Selling software or other downloadable goods .............207Charging visitors for access to your site .....................210Just the facts .........................................................211

IV Promoting Your Site .....................................21310 Promotion Is the Key to Success .............................215

The importance of promoting your online biz ..............216The target audience .................................................216Promotional and advertising opportunities available online ......................................................221Internet newsgroups ................................................222Internet mailing lists ...............................................224Why you should avoid using spam .............................226Paid online advertising versus free promotion .............229The ins and outs of banner advertising ......................229Banner ad trades: the ad barter system ......................233Press-release distribution .........................................234Tips for writing an effective press release ...................237Online chats and communities ..................................238Taking advantage of traditional advertising .................239Blogging as a promotional tool .................................240Podcasting as a marketing tool .................................243Online newsletters are excellent promotional tools .......244Just the facts .........................................................245

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11 Search-Engine Optimization and Search Marketing Made Easy..............................................................247Internet search engines and portals ...........................249Understanding search-engine lingo ............................252The Web-directory aspect of certain search engines ......253Make sure your site contains meta tags ......................253What a meta tag looks like .......................................254Search engines: the next millennium’s Yellow Pages .....256Generate traffic with Google AdWords ........................259Using banner ads to boost traffic ..............................262Tips for banner ad creation .......................................263Utilizing price-comparison websites ...........................265Just the facts .........................................................267

V Improving and Analyzing Your Site................26912 Making Your Site Look and Sound Great ...................271

Web browser plug-ins ...............................................272Chatting within your site .........................................278Beware! Not everyone uses plug-ins ...........................279Using Java applets and other graphic technologies ......280Should your site use cookies? ...................................282Paying attention to download times ..........................285Test browser compatibility ........................................286Giving visitors something of value .............................287Think before you act ...............................................289Look to the future . . . wait, it’s already here! ............290Just the facts .........................................................292

13 Analyzing Your Site ................................................293Pre-grand opening checklist ......................................294Determining how your site is perceived ......................297Soliciting comments and feedback from visitors ...........298Keeping your site’s content fresh ...............................300Just the facts .........................................................301

VI The Experts Speak........................................30314 Doing Business the eBay Way..................................305

eBay auctions 101 ...................................................306Reasons to use eBay ................................................308

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Create effective product listings ................................309Your feedback will make or break your reputation ........311Strategies for listing items for an eBay auction ...........312eBay spin-off businesses generate huge profits.............318Establishing an eBay store .......................................318An eBay store is scalable .........................................322eBay ProStores: another turnkey e-commerce solution .................................................................323Just the facts .........................................................323

15 E-commerce Industry Experts Share Their Knowledge and Secrets ...........................................325Sandy Bendremer, Cofounder, Galaxy Internet Services .................................................................328Rich Riley, Vice President/General Manager, Yahoo! Small Business ........................................................338Jimmy Duvall, Senior Product Manager, Yahoo! Merchant Solutions ..................................................338Jeff Vikari, Executive Director, Clickincome.com ...........347Troy Stevens, General Manager, Clickincome.com ..........347Barry Schnitt, Spokesperson, Google AdWords .............352Just the facts .........................................................356

16 Successful E-commerce Entrepreneurs Speak Out ......357Taeyoung Oh, Founder/CEO, Louisdog.com ..................359Jeremy Alicandri, Founder/Owner, SimplyCheap.com .....365Carole Jane Rossi, Founder/Owner, JOriginals.com ........372Christian Girts, Founder/Owner, AnglersVice.com ..........376Scott Meyer, Founder, OnlyOneCreations.com ...............382Chris Gwynn, Founder/CEO, Fridgedoor.com .................386Just the facts .........................................................392

A Glossary ................................................................395

B Resource Guide ......................................................403

C You Sold It, Now Ship It .........................................409

D Important Information About Copyrights and Trademarks......................................................413

Index ....................................................................421

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About the Author

xi

Jason R. Rich (jr7777@aol.com, www.jasonrich.com) is the bestselling author of more than 30 books, as well as a freelance writer and newspaper/magazine columnist.

Rich has written a number of books on business-related issues, including: Make Your Paycheck Last,Brain Storm: Tap Into Your Creativity to GenerateAwesome Ideas and Remarkable Results, The UnofficialGuide to Earning What You Deserve, The Unofficial Guideto Marketing Your Business Online, Job Hunting For theUtterly Confused and First Job, Great Job: America’sHottest Business Leaders Share Their Secrets.

Rich has also written a series of popular, family-oriented travel guides for Adams Media’s Everythingseries and is the author of American Idol Season 3—AllAccess (Prima/Random House) and American IdolSeason 4—The Official Behind-The-Scenes Fan Book(Prima/Random House), the official books aboutAmerica’s hottest televised talent competition,American Idol. During Season 4 of American Idol, Richserved as the senior editor of American Idol: TheMagazine.

Two of his most recently published books are TheBachelor’s Guide to Life (iUniverse) and 2002 HighPaying Jobs You Can Get Without a 4-Year Degree(Entrepreneur Press).

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xii ABOUT THE AUTHOR

Rich lives just outside of Boston, Massachusetts, with his newpuppy Rusty (www.MyPalRusty.com) and also works as a publicrelations and marketing consultant to companies in a widerange of industries.

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Introduction

xiii

So, you’re interested in starting an online-basedbusiness or creating an online presence for yourestablished brick-and-mortar business? As you’reabout to discover, there’s no better time to get started!

When the first edition of this book was publishedin 1999, the first sentence of the Introduction read,“According to Internet Computing, ‘Consumer shop-ping over the Web will be a $6 to $8 billion dollarbusiness by the year 2000.’”

Let’s jump forward to the present. As of June2005, the U.S. Census Bureau of the Department ofCommerce announced that the estimate of U.S.retail e-commerce sales for the first quarter of 2005was $19.8 billion, an increase of 6.4 percent from thefourth quarter of 2004. (Traditional retail sales grewonly 1.5 percent for the same period.) During thefirst quarter of 2005, e-commerce–based retail salesrepresented 2.2 percent of all retail sales in the U.S.

Internetnews.com estimated that in 2005 alonemore than 202.1 million new personal computerswill be sold. In 2004, an estimated 187 million per-sonal computers were sold. Many of these computerswill ultimately be connected to the Internet, withusers eager to surf and shop online.

Furthermore, sales of Smartphone devices (wire-less devices capable of surfing the Internet, fromcompanies such as Nokia, PalmOne, and RIM) also

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continued to surge in 2005. The latest figures from Canalys (aleading provider of consulting and market analysis, www.canalys.com) show that more than 10 million smart mobile devices wereshipped globally during the first quarter of 2005.

With so many new online shoppers, are you wondering whatthey’re actually buying online these days? According to ClickZ(www.clickz.com) and Neilsen/NetRatings, as of February 2005,the top 15 online retail categories, based on average order size,were the following:

1. Computer hardware

2. Event and movie tickets

3. Automotive

4. Office supplies

5. Consumer electronics

6. Child/baby care products

7. Sporting goods and outdoor activity items

8. Home and garden supplies

9. Shoes and athletic footwear

10. Flowers, greetings, and specialty gifts

11. Computer software

12. Jewelry and watches

13. Health, wellness, and beauty supplies

14. Apparel (clothing) and accessories

15. Toys, games, and hobby supplies

These days, there are hundreds of thousands (perhaps more)e-commerce websites and online-based businesses in existence.Some are run by multibillion-dollar corporations, but many areoperated by people just like you, who have created an online busi-ness as a hobby, as a part-time job, or as a full-time career.

As a soon-to-be online business operator, it’s important tounderstand that you’ll be facing a lot of competition in cyber-space. However, there’s still an incredible opportunity for you to

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earn profits, especially if your online business offers somethingthat’s new, unique, and not readily available at your local mass-market retailer or superstore. You’ll soon discover that your bestchance for success is to target a very specific niche market withyour online business.

After all, when you launch your online business, you’ll becompeting with traditional retailers such as Wal-Mart and thestores at your local mall, plus all of the other well-establishedonline retailers. Finding items or services to sell online that areunique, customized, one-of-a-kind, hand-crafted, collectible and/or that target a niche market may seem like a challenge at first,but you’ll discover this type of product offers the best profitpotential in cyberspace. Of course, people also continue to makemoney selling books, CDs, and consumer electronics, for exam-ple, but they face a much higher level of competition.

On Thanksgiving Day 2004 (the busiest shopping day of theyear in cyberspace), Hitwise, Inc. reported that on the Web, the10 busiest online shopping-related sites included the following:

1. eBay.com

2. Amazon.com

3. Wal-Mart.com

4. BestBuy.com

5. Target.com

6. Dell.com

7. CircuitCity.com

8. Sears.com

9. Yahoo! Shopping (http://shopping.yahoo.com)

10. BizRate.com

If you’re enticed by all of these statistics, you believe cyber-space offers viable business opportunities for you, and you’resomeone with an entrepreneurial spirit looking to capitalize onthis fast-growing marketplace, you’re reading the right book!

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Okay, enough with the boring (albeit impressive) stats. Therest of this book will get down to business and help you design,launch, and manage your online venture.

Beware of online scamsAs a Web surfer, your e-mail inbox probably gets bombarded by aconstant inflow of offers from companies doing business on theWeb. Aside from the countless invitations to visit the newest pornwebsites, you’ve probably also received dozens of business oppor-tunity offers via e-mail, explaining how you, too, can become richusing your computer to sell products or services on the Internet.

Yes, there are many business-opportunity scams being hypedin cyberspace. The truth is, however, that if you’re careful andmake well-educated decisions, the World Wide Web offers anincredible chance for virtually anyone to establish a successfulonline business. For a far lower investment than starting mostother types of companies, such as a retail store or traditionalmail-order business, you can establish an online business (or e-commerce website) and begin selling products or services onthe Internet.

The Unofficial Guide to Starting a Business Online, 2nd Edition,was written for the average computer owner who is interested insetting up a small-business or e-commerce site on the Internet.This book will guide you through the entire process of planningyour online-based business venture, creating your website, pro-moting and marketing your business, and managing the day-to-day operations of your business. If you already operate anestablished traditional business, this book will help you expandinto cyberspace by helping you create an online presence.

If you’re interested in starting an online-based business or e-commerce site (which involves actually selling goods or ser-vices online), you’ll need to make many choices when it comesto actually planning and building your website. This bookexplores a handful of the options available to you in terms ofusing off-the-shelf software and online-based turnkey solutions

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for creating and managing your online business venture. Aturnkey solution refers to a company or service that offers you allof the tools and resources you need, often for a monthly fixedrate, to create, launch, and manage your online business.Turnkey solutions for creating an e-commerce website are offeredby companies like Yahoo! and eBay. You’ll learn more about theseand other inexpensive turnkey solutions later in this book.

Keep in mind, the focus of this book is to help small start-upcompanies or small, established businesses create a presence onthe Web.

You’ve probably heard a lot of hype about the incredible mon-eymaking opportunities available to anyone selling virtually any-thing online. If done correctly, it’s true that almost anything canbe sold successfully on the Web; however, it’s also important toremember that many of the online business success stories we’reall familiar with (Amazon.com, Yahoo!, eBay.com, and so on)were all backed by millions of dollars in initial investment capital.

Even if you have an incredible and totally original idea foran online business venture, it’s vitally important to have realisticexpectations when you go online. It’s extremely rare for peopleimmediately to flock to a new online business of any type andbegin placing orders, especially if the online-based business isn’ta spin-off of an already successful traditional business with astrong reputation in the offline business world.

This book will help someone with an idea for creating anonline business transform that idea into what will hopefullybecome a viable, moneymaking business venture. When you hearreports about people from all walks of life launching their ownonline businesses, what exactly does this mean? Can someone likeyou actually create and operate a successful online business?

The buying habits of consumers are changing quickly. It’s nolonger just highly computer literate, well-educated, high-income people who shop online. Home computers have gottencheaper, and millions upon millions of people from all incomelevels are gaining access to the Web. A growing number of these

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Web surfers also now have high-speed broadband or DSLInternet connections, plus they’re willing to make purchasesonline. As a result, many individuals, just like you, have foundsuccess establishing online-based businesses catering to nichemarkets that larger companies aren’t reaching—online or offline.

People interested in working on a part-time basis from hometo supplement their incomes are among the fast-growing groupof online entrepreneurs. Homemakers, senior citizens, peoplewith physical disabilities, students, and those with an entrepre-neurial spirit are also among the people launching new onlinebusiness ventures every day. In addition, people looking for acareer change and those who want to become their own bossesand set their own work schedules have found success launchingonline businesses. In reality, there is no stereotypical successstory for online-based business operators. Even people withminimal computer skills but excellent business ideas haveachieved success.

So could you be successful launching and managing anonline-based business? The answer is yes, as long as you’re willingto work hard and invest a significant amount of time (as well asmoney) into your venture, and your underlying idea for a busi-ness is sound. How well you market your online-based businesswill also be a major factor in whether it becomes successful. Thisbook will help you gather the resources and knowledge you need,whether you’re hoping to launch an online business on a shoe-string budget or you have significant investment capital available.

Launching an online business requires an underlying under-standing of how traditional businesses operate. You also need tounderstand basic marketing, have some basic computer skills(even though programming isn’t actually required to start anonline-based business), and be willing to spend a considerableamount of time doing research and managing your businessonce it’s operational.

When it comes to obtaining the computer skills you’ll need,the more you know, the better. However, you can get started

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with simply knowing how to use a Windows-based PC and off-the-shelf programs, like those found in Microsoft Office, plushow to surf the Internet. Being able to use a standard wordprocessor plus send and receive e-mails are valuable skills.

In terms of equipment, at the very least, you’ll need a reli-able personal computer that’s connected to the Internet,preferably via a high-speed connection. Ideally, you’ll want acomputer with a large hard drive and fast processor, plus suchperipherals as a laser printer, a scanner, and a high-resolutiondigital camera (for taking your own product shots for your web-site). As for software, it will depend on the type of online busi-ness venture you’re about to launch and how the website will becreated.

Later, you’ll read about turnkey options for designing, launch-ing, and managing your e-commerce websites using services suchas Yahoo! Store, eBay ProStores, and GoDaddy Quick ShoppingCart. These solutions make it easy for virtually anyone to launchhis or her e-commerce business quickly and with no programmingrequired.

Launching an online-based business isn’t a get-rich-quickscheme, so before you get started, it’s important to establishrealistic expectations, which this book will help you develop. Ifyou’re hoping to discover a way to strike it rich overnight byreading this book, you’re going to be disappointed because it’snot going to happen! This book takes a realistic approach tolearning about e-commerce and how to operate a successfulonline business venture.

In addition to walking you through the entire process ofplanning, creating, launching, marketing, and then operatingyour online business, this book offers a selection of interviewswith experts from the e-commerce and website design fields.Chapter 16 of this book includes interviews with people whohave already achieved success operating their own online-basedbusinesses. These people offer extremely valuable advice thatcan help you follow in their footsteps and achieve success while

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avoiding the many potential pitfalls online entrepreneurs expe-rience as they set up their business ventures.

Obviously, the opinions expressed in these interviews arebased on each person’s own experiences. Because there are nosure bets in this industry, you might choose to follow or totallyignore the advice these people offer, as there are many differentoptions and opportunities available to you. If nothing else, how-ever, these interviews will give you insight into some of theoptions and opportunities of which you, too, can take advantage.

Likewise, throughout this book, many different softwarepackages, online services, and companies are listed as resources.With new products and services designed to help online busi-ness operators being released almost daily, it is literally impossi-ble to list all the available products, software packages, andservices you could use in the planning, creation, and operationof your online business venture. The goal of this book is simplyto provide a general overview of what’s available and to help youlocate the exact tools and resources you need.

You’ll find that The Unofficial Guide to Starting a Business Online,2nd Edition, offers many answers and solutions in regard to e-commerce websites. The book also delves into the latest trendsin online advertising, marketing, and promotions, such as searchmarketing, keyword-based advertising, and search-engine opti-mization. It also explores the online auction phenomenon cre-ated by eBay.com and Yahoo! Auctions.

The e-commerce industry is constantly evolving. There areno set rules or guaranteed methods for achieving success. As aresult, use this book as a starting point, but be prepared to doyour own research based on the type of business venture youhope to pursue. As you read this book, you’ll be provided withhundreds of website addresses (URLs) that will lead you to valu-able resources, services, and tools designed to help you plan,create, and manage your online business venture. Take fulladvantage of these resources and make an effort to benefit fromthe experiences and knowledge of others who already operate a

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business in cyberspace. Even if you’ve been successful operatinga business in the offline world, you’ll find that what works incyberspace is often different.

The business idea you have is important and will have someimpact on how successful your online business ultimately is;however, marketing your site and managing it properly areequally important.

For many people who proceed with caution and make edu-cated decisions, operating an online business can be extremelyrewarding, emotionally and financially. After all, very few typesof businesses require a relatively low initial financial investmentand allow you to be your own boss, set your own hours, andwork from virtually anywhere. Ultimately, how much investmentcapital you use to launch your business will depend on many fac-tors; however, it’s possible to launch a start-up business for verylittle money, especially if you use a turnkey solution, like theones described later in this book. Keep in mind, some of yourbusiness expenses as you launch your business will most likelybe related to advertising, marketing, and promotions, plusinventory. Thus, the investment needed will vary greatly, basedupon what you’re selling, how you’re selling it, and your overallbusiness strategy.

Special FeaturesEvery book in the Unofficial Guide series offers the followingfour special sidebars that are devised to help you get thingsdone cheaply, efficiently, and prudently.

1. Moneysaver: Tips and shortcuts that will help you savemoney.

2. Watch Out!: Cautions and warnings to help you avoidcommon pitfalls.

3. Bright Idea: Smart or innovative ways to do something; inmany cases, the ideas listed here will help you save time orhassle.

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4. Quote: Anecdotes from real people who are willing toshare their experiences and insights.

We also recognize your need to have quick information atyour fingertips and have provided the following comprehensivesections at the back of the book:

1. Glossary: Definitions of complicated terminology and jargon.

2. Resource Guide: Lists of relevant agencies, associations,institutions, websites, and so on.

3. You Sold It, Now Ship It: Lists resources for shipping yourproducts to customers.

4. Important Documents: “Official” copyright and trademarkinformation.

5. Index

As you hop on the e-commerce bandwagon, if you’d like toshare your experiences with the readers of future editions ofthis book, or if you have comments about this book, pleasee-mail me directly at jr7777@aol.com, or visit my website atwww.jasonrich.com.

Welcome to the exciting and fast-paced world of e-commerceand operating a virtual business. As you turn the page, yourintroduction to this industry and the opportunities available toyou will begin!

Jason R. Rich

Website: www.jasonrich.comE-mail: jr7777@aol.com

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PART IIn Business, Preparation

Is Everything

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Chapter 1

3

G E T T H E S C O O P O N . . .Is an online-based business right for you? ■How to invest your time and money ■ Do allbusinesses work on the Web? ■ Defining your

business idea and making it work for you

Making the RightBusiness Choices

So you’ve heard all the hype about the WorldWide Web and the profit potential of starting abusiness on the Information Superhighway.You might have also heard about all of those “dot-bomb” companies that lost a fortune and folded afew years ago.

What’s the real truth about the profit potentialfor an online business? In today’s fast-paced businessworld, can someone still earn a profit by launchingand operating an online business? As you’re about todiscover, the answer is most definitely yes!

Perhaps you’ve heard the opportunities availableto small-business operators on the Internet equatedto the Gold Rush, or you’ve seen statistics that depictonline businesses as being the best moneymakingopportunities for the 21st century.

The prices of computers continue to droprapidly, while with each new generation of micro-processor chips, their technological capabilities haveimproved dramatically. Thus, the equipment needed

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4 PART I ■ IN BUSINESS, PREPARATION IS EVERYTHING

to operate an online-based business is minimal—far moreaffordable than ever before to get started. In fact, you canlaunch an online business with little more than a basic PC that’sconnected to the Internet, a great idea and a product or serviceto sell. Inexpensive PCs are available from mail-order compa-nies, like Dell and Gateway, as well as from retail superstores,like CompUSA, Best Buy, and Circuit City.

Thanks to faster dial-up Internet connection speeds, DSL,and broadband Internet connections, surfing the Web is fasterthan ever. More and more people of all ages are becomingcomputer literate, and they’re beginning to explore theInternet on their own. People from all walks of life and fromalmost all income levels are finding their way into cyberspace inrecord numbers, thanks in part to the popularity of AmericaOnline and the tremendous marketing efforts of other InternetService Providers (ISPs), such as MSN, Earthlink, NetZero, GalaxyInternet Service, and many others.

Thousands of new people are making their way into cyber-space every week. These people, just like you, are consumers.Most have major credit cards, a checking account, and a PayPal(a secure online-based payment method) account for makingonline purchases using their computer.

The Internet’s fast-growing popularity has made it an attrac-tive and viable marketing tool for companies looking to reach abroad audience of computer users, plus niche markets made upof people with very specific interests, wants, and needs.

Moneysaver

If you need a home computer to establish your online business, and if you’llbe using a turnkey solution for designing your website (and won’t be doing alot of programming and graphic design work), a basic, inexpensive desktop PCor laptop computer is more than adequate to get started. Companies such asDell (www.dell.com) and Gateway (www.gateway.com) offer cheap, low-endcomputers. You’ll definitely want to invest in a high-speed broadband or DSLInternet connection, however.

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5CHAPTER 1 ■ MAKING THE RIGHT BUSINESS CHOICES

As you’re about to discover, if you’re planning to launch asuccessful online business, targeting niche markets with prod-ucts that a specific group of consumers wants or needs offers avery viable business opportunity for you as the online businessoperator.

What’s involved with starting an online business?Just a few years ago, establishing a business online (or an “e-commerce website”) was something that only large, well-funded companies were able to do; this is no longer the case.These days, virtually anyone with an idea for an online business,an inexpensive personal computer, access to the World WideWeb, and the tools for creating a website can launch their ownbusiness venture in cyberspace, with relative ease and with apotentially minimal financial investment. This book will showyou how!

Every seller is welcomeThe e-commerce industry is truly open to everyone; however,just because it’s available doesn’t guarantee that your onlinebusiness venture will make you rich, no matter what the statis-tics show or how good your idea is. Out of the hundreds (oreven thousands) of online businesses launched each month,only a handful will ever become profitable. An even smallernumber will make their founders wealthy.

Bright Idea

The amount of money you need to invest to successfully launch your onlinebusiness will vary dramatically, based on a wide range of factors. You can startalmost immediately using a turnkey service from Yahoo! or eBay, for example,that charges under $30 per month. It’ll cost more to have a website customdesigned if you have to maintain a light level of expensive inventory. Youradvertising, public relations and marketing costs will also impact how muchinvestment capital you need.

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6 PART I ■ IN BUSINESS, PREPARATION IS EVERYTHING

The good news is that starting an online business typicallyinvolves far less risk than opening a retail store or traditionalmail-order business. But, launching an online business venturethat has the potential for success will require a substantial invest-ment of time and creativity on your part. It could also turn intoa significant financial investment, depending on the decisionsyou make and the type of business you’ll be launching. As you’lldiscover, you can start an online business, using a turnkey solu-tion, for a very small initial investment.

Anyone who has explored cyberspace or studied the stockmarket has heard about all of the online businesses that havelaunched, gone public, and made their investors a fortune. Butmost online businesses don’t become profitable. Those thathave generated profits have done so only after being in businessfor several years. In many cases, sizable financial investments (inthe millions of dollars) were also put into marketing, advertis-ing, and promotion. You don’t need to launch your business ona massive scale to earn profit. Millions of online businessesachieve success by starting out very small, targeting a niche mar-ket and growing over time.

Online businesses such as America Online, Yahoo!,Amazon.com, eBay.com, Priceline.com, and 1800flowers.com,for example, weren’t launched as small start-up businesses. Theywere created by already-successful business entrepreneurs whoraised millions of dollars in investment capital and invested thatmoney in the formation and marketing of their online businessventures.

Still, don’t let this discourage you. Whether you’re contem-plating starting your own online business as a full-time career

Bright Idea

Take your website seriously. The first impression you make with a customer,whether it’s online, in person, over the phone, or by mail, is what makes thedifference.

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