The concept of starting a business online has been around since the 1990s.
These days, opening a storefront or a sales channel on the Internet is
not the least bit unusual. As time goes on, you have more and more success
stories to emulate and be inspired by. Also, new software and services are
continually developed to make creating web pages and transacting business
online easier than ever. But after you leap a few not-so-high technological
hurdles, the basic steps for starting a successful online business haven’t
really changed. Those steps are well within the reach of individuals like you
and me who have no prior business experience.
Online businesses are affected by economic downturns just as offline operations
are. But in good times or bad, you can still thrive. All you need are a
good idea, a bit of startup money, some computer equipment, and a little
help from your friends.
One of my goals in this book is to be one of those friends — someone who
provides you with the right advice and support to get your business online
and make it a success. In this chapter, I give you a step-by-step overview of
the entire process of starting an online business.
Step 1: Identify a Need
“The best of anything hasn’t been done yet,” says John Moen, the successful
founder of the Graphic Maps website (www.graphicmaps.com) I profile
in this chapter. “The web isn’t over. Someday someone will invent a better
Walmart, and there will be a bigger and better store. As the technology
changes, someone will create a business online that makes people say, ‘Holy
cow, that’s cool.’”
In fact, in the course of writing about online business for ECommerceBytes
(www.ecommercebytes.com), I’ve found out about all kinds of new online
services, such as:
✓ RIVworks (www.rivworks.com) lets small businesses affordably add
video clips to their websites. RIV stands for Rich Interactive Video.
✓ SteelHouse (www.steelhouse.com), a “behavioral advertising”
company, gives online businesses the ability to display animated or
video ads on their sites.
✓ FBAPower (www.fbapower.com) helps those who sell on Amazon.com
boost their profit margin by finding products that sell well on the site
and then letting Amazon ship them through its Fulfillment By Amazon
✓ FeeFighters (www.feefighters.com) helps businesspeople shop for
the best discount rates from credit companies so they can accept credit
card payments from shoppers.
✓ Mobify (www.mobify.com), helps merchants create mobile versions of
their websites so they can pursue “m-commerce.”
In addition to these service providers, I’ve profiled small business websites
that sell handmade primitive artwork, elaborate eggshell art, high-quality
merchandise from Europe, and lots of other products.
Electronic commerce (e-commerce) and the web have been around for nearly
15 years. But new products and ways to sell those products are identified all
the time. Think of the things that didn’t exist when the first websites were
created: blogs, Twitter, search ads, podcasts, RSS feeds, MP3s, YouTube,
DVDs, and eBay. Consider my brother, Mike: For the past couple of years,
he has operated an online business — lp2cdsolutions, Inc., which converts
scratchy old records to clean and repackaged CDs. Business has remained
steady because, like many entrepreneurs, Mike reached a simple conclusion:
“If I want this product so much, I bet a lot of other people do, too.” He spent
thousands of dollars on computer hardware and software, and he got really
good at audio restoration. Now he’s making a modest but steady extra income
and putting his technical talents to good use. Will he succeed because he has
me to help him? I don’t think success is guaranteed. It depends on you — your
energy, dedication, and enthusiasm.
Your first job, accordingly, is to get in touch with your market (the people
who’ll be buying your stuff or using your services) and determine how you
can best meet that market’s needs and demands. After all, you can’t expect
web surfers to patronize your online business unless you identify services or
items that they really need. For Ryan Hatfield, who sold general merchandise
on eBay from 2002 to 2009, a desire to automatically lower his prices to beat
the competition served as the impetus to create his own company selling his
product, Price Spectre, online. For more on Ryan, see the “Programmer maps
plan for success” sidebar, later in this chapter.
Getting to know the marketplace
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 with credit cards or by other methods.
Many people decide to start an online business with little more than a casual
knowledge of the Internet. 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.
One of your first steps is finding out what it means to do business online and
determining the best ways for you to fit into the exploding field of e-commerce.
For example, you need to realize that the Internet is a personal place;
customers are active, not passive, in the way they absorb information; and
the Internet was established within a culture of people sharing information
freely and helping one another. For another, you need to know that although
the marketplace continues to grow, most of the new growth is expected to
come from experienced online shoppers rather than people making their first
purchases online. That means you must address the needs of experienced
shoppers who are becoming more demanding of web-based merchants.
Some of the best places to find out about the culture of the Internet are blogs,
social networking sites such as Facebook, chat rooms, and sites such as
Twitter where individuals gather and exchange brief messages online. Visiting
discussion forums devoted to topics that interest you can be especially helpful,
and you’re likely to end up participating. Also visit commerce websites
such as eBay and Amazon.com for ideas and approaches you may want to use.
“Cee-ing” what’s out there
The more information you have about the “four Cs” of the online world, the
more likely you are to succeed in doing business online:
✓ Competitors: Familiarize yourself with other online businesses that
already do what you want to do. Don’t let their presence intimidate you.
You’re going to find a different and better way to do what they already do.
✓ Customers: Investigate the various kinds of customers who shop online
and who might visit your site.
✓ Culture: Explore the special language and style that people use when
✓ Content: Although websites have become far more visually interesting
over the years, what truly distinguishes them is their content. Useful
information attracts repeat visitors, which leads to increased sales.
When 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 products that sell best in cyberspace
include these four Cs:
✓ Cheap: Online items tend to sell at a discount — at least, that’s what
✓ Customized: Anything that’s hard to find, personalized, or unique sells
✓ Convenient: Shoppers look for 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).
✓ Compelling: Consumers go online to quickly read news stories from
sources that are available by subscription, such as newspapers and
magazines; content that is exciting and eye-catching or that exists online
only, such as homemade videos on YouTube (www.youtube.com) or
blogs (a term derived from web logs).
Visit one of the tried-and-true indexes to the Internet, such as Yahoo! (www.
yahoo.com), or the search services Google (www.google.com) or Bing
(www.bing.com). Enter a word or phrase in the site’s home page search box
that describes the kinds of goods or services you want to provide online.
Press Enter, and you’ll 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 how to do it better
After you see what’s already out there, you want to find ways to make your
business stand out from the crowd. Direct your energies toward making
your site unique and providing products or services that others don’t offer.
Offerings that set your online business apart 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 others. Maybe you can just provide
better or more personalized customer service than anyone else.
What if you can’t find other online businesses that do what you want to do?
Lucky you! In e-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 Jeff Bezos and others who founded the online bookstore
Amazon.com.) Don’t be afraid to try something new and outlandish. It
just might work!
Step 2: Determine What
You Have to Offer
Business is all about identifying customers’ needs and figuring out exactly
what goods or services you’ll provide to meet those needs. It’s the same both
online and off. (Often, you perform this step before or at the same time you
scope out what the business needs are and figure out how you can position
yourself to meet those needs, as I explain in “Step 1: Identify a Need.”)
To determine what you have to offer, 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, decide not only what goods or services you can provide online, but also
where to obtain them. Will you create sale items yourself? Will you purchase
them from another supplier? Jot down your ideas and keep them close at
hand while you develop your business plan.
The Internet is a personal, highly interactive medium. Be as specific as possible
with what you plan to do online. Don’t try to do everything; the medium
favors businesses that do one thing well. The more specific your business, the
more personal the level of service you can provide to your customers.
Step 3: Come Up with
a Cyberbusiness Plan
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 a business plan. A good business plan applies not only to the startup
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.
To set specific goals for your new business, ask yourself these questions:
✓ Why do I want to start a business?
✓ Why do I want to start it online?
✓ What would I want to buy online?
✓ What would make me buy it?
These questions may seem simple. But many businesspeople never take the
time to answer them — to their detriment. And 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 3 for more on setting goals and envisioning your
To carry your plan into your daily operations, consider these suggestions:
✓ Write a brief description of your company and what you hope to
accomplish with it.
✓ Draw up a marketing strategy. (See Chapter 10 for tips.)
✓ Keep track of your finances. (See Chapter 18 for specifics.)
Consider using specialized software to help prepare your business plan.
Programs such as Business Plan Pro by Palo Alto Software (www.paloalto.
com) lead you through the process by asking you a series of questions to
identify what you want to do. The Standard version of the program retails for
$99.95. You can find an online version for $19.95 per month.
If you set aside part of your home for business purposes, you may be eligible
for tax deductions, depending on how much space you use and whether it is
completely dedicated to your business. (You can’t work in a corner of the
kitchen but then deduct the entire kitchen, for example.) 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 17 and 18.
Go to my website (www.gregholden.com/busplan.doc) to download
information created by business consultant Jeffrey Edelheit about creating a
Step 4: Assemble Your Hardware
One of the great advantages of opening a store on the Internet rather than
on Main Street is money — or, rather, the lack of it. Rather than rent a space
and set up furniture and fixtures, you can buy a domain name, sign up with a
hosting service, create some web pages, and get started with an investment
of only a few hundred dollars or less.
In addition to your virtual storefront, you have to find a real place to do your
business. You don’t necessarily have to rent a warehouse or other large
space. Many online entrepreneurs use a home office or a corner in a room set
up with a computer, books, and other business-related equipment.
Finding a host for your website
Although doing business online means 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. The most common way to do so is by creating a website and
finding a company to host it. In cyberspace, your landlord is a web hosting
service. A web host is a company that, for a fee, makes your site available 24
hours a day by maintaining it on a special computer — a web server.
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-based resources, such as Microsoft Office Live 365 (www.
Tripod (www.tripod.lycos.com), act as hosting services and provide easyto-
use website creation tools as well. When my brother decided to create
his website, he signed up with a company called Webmasters.com, which
charges him $9.95 per month. Webmasters offers many features, including
the form shown in Figure 2-1, which enables you to create a simple web page
without typing any HTML.
In addition, the company that gives you access to the Internet — your
Internet service provider (ISP) — may also publish your web pages. Make
sure your host has a fast connection to the Internet and can handle the large
numbers of simultaneous visits, or hits, that your website is sure to get
eventually. You can find a detailed description of web hosting options in