Becoming an Internet Entrepreneur

How to Become an I.S.P. A Short Course for Internet Entrepreneurs By Lorraine Cobcroft Copyright Brisbane, March 2005 All rights reserved. No part of this publication may be reproduced in any manner without the express prior written permission of the author.

All product names in this publication are the property of their respective owners. The author acknowledges the rights of the respective owners in respect of product and business names, trademarks, etc., whether or not such ownership is specifically noted in the text, and regardless of whether or not trademark symbols follow names.

How to Become an ISP: A Short Course for Internet Entrepreneurs Introduction

Forward The purpose of this book is to assist the aspiring Internet Entrepreneur to find and exploit Internet Business Opportunities. The range of opportunities is vast, and continually increasing, and it would not be feasible to describe all of them in a single text \u2014 let alone to provi de detailed business modeling information for all of them.

Many Internet businesses involve \u2014 or could benefit from adding \u2014 a site hosting compon Whether an offering includes a conventional hosting package, or simply a page or set of pages for promoting a product or service, many ISPs will find it useful to allow their customers, suppliers, or affiliates to use space on the ISP's server for product and service promotion, and will want to charge for this facility by one method or another. The Web Community concept is one which is gaining favor rapidly, and with new technology now available to automate the set up and management of web communities, the author believes this trend will continue to grow strongly. Therefore, this book will pay considerable attention to the opportunities to start a Web Hosting business, because: 1. we assume that many types of specialist ISP business will include a hosting component, and 2. hosting businesses are somewhat more complex than many simple retail, advertising or service businesses, and those who wish to include hosting in their product range may need additional help. Conventional hosting is a crowded market space and highly competitive. It is not our intention to discourage anyone from entering the conventional Web Hosting space. If you choose to do so, though, take care to ensure you identify a way to achieve a specific competitive advantage. Do it a little differently from your competitors if you wish to succeed. This book is intended as an entrepreneur's guide, and is therefore business focused. It does not cover the technical aspects of setting up an Internet server, though it includes some reference to products and suppliers, and to particular business-level approaches to establishing infrastructure. The author can supply limited additional material focused on the technical aspects of establishing an Internet server on request. Such material may be strongly vendor-influenced, and may therefore be unsuited to the needs of those having particular preferences relating to their technology approach, products, or suppliers they favor. A Note about the book title. The term ISP has traditionally been used to refer to those providers who supply Internet connections to homes and businesses. In this text, the term is used in its broader application. Anyone delivering a service via the Internet may be described as an ISP. For convenience, the term is used here in place of the broader term "Internet Business Operator".

Table of Contents FORWARD.....................................................................................................................3 TABLE OF CONTENTS.................................................................................................5 INTRODUCTION............................................................................................................7

IS E-BUSINESS FOR YOU?............................................................................................8 QUALIFICATIONS FOR SUCCESS.....................................................................................9 THE INTERNET CLIMATE TODAY.................................................................................... 9 1: THE INDUSTRY AND POTENTIAL.........................................................................11

W HAT IS AN ISP?...................................................................................................12 W HAT IS WEB HOSTING?......................................................................................... 12 RESELLING HOSTING SERVICES.................................................................................. 12 W HY BECOME AN ISP?............................................................................................ 13 HOW MUCH MONEY CAN I MAKE?.................................................................................15 UNDERSTANDING BANDWIDTH..................................................................................... 17 OTHER BUSINESS OPPORTUNITIES...............................................................................20 2: HOSTING BUSINESS MODELS: THE INFRASTRUCTURE CHOICES..........................................................................21

VIRTUAL PRIVATE SERVERS (VPS):............................................................................25 DEDICATED SERVERS:.............................................................................................. 26 PRIVATE LABEL RESELLING VS A DEDICATED SERVER: SUMMARY......................................28 SHOULD CUSTOMERS KNOW YOU ARE RESELLING?.........................................................29 IN-HOUSE PRIVATE SERVERS......................................................................................29 3: ISP BUSINESS OPPORTUNITIES: GETTING CREATIVE................................................................................................ 31

FIVE BIG E-BUSINESS OPPORTUNITIES..........................................................................33 SOURCING PRODUCTS.............................................................................................. 35 SELLING ADVERTISING.............................................................................................. 35 SELLING DIRECTORY LISTINGS.................................................................................... 35 SELLING CONSULTING SERVICES.................................................................................35 SELL SUBSCRIPTIONS............................................................................................... 36 BECOME AN E-MEDIARY............................................................................................. 36 BECOME AN INFOMEDIARY.......................................................................................... 36 FINDING THE BEST OPPORTUNITY FOR YOU...................................................................37 4: BUSINESS PLANNING AND STARTUP.................................................................39

YOUR BUSINESS STRUCTURE..................................................................................... 39 REGISTERING A BUSINESS NAME.................................................................................40 DO I NEED A BUSINESS PLAN?.................................................................................... 40 GETTING STARTED...................................................................................................44 ADMINISTRATIVE OPERATIONS.....................................................................................46 SUPPORT OPERATIONS............................................................................................. 49 YOUR PRODUCTS AND PRICING...................................................................................50 5: BUILD YOUR BUSINESS WEBSITE...................................................................... 61

BUILDING YOUR WEBSITE............................................................................................61 REGISTERING DOMAIN NAMES......................................................................................74 UPLOADING YOUR W EB SITE......................................................................................76 PROMOTING YOUR W EB SITE..................................................................................... 76 SEARCH ENGINE OPTIMIZATION....................................................................................77 ASSESSING W EB SITE SUCCESS (IT'S NOT ABOUT HITS!)..............................................78

6: MARKETING FOR SUCCESS................................................................................. 80

TARGETING A NICHE MARKET.....................................................................................80 TARGETING LOCAL MARKETS...................................................................................... 81 THE SPECIALTY ISP BUSINESS...................................................................................82 FINDING CUSTOMERS................................................................................................. 82 THE POWER OF ONE................................................................................................ 89 PUBLIC RELATIONS.................................................................................................... 90 DOWN LINES............................................................................................................91 TRACKING MARKETING RESULTS..................................................................................91 7: SERVICE AND SUPPORT...................................................................................... 95

COMMUNICATION OPTIONS..........................................................................................96 SALES AND BILLING SUPPORT..................................................................................... 98 CHOOSING SUPPORT STAFF OR AGENTS....................................................................... 98 USING SUPPORT REQUESTS TO UP-SELL AND ON-SELL....................................................98 BUILDING AN ADDED VALUE ATTRACTION INTO YOUR ISP BUSINESS..................................100 8: SUCCEEDING IN AN INTERNET BUSINESS ...................................................... 101

EMPOWER CUSTOMERS TO HELP THEMSELVES............................................................. 101 EMPOWER CUSTOMERS TO SUCCEED..........................................................................102 SHOW APPRECIATION.............................................................................................. 102 BUILD LASTING ON-LINE RELATIONSHIPS..................................................................... 104 BRANDING IS MORE IMPORTANT THAN EVER................................................................. 105 DIFFERENTIATION....................................................................................................105 BUILDING YOUR IMAGE............................................................................................. 109 ENTHUSIASM IS INFECTIOUS.......................................................................................112 LEARN SOMETHING NEW EACH DAY.......................................................................... 113 9: EXAMPLES OF SUCCESS ................................................................................... 114

BLOEMENVEILING AALSMEER, THE NETHERLANDS.......................................................... 114

EBAY....................................................................................................................114

PRICELINE.............................................................................................................116 AUTOBYTEL........................................................................................................... 117 BESTOFFER.COM.................................................................................................... 118 CHROME DATA...................................................................................................... 118 MOTLEY FOOL....................................................................................................... 119 BARNES AND NOBLE............................................................................................... 119 OTHER ISP IDEAS THAT HAVE BEEN SUCCESSFULLY IMPLEMENTED:.................................... 120

10: SUCCESSION AND EXIT PLANNING.................................................................125

THE SALE PRICE....................................................................................................127 NOTABLE EXIT SUCCESSES...................................................................................... 127 PARTING ADVICE......................................................................................................129

How to become an I.S.P.: A Short Course for Internet Entrepreneurs

Introduction

Internet Service Provision is one of the most powerful low entry cost, low risk business opportunities available today. The ISP business is also a great lifestyle business. Think about it! •

• • •

Work from home. With the right software set up, you can even travel, managing your server and servicing your customers from a distance. Work your own hours – part time or full time. Overheads are very low Staffing needs are minimal, unless you grow a very large enterprise

•

Clean, professional work. No hard manual labor involved.

•

You enjoy the image of a skilled professional

Internet-based businesses are probably the fastest growing business sector in the worl International Data Corp. estimated Web hosting revenues would reach $19.8 billion by 2004, up from $1.4 billion in 1999. Some examples of claimed hosting company revenues for 2004 include: Earthlink

$351.6 million (growing at 98,000 additional subscribers per quarter)

Via

between $76 and $79 million

Interland

$101.6 million

Frank Feather, author of Future Consumer and G-Forces, claims “By 2010, the Internet gobble up 31% of consumer spending, leaving most brick-and-mortar retailers in rubbl Would you like to join the on-line revolution? Do you find the idea of joining the next generation of Internet entrepreneurs exciting? This short course details the steps to becoming a successful ISP.

I have used the term “ISP” as a general term to describe all Internet-based businesses, rather than in the narrow sense of the provider of Internet connections. I have focused strongly on Web Hosting businesses, partly because it is such a big and fast growing business. However, there are many specialty ISP business opportunities which may be more suited for startups. Some include a substantial component of hosting, while other are more focused on advertising, web-based retailing, or information or service provisio

How to Become an ISP: A Short Course for Internet Entrepreneurs

Copyright Lorraine Cobcroft, March 2005. All rights reserved.

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My goal is not to detail business models for every type of opportunity. This would be impractical in a single publication. Rather, my goal is to provide ideas and guidelines that can be applied to your new Internet enterprise to help it succeed. I strongly recommend that you research any other available sources, speak to business advisers, and consider carefully the relevance of any advice given here to your specific business idea. I cannot guarantee your success, nor can I give any absolute guarantees that specific approaches or strategies might be more successful than others. To some extent, any business is an ongoing experiment, and a learning adventure. Be prepared to make mistakes, but plan to enjoy the journey.

Is e-business for You?

If you are like most entrepreneurs, you are probably very interested in the financial potential of this opportunity. Maybe you already run a successful on-line business, and you’re looking for ways to make more money with less effort. Perhaps you're a web designer looking for a way to provide hosting to your clients while increasing your profits. Or maybe you are just looking for a lucrative opportunity in a new age industry which is destined to continue achieving astonishing growth rates for some time to come. With the right marketing plan, six figure incomes are quite readily attainable in ISP businesses. The industry is booming. Look at the following growth table, published at http://www.lums.lancs.ac.uk/files/forecasting. Worldwide

Internet users (000s) Internet penetration (%)

1997

2000

2003

2005

72,500

241,500

516,600

775,700

2

4

9

13

Internet terminals and hosts (000s)

46,800

200,800

598,400

1,154,200

Internet connections

39,400

109,700

405,000

824,400

With the emergence of technologies such as Wifi, 3G and Voice-over IP, the industry is certain to continue its rapid growth.

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Yet for many small business operators, the Web remains a frightening mystery. Predicti that “businesses that do not embrace the web successfully will die” continue. Yet despi often heavy investment, business operators are finding that web sites fail to deliver for them. Increasingly, they will turn to specialist web communities and niche market hosting providers capable of supporting their e-marketing endeavors effectively. This will open increasingly exciting opportunities for specialist web hosts and ISPs.

Qualifications for Success

All kinds of folk have been successful in the Internet economy — including some seemin very unlikely candidates! There are, however, a few traits that are common among successful Internet Entrepreneurs:

1. As in other industries, successful entrepreneurs in the Internet world tend to be risk takers

2. They have the ability and willingness to learn some basic technical concepts. In general, however, successful Internet Entrepreneurs are not “techno geeks”. They a more business focused. 3. They jump at opportunities — but take calculated risks, not gambles

4. They have energy, determination, a willingness to work, and the persistence to meet challenges head on and overcome difficulties.

5. They are well connected among target customers, or know how to reach their chose market effectively.

6. They are good communicators. They get along well with people and can communicat their vision effectively. 7. They believe passionately in what they are doing and their ability to succeed at it.

The Internet Climate Today

The Internet is empowering entrepreneurs. Traditional “brick and mortar” businesses t have traditionally owned distribution channels are being challenged by new business models and new rules. In the early days of the Internet, there was a lot of “stupid money” about. Ventures were being funded that had no value, no meaning, and no real chance of ever making money. Any company with “dot com” in its name could secure investor funding. How to Become an ISP: A Short Course for Internet Entrepreneurs


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The stupid money is gone. The Internet is maturing. Yet industry growth remains strong and investor confidence is returning, along with the realization that the “bust” only served to flush out the rubbish and bring some sanity into the industry. Those with a good idea and a sound business plan have an excellent chance of success. As we look ahead, there are 6 factors that spell “opportunity” for Internet Entrepreneurs: 1. Connections will continue to become faster and cheaper and a greater variety of devices will be connected. This will greatly expand opportunities. 2. The concept of “virtual companies” and “virtual communities” will increasingly displace the conventional physical company and community. Companies will operate through a network of partners and alliances, formed at lightning speed as different needs arise. 3. More people will work from home, telecommute, and work as independent contractors for several companies. Large offices with many employees will give way to small company headquarters and virtual private networks connecting contractors and partners. 4. On line buying will continue to increase as people become more confident in the security measures that apply, and more comfortable with the Web as a buying environment. 5. The quality of information on the Web will improve. 6. Business to business services will flourish, as the convenience of the Web becomes more readily understood and awareness grows of the potential to harness its power in new and creative ways.

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1: The Industry and Potential

First, a word of caution. This course is NOT a get-rich-quick scheme. It won’t teach you how to get money for nothing.

If you are looking for a get-rich-quick program, I would suggest you stop reading now!

Becoming a successful Internet entrepreneur is a real opportunity that takes serious e and persistence. I can help you automate the technical setup and management part.

Unfortunately, while I can help out with advice, I haven't yet devised a way to automate the marketing and administrative part of the operation for you. I can help in that area by providing ideas, resources, and technology solutions that facilitate efficient marketing and management, but you need to be genuinely prepared to invest effort in your business if you wish to succeed. In every enterprise, success is proportional to the effort invested. So... before we go any further, perhaps you should ask yourself a few questions: 1) Do you desire to make money running a full or part time Internet business? 2) Are you willing and able to learn? 3) Do you enjoy helping others to achieve their business and income goals? 4) Do you know how to use the Internet and email? 5) Are you willing to invest some time and effort to make a business venture work?

6) Do you have an open minded and progressive approach to learning. That is, do you understand that in a fast moving world, knowledge and skill rapidly becomes obsolet and you must continually embrace new ideas and new methods to succeed?

7) Are you excited by new and creative ideas for harnessing the power of technology to drive business improvement? If you answered 'yes' to these questions, you have the basic ingredients to achieve success as an Internet entrepreneur.



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What is an ISP?

In simple terms, an Internet Service Provider is a supplier of services which utilize the Internet in some way. The first and most obvious type of ISP is the supplier of an Internet connection, through which consumers can send and receive email and access the World Wide Web and other Internet facilities. These suppliers are somewhat similar to your phone company. They supply the connection. Once connected, businesses and consumers see thousands of potential uses for Internet and World Wide Web technology. For many business operators, their first attempt to take advantage of the potential of the Web will be creating and publishing a web site. To do that, they need to establish or locate a web hosting server. Most will use a well known hosting service provider.

What is Web Hosting? Web hosts take collections of web pages (HTML and other files) and “publish” them for public access, by placing them on a web server connected to the Internet. Most hosts operate servers for “virtual hosting”, which means that many sites are run from the same server. While this reduces costs, it also implies some restrictions in terms of privacy, access, and the types of applications that can be implemented on a web site. Therefore, many businesses find a managed server better suits their needs. A managed server is a server that is used exclusively by one site owner, but is located in a data center, and managed by a hosting service provider. A private server is similar to a managed server, except that it is located in-house in the business it serves, or in a location nominated by the owner. While the software and services provided on a managed server are determined by the hosting service provider, the owner of a private server may configure and equip his system any way he chooses.

Reselling Hosting Services Sometimes hosts allow virtual hosting resellers to rent managed servers to provide virtual hosting services to their customers. In this way, web site developers and other entrepreneurs are able to offer hosting services to their customers, without actually having any facilities. Hosting resellers buy or lease server space, bandwidth, etc. from an ISP, then on sell those services to their customers. While many make money from this activity, it carries some risks and negative implications. As a reseller, you are not in control of service delivery to your customer: page 12




You have to rely on someone else to honor your service guarantees, and to ensure th service quality is as you promised. • Customers who become aware of the reseller arrangement may see no benefit in dealing with you as opposed to dealing directly with your supplier. Some may see it a significant disadvantage to work through a “middle man”. • If you do not reveal your reseller status, customers discovering the arrangement ma feel they have been deceived. Never the less, hosting service reselling has become very big business, and quite profit for many entrepreneurs. Reselling has proved popular because, in the past, setting up hosting operation required expensive infrastructure and extensive technical manageme skills. •

Today, new technology solutions provide non-technical resellers the opportunity to prov a direct service to their customers – via a private server – and to earn substantially increased profits from doing so. Private servers allow resellers complete flexibility to configure their systems, create custom hosting packages, and set pricing as they wish. They also enable the establishment of powerful web communities to service niche mark in creative ways.

Why become an ISP? Every day, thousands of new websites are added to the billions of web sites already published on the World Wide Web. And most of the owners of these sites pays a host! The web hosting business is a hugely profitable and rapidly growing industry.

Of course, there are already thousands of web hosts all over the world, and many of the are big and powerful businesses with millions of customers and the strength to be high competitive. Does that mean that your opportunities to enter this industry are limited?

No. There are literally so many websites being added to the web each day that if you could even capture a small fraction of a percent you could achieve high earnings. And a very diverse world. There are countless site owners who dislike dealing with large corporations, want personal service, want to deal with folk they know, want a supplier located geographically close to them, or want to host with someone who understands th industry and business needs.

Many savvy business operators understand that there are reduced security risks dealin with smaller ISPs. The higher the number of sites on a server and the more servers an ISP is managing, the less likely any infected file that may be uploaded will be detected sanitized quickly, before cross-infection occurs. In addition, there is a growing trend away from just publishing a web site and hoping for traffic. Business operators are becoming disillusioned with the Web, because their sites frequently don't generate the business growth they anticipated. Some find that they can't



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even justify the cost of hosting. Yet the potential of the Web is unquestionable. It's simply a matter of finding the right way to harness its power and put it to use in your business! Savvy business operators are recognizing the value of networking on the web. Many are finding that web communities generate better results. Portals, directories and virtual malls are proving to be a better way of attracting attention. Consider, for example, how some of the small store owners on eBay would succeed in attracting buyers if they had to simply publish their store on the web and market themselves. Many experts are predicting that the “infomediary” business will be the next “big thing” on the Internet. There is logic to that prediction. We know that people are fiercely protective of their privacy and are nervous about disclosing personal information on the Web. We also know most people using the Web are seeking information — free information! It's a proven fact that business sites that offer lots of free and useful information attract traffic, and can generally convert that traffic to sales. Providing that information can be a huge task, however, for someone busy running a retail store or service business. The benefit an “infomediary” can offer is that he can specialize in researching and publishing information on a particular topic, and answering visitor's questions and concerns about that subject. Because he isn't selling anything directly — but rather giving free help – site visitors have the confidence to build a relationship with the site owner and will often volunteer information about themselves and their needs. He is also uniquely positioned to focus strongly on driving qualified traffic to his site and building relationships that imply repeat visits. Once the infomediary has established a relationship with a customer, he is able to broker relationships with trusted suppliers. Those suppliers pay him to broker these relationships, perhaps via commissions on their sales to the customers he introduces. Of course an infomediary business is only one of dozens of ISP business models that are proving highly successful. On-line auction houses, trading centers, swap meets, e-book suppliers, job portals, motor vehicle sales portals, real estate sales portals, virtual home shows, on-line craft fairs.... the list of possibilities is endless, and in every category there are exciting examples of business success. 1999 saw a boom of unprecedented proportions, when everything “Internet” seemed destined to turn to gold. Then there was the “big bust”. Now, though investors are more discerning than in 1999, there is an air of excitement again surrounding new Internet ventures. Continued growth in e-business and emerging new technologies ensure continued strong growth and high profits for creative and energetic Internet entrepreneurs. Low entry costs, low risks, and the capacity to operate from home with low labor input makes an ISP business the perfect choice for entrepreneurs seeking an ideal combination of income and lifestyle.

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How much money can I make?

Your income and profit will depend on a great many factors: •

• • • •

the product you choose to offer (it may be simple hosting, or a much more specialized offering at higher cost) the specific business model you adopt the market sectors you target the quality of your offering how much effort you invest

your marketing abilities and business skills and, to some extent, “Lady Luck”. •

If you have looked at hosting reseller programs, you’ve probably seen ads that make qu extravagant promises.

While it’s true that the potential of the better reseller programs is virtually unlimited, m examples are optimistic scenarios which omit to consider the number of customers that will quit the service, and often fail to take into account marketing expenses such as advertising.

More importantly, they don't clearly explain the implications of their bandwidth and storage space allowances. While these look generous at a superficial glance, the reality that the entry level programs typically allow you to host about 30 to 40 very low volum customers reliably. Even programs in the $200 to $250 per month range are unlikely to support a high volume of customers unless their consumption is very limited and the timing of their usage spread evenly over peak and off-peak periods.

You should read carefully the section on Understanding Bandwidth to gain an appreciation of how to assess the traffic volume different host's offerings will actually support. Much of the promotional material published is confusing and deceptive!

Having your own connection gives you much better control, as you can negotiate with your supplier to ensure that you understand exactly how traffic allowances are calculat and the potential impact of any bursting allowances included in your plan. It also gives you complete control over the services you offer your customers and the terms on which these services are offered. In other words, your business is your business, and you manage it entirely your way.

Here are some very conservative estimates to help you envisage the kind of income and expenses that might apply in your startup business, assuming that you are building a sm specialty business taking on 80 to 100 new customers each year: •

Happily, this is a low overhead business that you can run from one small room or corner of a room in your own home. Many costs will become tax deductible (part of



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•

•

•

•

•

your phone, electricity, motor vehicle, rent or home loan interest costs, council rates, etc.), but your actual expenses for premises and power will be negligible. A business grade ADSL or wireless connection might cost in the vicinity of $50 per month A server capable of hosting 200 customers might cost around $1800 new, and have a life expectancy of 3 years, therefore imposing a cost of approximately $50 per month Stationery, photocopying, printing, etc, plus merchant fees and bank charges could cost you $40 per month For the purposes of this exercise, we'll be generous and allow $100 per month for marketing and advertising. For a small local operation, $1200 p.a. will buy a lot of promotion We'll add another $10 per month for unidentified incidental costs. Realistically, your operational costs in this business will be very minimal indeed, because it really is a very simple business with residual income that compounds each month as new customers sign on to your service. At end Yr 1

Estimated sales per week

2 104 customers

% of customers signing for $20 per month sites each 52 customers/ month 50% 24 $1040 per month % of customers signing for $35 per month sites each 52 customers/ month 50% 24 $1820 per month $2860 per month No. of $20 per month customers quitting each month1

-$20 per month

No. of $35 per month customers quitting each month1

-$35 per month

Total income at end Year 1

$2200 per month

Less:

Estimated server costs

$50.00 per month

Estimated connection and bandwidth costs

$50.00 per month

Estimated advertising, marketing and administration costs

$150.00 per month

Total operating costs

$250.00 per month

Net income:

$1950 per month

With a little figuring, you can see that by the end of year 2, you would achieve $4400 per month in gross income; and by the end of year 3 your earnings would be $6600 gross. Since expenses tend not to increase exponentially as income rises, your nett profits could easily exceed $72000 per annum by the end of your third year in business.

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Let's look at another example: For a web designer, it would be realistic to assume that one new client each week woul subscribe for a $50 per month hosting package. Within a year, you would accrue an extra $2500 per month income from hosting.

Since your operational costs will only increase by the cost of your server and bandwidt (administrative and marketing costs should not increase over what you are currently spending), your additional nett profits by the end of year 1 will be $2400 per month. Note:

These figures refer to startups and sideline businesses with minimal resource input. The growth potential for an energetic entrepreneur is virtually unlimited.

Understanding Bandwidth

When you connect a computer to the Internet, or to a wide area network, you use a facility similar to telephone wiring to enable communication between machines in remo locations. As you make use of the services made available by this connection, you consume “bandwidth”, for which the suppliers of the connection levy charges. “Bandwidth” is defined in computer dictionaries as “the amount of data that can be transmitted in a fixed amount of time”.

For digital devices, the bandwidth is usually expressed in bits per second (bps) or bytes per second. For analog devices, the bandwidth is expressed in cycles per second, or He (Hz). ISPs will inform you of the bandwidth allocation that is allowed in the plan you subscribe to. Additional bandwidth is charged at specified rates, so if you exceed your allowance, you should expect to pay extra on top of your regular monthly subscription fee.

Web hosting plans also allocate bandwidth (sometimes described as “traffic allowance” and often refer to “upstream” and “downstream” bandwidth — which may be charged a different rates. Upstream traffic is generated when an end user — i.e. a web site visitor sends data to the web server. Downstream traffic is generated when the server sends d to the site visitor — for example, when the visitor views pictures on a site, or download file from the site.

Upstream bandwidth is typically very inexpensive, and often you receive an allocation o free upstream bandwidth for each MB of downstream bandwidth you pay for.

When you host customers, you need to appreciate their likely bandwidth requirements. Small business web sites with low traffic typically consume so little that the cost is not worth considering. However, those with higher traffic volume — and particularly those How to Become an ISP: A Short Course for Internet Entrepreneurs


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have many large images or photographs on their site, or down-loadable e-books, white papers, software etc.— may impose significant bandwidth costs. If you have no way of measuring consumption and passing on charges to the customer, or if your contract doesn't specify that the customer is responsible for the cost of excess bandwidth consumed, you could find that the cost of bandwidth impacts negatively on your profit.

Unlimited Plans Many ISPs offer “unlimited plans” in their promotions. Hosts advertise plans which claim to include unlimited disk space, bandwidth, and/or domains. Because they claim to impose no added costs for excess usage, they appear, superficially, to be very attractive. You should treat these offers with caution! Obviously, there is no such thing as an unlimited hard drive, so it’s impossible to offer unlimited storage. Common sense dictates that when you fill a hard disk, the supplier isn't going to buy you another one and not pass on the cost! While it may be technically possible for a host to have an “un-metered” connection to the Internet, the connection is not really “unlimited”. Although the bandwidth provider may not meter the bandwidth, the host is still limited by the speed of the connection. In fact, many suppliers offer limited bandwidth plans which impose no charge for excess consumption, but actually slow the connection when you exceed the plan limit. When you combine many customers on an “unlimited” connection, the combined traffic load will impact on the speed of the service, and may actually render it effectively unusable during peak periods. Companies in many different industries use various “unlimited” gimmicks to promote their products and services. Such offers should always be approached with caution. Do some research before accepting the offer. The offer isn't necessarily an indication of an inferior product or supplier, but the product may not be as it appears. “Unlimited” plans are often offered by newcomers to the industry, and the offer might indicate inexperience. This type of selling may imply that the host is overselling their servers — often a recipe for eventual business failure. It may suggests their operation isn't really profitable, and therefore they will soon need to apply major pricing changes to survive. This will impact on all of their customers. Setting reasonable limits is a better way of running a hosting company for long term survival and growth. Some hosts may consider it acceptable to offer the ability to set up an unlimited number of hosting accounts, as long as they stay within their total disk and bandwidth allotment. This can cause serious performance issues. The number of active websites on a server has a major impact on its stability and speed. One or two users might impose huge loads which result in serious performance degradation for others with lower consumption. It page 18




simply isn't fair that the heavy users shouldn't pay, but should be allowed to reduce services to lighter users. Look for hosts offering a generous quota, but not an unlimited number of domains, to achieve the best balance between cost and service quality.

Of course it should be made clear that some hosts offering unlimited plans are very responsible, and are able to do so because they have become very skilled at estimating and managing loads and balancing loads on their servers. As long as the plans don't include unlimited storage — which clearly is an unrealistic offer — it is possible that the supplier is making a genuine offer of a quality service. It's wise to be aware of the potential dangers, however, so that you can make an informed judgment.

Overselling Overselling at the wholesale level occurs when a wholesaler offers the same volume of bandwidth to multiple customers. That is, you may be permitted up to 60,000 MB traff allowance before extra fees apply. Ten other resellers are allowed a similar volume – b it's actually the same 60,000MB. You all share it!

The assumption is that none of you will come even close to reaching your allocated limi the same time as others are imposing substantial load, so the unused portion of your allowance will be usable by others during their peak periods, and their unused portion available to you during your peak usage periods. The result is that you cannot rely on having adequate available bandwidth during peak periods once your customer's usage begins to rise, and you may find this impacts very seriously on your growing business.

Bursting “Busting” is a complex concept, but it basically means that although technically a certa bandwidth allowance is available to a customer paying a set monthly rate, the custome actually has more capacity available to him. For example, a supplier may install a 10MB link in anticipation of business growth, but only enable a 2MB connection to control cos If rapid growth results in high traffic during a particular period, the connection will “bu out and the excess consumed over 2MB will incur additional costs, but the service will handle the load. Conversely, if the plan limit matches the capacity of the pipes, the serv will not be able to accommodate traffic in excess of the plan limit.

It may be, therefore, that a supplier in growth stages who has installed a higher capaci facility that he is currently using is better positioned to assure reliable service despite unanticipated high traffic demands during some periods.

Again, the fact that bursting is referred to in promotional material isn't necessarily a negative. Properly managed, the use of bursting can improve a service offering and positively impact on prices. It's helpful to understand the concept, however, so that you can ask the right questions and make informed judgments.



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Other Business Opportunities

Hosting is only one of a host of business opportunities in the Internet world. In Chapter 3, you will consider some of the many alternate business models that present opportunity. In Chapter 9, you will look at some of the more notable examples of past success in the Internet business world. While the hosting market is still growing strongly, and there is abundant profit opportunity in this sector, many of the more novel business ideas may prove more suitable for a start up entrepreneur. As technology continues to advance, a seemingly never-ending stream of new business ideas continue to emerge. Many of these form the basis of businesses that achieve astonishing growth. Later in this book you will read about the importance of differentiating in business. When formulating your business idea, remember this:

Having a unique idea is much less important than implementing the idea in a unique way.

Choose your business model with this in mind.

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2: Hosting Business Models: The Infrastructure Choices

As I have said, this book cannot provide comprehensive business models for every type ISP business. Rather, its purpose is to assist you to build your own business model by providing some examples, and some advice. While this chapter focuses largely on hosting businesses, much of the information is useful to any Internet entrepreneur, so I suggest you read it carefully, even if you have decided on a different business model. Many of the planning principles remain the same, and an understanding of the mechanics of the hosting industry will prove useful.

Let's start with the most basic business models — those that have been around for a few years and don't require you to have your own infrastructure.

Affiliate Program This type of program is offered by thousands of large ISPs. Signing up as an affiliate is easy and usually free or very low cost. Once signed, you simply advertise the host's business for them and refer customers. The host pays you a very small commission for each customer referred.

Customers belong to the ISP and deal directly with the ISP. You will clearly indicate tha you are an agent for the company. The ISP bills the customer and receives payment, th hopefully pays you your commission.

Because entry and operational costs are minimal, this is a risk-free way to resell hostin It might only require you to place a banner ad on your web site. Affiliate programs exist for all kinds of products, and some folk claim to make good money from them. You need to be very selective, however. The profit margins are tiny, and you may find that some companies don't actually ever get around to paying you! If the supplier's service is poor, that reflects badly on you. You need to choose suppliers to affiliate with very carefully. The up side of affiliate programs is that the customer is aware that they are dealing with the supplier, and therefore knows that the supplier has let both you and him/her down, and that you are not to blame. Of course that doesn't stop any problems reflecting badly on you.

Affiliate programs are a good choice for someone with strong marketing skills but little no knowledge of the product or service they wish to promote. They work best for those who are already in contact with lots of potential customers via other business activities which they are involved. For example, if you have a web site drawing high traffic, you may find your site visitors would respond readily to the offer of an introduction to anoth service which they may need.



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Affiliate selling is probably more likely to succeed if there is some logical connection between what you sell, and the product offered in the affiliate program. For example, if you currently sell marketing advice, reselling web development and web hosting services under an affiliate program might be a simple way to value-add to your offering and make extra profits.

Per-Account Program: This is basically the standard, centuries old retailer business model. You buy from someone at a price, and sell to someone else at a higher price. You appear to be a web hosting company when you sign up to a “per account program”. You effectively re-brand someone else's product, according to rules imposed by the supplier. Mostly, the supplier supplies the re-branding tools. Each time a customer buys from you, you go to the supplier web site and sign up. The supplier emails you the account details, and you then forward those to your customer. Depending on program terms, you may or may not provide customer support. If not, the support program is likely to be structured such that customers believe they are getting support from you or your agent. The customers are yours when you operate this way. They contact you with problems. You bill them at charge rates you determine, and you pay the supplier a fixed amount for each customer they host for you. The advantage of this program over affiliate programs is that you make a little more profit, and you collect the cash directly — so you don't have to rely on the supplier's integrity or efficiency to receive payment. The major disadvantage is that the product carries your brand, and the customer deals with you — so any failing by the supplier impacts directly on your work load, profit and reputation. A supplier failure could destroy the value in your brand. Further, under this type of program you have no control over your product selection. Your profit margins are likely to be very small, and because high volume resellers can operate on lower margins, you may find it hard to compete with other resellers who are better established. This type of program may be useful for those who “bundle”. Bundling means combining a product into a suite of products or services you offer. For example, if you are charging for e-marketing consultancy, you may want to include web hosting as part of the offering. The customer need not know the exact component of the price that relates to hosting. Again, this program is suited to those who have exposure to prospective customers and can market effectively, but have little or no knowledge of or experience with the product on offer.

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Private Label Reseller Program: Some retailers buy goods in volume and then re-pack them into smaller packages befor on-selling. This is essentially how a private label reseller operates.

As the reseller, you purchase a quantity of storage space on a host's computer, and an allocation of bandwidth. You then create your own hosting packages to offer to custome

For example, by purchasing 1500MB of storage space, you could support up to 30 customers, if you decided to offer up to 50MB of storage space in your packages. You could support more if you could rely on several customers using less than their allocati Note, however, that many plans also limit the number of customers you are permitted t host or the number of accounts you are permitted to create.

Your customers need not know that you are using a reseller plan, or which parent company supplies you. You sell under your brand and all your dealings with customers are direct. Within limits imposed by the control panel software your host uses, your product can be packaged and priced distinctively, with very visible differences between your offering and that of others. This reduces the impact of competition, and enables limited control over your brand.

This type of program typically requires some technical knowledge. How much knowled is required probably depends on the quality of the software configuration on the host's systems, and the management tools supplied by the host.

Most hosts will give you access to some kind of control panel to set up your customer accounts. The host will also probably provide basic support, but the support load will f largely on you.

Private label resellers sell what is referred to in the industry as “shared hosting” or “vi hosting”. Customers share resources on a central server, which reduces costs for the sm hosting customer. It also implies major risks. For example, if a customer uploads a vir or trojan-infected file, files belonging to other customers may be infected, and the infection may spread to the customers of other site owners when they download files fr the server. Trojans may extract information from all sites on the server, adversely impacting on anyone who shares space on this server.

Shared hosting also typically imposes tight limits on the amount of storage space and traffic allowed for each hosted site, so it isn't suitable for anyone wanting to host a larg or very busy site, or one permitting extensive file downloads (an e-book or software sto for example). Limitations imposed by the nature of the shared hosting market will, to some extent, dictate your business growth potential.

Private label programs enable you to appear to run your own web hosting company, and may enable you to make considerable profits if you are a skilled operator. There are literally thousands of hosting companies offering private label programs, so there is ple of product choice.



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To succeed as a private label reseller, you need a reliable host offering the amount of space and bandwidth you need, and a good limit on the number of accounts you can create. These allocations will have a major influence on your pricing structure and in calculating your return on investment (ROI). You should look for a host who will provide you with customized name servers, such as ns1.yourcompany.com and ns2.yourcompany.com. This assists you to present the offering as your own, and hide the identity of the actual supplier. There is a real opportunity in this business model, but it is also fiercely competitive. Hosting is now so inexpensive and price-based competition is so strong in the shared hosting space that many operators are finding they just can't make enough margin to justify the effort involved in setting up and managing a private label reseller business. Your customers will be, by definition, low budget virtual hosting customers. These customers are more inclined to buy on price, and often hard to satisfy because they are typically unsophisticated buyers who have little knowledge of how to assess quality and compare benefit in this product area. Because they are so price-driven, they will often resist buying the services they really need, yet may expect you to provide the benefits of those services. Often this class of customer blames the supplier for problems that result from his lack of understanding or ability in specific areas, and his unwillingness to pay for assistance that is realistically needed. As with Per Account and Affiliate programs, Private Label programs give you limited control over the quality of service offered, and any failing by the supplier reflects very badly on you. As a private label reseller, you will appear to be totally responsible for any supply failure. You also cannot necessarily offer all of the services your customers may want, because the supplier will determine which services will be supported and which technology platforms will be used. Before entering into an arrangement of this type, you should consider carefully how you would deal with, for example, the supplier closing its operation on short notice – or changing the pricing model or service offerings substantially. Read any agreements and disclaimers very carefully, and have your lawyer check them thoroughly. By becoming a private label reseller, you are entrusting your future income and reputation to the supplier. In a fast changing industry, that implies some serious risks.

Summary of positive aspects: Low entry cost, low risk Improved cash flow and quicker returns on investment than a dedicated or private server Quick and easy way to get started in a hosting business Minimal requirement for technical skill or knowledge No technical management work Someone else handles software upgrades, security issues, performance issues, and any tricky support questions • •

• • • •

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•

Your product is (hopefully) supplied by an experienced host

Summary of negative aspects: Limited control over the server and service Packaging options may be limited by what the host will allow and the technical servi available on the server Host may neglect server maintenance or technical management issues Business growth may be limited according to the terms of the plan you select unless you carefully strategize growth options in advance Service quality, and therefore your brand value and goodwill, is controlled by the supplier Highly competitive business selling to a price-driven customer segment • •

• •

•

•

Virtual Private Servers (VPS):

Also referred to as Virtual Dedicated Servers (VDS), Virtual private servers are partitio on large server clusters. Suppliers use specialized software technology to multiplex resources on a dedicated server.

Renting a virtual private server is a bit like renting an apartment in a large apartment block! You share space and facilities with others, but you are allocated your own define space and you have considerable freedom as to how you use it. On a VPS system, server resources are “virtualized”, meaning resources like memory and CPU are distributed, but appear to customers as a standalone. This can be deceptive to the reseller as well as the end-user. VPS technology is improving, but currently there are many potential problems: •

•

•

•

1

The root functions are controllable only by the server administrator, but many technical functions are controlled by the VPS owner, and therefore good technical knowledge is required. You can't generally apply an automation solution, such as NetCityz 1, to a virtual private server to eliminate the technical knowledge requirement for managing it, because you don't have control at root level. How much knowledge and skill you need to manage a VPS, and how reliably the VPS performs, depends entirely on the configuration and management tool choices of the host. Mistakes by a system administrator can have devastating effects on everyone sharin space on a VPS.

A product of inteRAD Technology Ltd, designed to automate the technical setup and management of servers



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•

•

•

While some resellers on a VPS may appear to have very low resource usage, higher volume users on the same server may cause serious problems to the server’s performance, which affects everyone on the server. Peak period demands can cause serious problems to users sharing a system which appears to offer adequate resources most of the time, but struggles to cope with peak loads One mistake by an VPS user who has root access can negatively impact every other user on the server.

Some VPS sellers will employ better technology than others. The difficulty is that you may need extensive technical knowledge to differentiate. The information you need to be confident the offering suits your needs may not be honestly and openly presented by a supplier keen to make sales in a competitive market. That is not to say that suppliers will deliberately deceive, but selling is all about presentation — and presentation involves being selective about the product information you disclose and how you disclose it. Legal requirements only go part way to ensuring products are accurately described in presales literature. Products that are technically complex are typically difficult to describe in terms others will readily understand. Descriptions can be quite confusing.

Dedicated Servers:

Enterprise level web sites with extensive traffic require a dedicated server — a single computer fully devoted to the hosting needs of one customer. Some sites actually require multiple servers, which sometimes will be chained to appear as one. A dedicated server provides faster access to information, better traffic management, greater flexibility in software development, greatly improved security, and the capacity to scale as the business grows. Many resellers choose to use a dedicated server to run their hosting business. They contract to rent a server in a hosting facility, then configure that server to provide virtual (shared) hosting for a number of customers. A dedicated server is a major step up from a private label reseller plan. The cost of managing the server, which may include hiring or outsourcing a server administrator to

manage it for you, must be carefully considered. Also, consider carefully the extra time required and the major responsibility attaching to arranging or performing your own technical management.

While there is higher responsibility for the reseller, however, this business model enables a great deal more control over the structure and quality of the product offering. page 26




Dedicated servers are also the right choice for web communities, directories, specialize portals, virtual malls, etc. because they allow you to control the software operating on server and the services that are deliverable. A dedicated server may be located in a large hosting facility. In this case, the host supplies bandwidth and other services. Depending on the agreement you enter with the host, you might own, or rent the server. You might carry out your own repairs, or contract the host to attend to any necessary hardware maintenance.

Dedicated servers are often offered by hosts under a “managed server” agreement, wh implies that the host performs many of the technical management tasks for you. Such arrangements may be more suitable for those with limited technical expertise, but they also increase the restrictions that apply to your usage. Typically, the supplier of a managed server will dictate the software platforms, configurations, and tools that run o the server.

Unless your server is fully managed by the supplier, or you are able to use a high quali automation solution, you may need extensive skill and knowledge to perform technical management tasks, and you should not take on customers until you are very familiar w the system and comfortable managing every aspect of it. The choice to use an outsourced dedicated server is one that must be very thoroughly researched. It is critical that the right supplier be selected. The wrong business partner could will almost certainly mean business failure.

Summary of positive aspects: The appearance of an independent business Greater control over product packaging and pricing Greater control of your server and the platforms and facilities provided on it Ability to monitor your resources and customer resource usage Ability to fully monitor your resources to avoid problems A higher level of control over service delivery and product quality, and therefore improved control over brand value and business goodwill • • • • • •

Summary of negative aspects: Higher up-front costs and therefore higher risks Slower return on investment and reduced initial cash flow Technical management implications Need to manage security You must install, configure and upgrade software • • • • •



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Private Label Reselling vs A Dedicated Server: Summary Private Label resellers trade a higher per account price and lower per account profit margin against the responsibility of managing the server. A private label reseller can focus on finding customers, setting up accounts, and providing support. The host worries about server performance and support. If the server does go down, however, your only option is probably to wait for the host to fix it. Your customers' sites will be down until the problem is resolved, and while you have no control over it, your customers will undoubtedly be making their complaints to you and asking you for reduced hosting fees for any period in which failures occurred. Conversely, a dedicated server gives you control — but you need to be sure you can manage the responsibility that comes with control.

Relocation Risks Both Dedicated and Virtual Servers impose a major risk which needs careful consideration before entering into any arrangement to host customers: Moving customers from one facility/server to another is a nightmare. It potentially implies major disruptions and the requirement to do this could destroy your business. Moving might be necessary if, for example, the host you choose: • • • •

fails to deliver increases prices or changes terms of supply unacceptably changes ownership adopts technology solutions that don't suit your needs

or if you simply discover that you made an unwise initial choice. Despite the risks of a dedicated server, most advisers suggest that the ultimate goal for any serious hosting reseller should be a dedicated server. This recommendation suggests that while affiliate, per account , and private label programs may have many positives, there are also strong negatives that imply a need to upscale as soon as volume allows. What may be disturbing, however, is that advisers go on to suggest that you need a good technical aptitude and knowledge of how to run a web server. According to one expert, running a web server is “an entire book in itself”. He is correct, if you take the traditional approach to server management. Fortunately, though, there are now excellent automation solutions available.

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If selecting an outsourced dedicated server in a hosting facility, or a managed or semimanaged server, you should verify that you will be able to install your choice of management automation solutions. A product like NetCityz, from inteRAD Technology, (www.NetCityz.com) could have a major impact on the cost of server management, time and skill requirements, security and server performance, and the overall quality of your service offering.

Should Customers Know you are Reselling?

If you plan to grow your business and establish your own identity as a web hosting company, it's important not to present as a reseller.

An experienced provider will never contact your customers unless it’s a part of your agreement. Your clients will normally see you as their web hosting provider, and the supplier will remain invisible to your customers unless you prefer to reveal your reselle status and arrangements with the host. Your name servers should be anonymous, or private-labeled for your company.

The down side of pretending to be the original supplier is that you carry full responsibi for service delivery. If your supplier lets you down, you have no-one to blame and you cannot tell your customers that the problem was not your fault or was outside your control. This could have adverse implications for your reputation and brand value if you supplier fails to deliver.

There may also be specific indicators that alert savvy customers that you are reselling. may experience negative customer reactions if customers feel that you have deceived them in some way by not indicating your reseller status.

It's a question you must decide for yourself, but think carefully through all the implicat of this question before deciding. If the program you select doesn't allow you to substantially personalize your offering and prices to differentiate it from others, it's probably not a good idea to hide the fact that you are reselling.

Of course if customers know you are reselling, you will need to offer them sound reaso for dealing with you and not directly with your supplier.

In-house Private Servers You can install your own managed server in your own facility — even in your own office or home. A business grade Internet connection is recommended if you make this choice.



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Until recently, an in-house private server was an unusual choice, with many negative implications. However, there are now some excellent ADSL and wireless connection plans available, at very low cost, that make an in-house server a viable option. Increasing recognition of the potential of web technology will drive more enterprise level sites requiring dedicated servers. Emerging technologies are increasing the use of the web for transacting business, implying a need to implement software applications on web sites. The resource demands many of these applications impose, and the desire to protect intellectual property and business advantage by ensuring servers storing transaction modules and data are highly secure, will increase demand for private servers. Within a relatively short time, technologies such as Voice-over IP are likely to drive widespread demand for in-house private servers, potentially implying major changes to the whole hosting industry. A major challenge for those contemplating a private server has been the set up and technical management of the server. This has typically been an onerous and time consuming task requiring extensive technical expertise — and therefore has implied substantial cost. Fortunately, new technology resolves that problem. Now, suppliers such as inteRAD Technology, through their revolutionary NetCityz product offering, are able to fully automate the setup and management of private servers — and even automate server administration, web site building, content management, and the implementation of ecommerce functions on the server — very affordably. The hardware requirement to host up to 200 typical small business web sites using NetCityz is a Pentium III 'white box', with 512MB RAM and a 50+ CD Drive. The router supplied with most ADSL connections is adequate, and you do not need a firewall. The total hardware investment is likely to be below $2000. Products like NetCityz virtually eliminate the technical skill required to install and manage a private server, dramatically reduce the hardware requirements and costs, and effectively bring the private server into the mass market consumer product category. inteRAD's management predict that, within a relatively short time, the private server will replace the PC in most homes and small businesses. Right now, however, the private server solution is sufficiently new to present exciting opportunities for Internet entrepreneurs to differentiate their product offering, control their brand and pricing completely, and manage their operational costs and service levels to achieve a major competitive advantage.

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3: ISP Business Opportunities: Getting Creative Chapter 2 discussed reselling hosting services and operating your own private hosting server.

While much of this guide speaks to the ISP whose product is hosting services, it isn't intended to suggest that this is the only, or even the best ISP opportunity. In fact, the writer believes that the best ISP business opportunities are outside the standard hostin arena. Why, then, place so much emphasis on the mechanics of a hosting business? Well, because many ISP businesses sell hosting in one form or another, even though their product is anything but a conventional site hosting package.

Lots of ISP businesses that don't sell hosting could benefit from adding a hosting packa component to their business. In fact, I believe that hosting “on line communities” is one of the best current business opportunities in the on-line world. Why? Well, simply because: 1. The potential of on-line communities hasn't been extensively exploited yet, and

2. On-line communities address a number of the issues that have led to disillusionment and disappointment among SMEs striving to embrace the Web

Think about the issues that confront the the small businessman venturing into the Web world.

Later in this book you will read about how the Web has changed business dynamics; ho the rules of customer/supplier relationships have been radically altered; and how the marketing techniques that worked well in the old world fail dismally in this new e-world For the small businessman, the Web is a frightening place. Many suffer “techno-fear”, and have limited knowledge of even simple computing — and limited desire to learn. They are busy running businesses. They have skills and expertise relevant to their business. The Web presents so much opportunity and promise: • • •

global reach — the opportunity to expand markets beyond geographic boundaries low cost advertising and marketing — wider exposure to prospects reduced costs for customer servicing



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The Web is huge! At first glance, it appears to present huge opportunity. On closer examination, one sees that it also presents huge competition and huge challenges. To be successful in the Internet world requires strong focus on an Internet-based business, or the web-based portion of your business. An SMB cannot just publish a budget website and expect good results. This factor is at the root of much of the disappointment and disillusionment expressed by SMBs who have tried to embrace the Web. For the consumer, the Web can be an equally daunting place. It's vastness can be terrifying. People like familiarity. They appreciate the comfort of small communities of likeminded friends. Here, then, is where I see exciting opportunities for Internet Entrepreneurs. I believe the Web is undergoing a transformation. It's a necessary transformation. The rapid growth of the Web is clear evidence of the success of the technology in meeting key needs. Yet its rapid growth is also a key factor in its failure to satisfy many needs. Its sheer “bigness” is its most significant problem. If you agree that people often: • • • • •

• •

feel uncomfortable in large crowds; prefer doing business with people they know; like to mix with people with similar interests; like to support local economies; like to give the hardworking “little man” a bit of a leg up, in preference to supporting larger suppliers; appreciate the personal touch when doing business; appreciate consistency and familiarity

you should recognize good reasons for the socialization trends that have occurred throughout the history of civilization to be repeated in the Virtual world. It's already happened, and the trend is continuing. People are joining newsgroups, forums and chat rooms focused on topics that interest them — in order to mix with like-minded people. People are selecting web sites that appeal to them based on geographic or demographic factors. They are buying from members of web rings or from suppliers that have been referred to by the suppliers they regularly frequent. They are using community portals or industry portals to source product, rather than simply searching the global web for the best deal. Unless sociologists are very wrong, and people are no longer behaving as they have for centuries, this trend will continue.

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Smaller groups and established relationships make people more comfortable, and more confident to enter into business transactions. Web communities, therefore, will continue to grow and prosper. Communities can be formed anywhere, by anyone, on any number of foundations. For example, if you are involved in a club or association, it's logical to think there is an opportunity for that group to establish an on-line community — possibly expanding its geographic reach by doing so.

Industry groups have already embraced the web community concept, and there is lots more scope for expanding the ways in which they take advantage of the opportunities i presents. For franchise operators, multi-level marketing groups, and distribution chains, the community concept offers exciting potential for improved servicing of both business members and customers — and for expanding market reach by making it easy for customers to do business with their favorite supply chain anywhere, anytime, in a consistent environment, where consistent rules apply.

The opportunities for forming web communities are limited only by one's imagination. Wherever members of a community come together, there are opportunities for selling a profit — whether it be selling goods or services to the members, advertising to those w want their message to reach the members, or using other creative concepts to build ba end business models behind a concept that encourages people to make return visits to specific location.

Five Big e-business Opportunities

This is by no means intended to be a definitive list of opportunities — but rather a list o ideas to kick-start your thinking. Business ideas are like gems in mines — there to be found and exploited by anyone with the desire and determination!

Selling on-line This is probably the simplest and most obvious way to make money from the Internet, a there are countless opportunities for selling all kinds of goods and services on-line.

Today, you can establish an on-line store with a relatively small investment, though man spend tens of thousands and even millions building an on-line retailing presence.

Goods that sell best on-line are those that people do not need to see, touch, and smell t appreciate. In particular, goods that sell better when people have access to a wealth of information about their benefits will sell well. This includes books, music, movies, computer hardware, software, telephones, travel, accommodation, health care products pet care products, food, beauty products, and the like. Motor vehicles and real estate a sell well, although typically the actual sale will be completed off-line. The web enables buyers to secure critical pre-purchase information conveniently. How to Become an ISP: A Short Course for Internet Entrepreneurs


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You don't necessarily have to be the original supplier of the product to profit from its sale. Lots of e-mediaries and e-brokers have been very successful. With inteRAD's NetCityz products, the opportunity exists to establish a “virtual shopping center”, making it easy for retailers to achieve selling success on-line by managing promotion, technology issues, and, optionally, payment processing for the group in return for either fixed store rental fees, or a portion of the profit.

Servicing on-line Service-oriented business models abound on the web, and are often highly successful. You can use the Web as a vehicle to deliver services to other businesses, or to end customers. For example, printers are now accepting digital files — and sometimes even offering on-line tools for designing stationery, business cards, invitations, etc. — collecting payment on-line, and printing and shipping to remote destinations. It is relatively simple to provide on-line data backup services via the Web. You could provide an email marketing service or an e-newsletter distribution service. You might create a booking engine to manage appointment scheduling for hairdressers, dentists, doctors, etc.

Distance Learning In the old days, training employees in new skills was costly and inconvenient. It meant allowing them time away from work, and often paying travel and accommodation costs on top of expensive course fees. Today, training can be delivered to the employee's desktop, on demand. Students learn at their own pace, and review whenever necessary. People are generally hungry for knowledge, and love learning. The opportunities for Webbased delivery of everything from specialized employee training to basic hobby skills are unlimited.

Telecommunications Deregulation has opened an abundance of market opportunities. The natural desire of people to communicate, combined with new technological advances, assures continued growth of opportunity in this industry. While simple hosting reseller businesses and Internet connection businesses may be losing their appeal with ever-increasing competition, the opportunities to build sound businesses in the communications industry by exploring new technology and applying the rule “differentiate yourself for success” are unlimited.

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Information Selling Selling information is possibly the best way to make money on the Internet. The great thing about this opportunity is that typically it isn't the consumer of the information wh pays you. You are paid by the information supplier and other sponsors to make information available to the public as a way of advertising, promoting, and brokering customer/vendor relationships.

Sourcing Products

If you want to sell product over the Internet, you can secure product from suppliers an become a reseller, or you can create your own products. Creating your own products is probably a better approach, though there are plenty of opportunities to become a reseller of quality goods and services.

If you have expertise in a particular area — and almost everyone does if they just think about it — consider creating and selling an informational product. Or build an Internet community through which all of the experts in your community can sell their expertise a variety of topics.

Selling Advertising

If you can find a way to build a web community that attracts many visitors, and repeat visits, you can sell advertising on the site. The requirement here is to be able to attrac people to the site, and to convince advertisers that large numbers of their target custom prospects will see their advertisement.

Selling Directory Listings

Directories are popular on the Web, because of the ease of finding information quickly digital index. If you can structure a directory that reliably returns good information qu — and can rally the support of a community of target users — selling directory listings to suppliers can be a great way to make money easily on the Web.

The challenge here is to be heard above the big suppliers, like Yellow Pages. It's probab smart to target a very specialized area, such as a specific industry or locality.

Selling Consulting Services

Anyone who can provide wanted information and advice can establish an on-line consultancy. Sell legal advice, health care advice, business or marketing advice, accounting advice, building advice, sewing advice, interior decorating advice ..... the lis endless. If there is something you do well, and have a sound knowledge of, then you are positioned to make money from building an Internet advice portal. How to Become an ISP: A Short Course for Internet Entrepreneurs


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Check legal restrictions before selling consultancy services. Some types of consultants may require a license.

Sell Subscriptions

A subscription sales business requires you to find people who want to pay on a continuing basis for access to information or services. Essentially, a web hosting business sells subscriptions, as does a business selling newsletter subscriptions or investment opportunity alerts. A 1999 survey by Jupiter Communications found that 46% of Internet users would not pay to view content on the Web. To succeed in selling subscriptions, you must deliver high quality content that isn't available elsewhere free of charge. You should also check legal restrictions to ensure that you are not seen to be giving advice without the appropriate qualifications and licenses. There may be restrictions on the kind of advice you can give in areas such as investment and finance, for example.

Become an e-mediary e-mediaries bring suppliers and buyers together. Probably the best known example of this is eBay. There are many market exchanges, trading communities, buy/sell fulfillment portals, and other B2B businesses that can be classified as e-mediaries. Even a recruitment or job seeker portal loosely fits the description of an e-mediary. To become an e-mediary, you simply create a website that facilitates business transactions between suppliers of goods or services, and those who seek to buy those goods or services. You profit by charging a small percentage of the transaction value, or a listing fee.

Become an Infomediary There are those who claim Infomediary businesses will be the next “big thing” in the Internet business world. There is good reason to believe they may be right! People are, by nature, hungry for information. People love to have access to a ready source of help to solve their problems. Also, there is substantial evidence to suggest that many folk are nervous about buying on the Web. We need no evidence to convince us that many folk are irritated by pushy sellers, and it's clear that this is driving people to be fiercely protective of their privacy on the Web.

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As the volume of spam mail increases, people are becoming more and more reluctant to reveal anything about themselves to sellers, making it more and more difficult for sellers to market. Enter the infomediary! The infomediary is a specific type of e-mediary that provides free information — lots of it. The information is focused on a specific need or interest. It may be accompanied by consulting and problem solving services — often free or at very low cost.

The theory behind the Infomediary business model is that people will feel more secure and comfortable revealing information to, and forming relationships with, those who are giving them free advice, information and help, and are not seeking to sell them anything.

Once the infomediary forms a relationship, he is able to extract detailed information ab customer needs, wants, and preferences. He can then pass that information on, for a fe to businesses who need it. He can also broker supplier/customer relationships, based o known customer needs and with the customer's express permission. The resulting relationships commence in an atmosphere of trust and confidence that inevitably offers far better chance of delivering the supplier a high lifetime value customer.

Finding the Best Opportunity for You How do you select an opportunity? First, assess ideas for immediate appeal. A business works best if you have passion. You should love what you do. If the idea doesn't appeal to you personally, or isn't in an area of interest, it's probably not the right business idea for you. Next, consider your knowledge about the topic and related areas. You will always do best working in areas about which you have some knowledge. For example, if you know a lot about fine food, think about opportunities to sell gourmet foods, or create a directory of top restaurants and promote the specialties of each.

Consider your access to customers. If you are, or have been, involved in a specific industry or trade sector and you know a large number of people involved in that indust you are already well on the way to having a valuable database of target customers. Go a business idea that targets folk you know, or can easily get to know.

Can you relate to your target customer? Is your target customer someone with similar needs, wants, and ideals to you? Do they enjoy the things you enjoy? Do they have similar buying habits? If so, then you are well on the way to being able to fill their nee effectively.

Short on Ideas? Actively look for problems. Ask friends to tell you their gripes. Encourage them to wh By determining what frustrates or irritates people, drains their energy, or prevents the How to Become an ISP: A Short Course for Internet Entrepreneurs


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from getting on with the things they enjoy doing, you'll find the perfect business opportunity! All you need to do is find a problem that many folk share, and solve it! Chapter 9 lists a number of successful on-line enterprises. Hopefully, it will help you with business ideas. Typing key phrases like “making money on the Internet”, “Web-based business opportunities” or “Internet business successes” into an Internet search engine is likely to reveal literally thousands more! Good luck, and happy hunting!

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4: Business planning and Startup

Before launching into the details of business and operations planning requirements, it's important to stress the importance of immediacy. The Internet is a fast moving world. Right now, your competitor is considering implementing your business idea! No, he hasn't stolen it. Few ideas are really unique. you've seen a market need, chances are others have noticed it too!

Don't wait to start your business until you've developed and documented a great maste plan! Get started... then create the plan. Be prepared to grow and modify the plan as y build your business and learn more about your industry and customers.

You will make mistakes. Learn from them and move on! Think of mistakes and failures tools for learning. Read, research, and study as much as you can to avoid mistakes and failures, but don't fear failure. Some of the most notable business successes have resul from the lessons learned through failure. It is never too soon to take the first step to success... and the first step to success is simply to begin your enterprise now.

Your Business Structure

Most government jurisdictions worldwide require business operators to register their business. In fact, there are usually a number of legal requirements you need to be awar of and/or licenses you must obtain to operate a business.

You should check with local authorities, your accountant, and/or your lawyer to ensure you are aware of all the relevant requirements and that you comply.

There are a number of different types of business structure you can operate under. The simplest of these is a sole proprietorship – a “one owner” business. In some jurisdictio sole proprietors cannot engage employees, so this structure can limit growth options – although you may be able to engage workers on a contract basis. A partnership is a business ownership agreement between two or more people (up to limits that vary according to the jurisdiction in which your business is registered). Both of these business types are relatively simple to operate, and the income from the business automatically belongs to the proprietor(s) and is taxed as their income. In a partnership, the ownership agreement usually defines the percentage of profit to which each partner is entitled. Profit may not always be divided in equal shares. A disadvantage of these simple structures is that the owners also own the debt in the business and are wholly and personally responsible for paying all debts. If things don't well, this can mean losing your personal assets, such as your home. How to Become an ISP: A Short Course for Internet Entrepreneurs


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Most jurisdictions have different kinds of company structure. You may be able to register a “limited” company, which limits the number of parties to whom shares can be issued, or a public company in which you can sell shares to and raise capital from a large number of people. Shareholders carry no liability for business debt, but all can share profit through dividend payment programs agreed to by the Board of Directors. A public company structure may be useful if you think you will need to raise capital to build or expand your business. You should be aware that, in most jurisdictions, there are very strict laws regarding how you raise capital from the public. Complex and expensive procedures must be observed before permission to make a public offer will be granted. Do some research on the types of business structure that might be most suitable before commencing your business. While you can change the structure afterwards, it often creates unwelcome complications. There may be limits to the type of changes you can make.

Registering a Business Name

If your business uses a trading name which is not identical to your own name, you will probably be required to register the business name. In any case, it's probably a smart move to register a trademark that you intend to use for your business or product. This is a simple and inexpensive process, and gives you ownership of that trademark and the ability to establish it as a recognized trademark associated with your company. Trademarks can become very valuable if you build your brand successfully. Consider the Coca Cola trademark, or the Microsoft trademark, for example. How much value do you think attaches to trademarks like these, that are immediately recognized by almost everyone in the world?

Do I need a business plan?

It's quite easy to sign up as an affiliate, per account reseller, or private label reseller without any advance thought or planning. However, successful entrepreneurs appreciate the value of planning. If you are serious about succeeding in business, you will draw up a business plan, follow the steps it lays out, and update it from time to time as you learn more about your industry, the market opportunities, and your customers. Unless you need to apply for bank finance or investor funding, or want to secure a partnership agreement with another entrepreneur, a brief one or two page sketch plan is probably quite adequate. It should cover things like:

•

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how you plan to package and present your product, How to Become an ISP: A Short Course for Internet Entrepreneurs



• • •

pricing, the target market you have selected, how you intend to promote your offering.

You should build a spreadsheet or table, listing all your anticipated operating expenses

Next, you need to analyze direct product costs, and measure these against the price yo intend to charge to determine the gross profit per sale. In a per account program, it's as simple as: Cost per customer account set up:

$15.00

My price:

$22.00

Profit per account:

$ 7.00

If you are setting up a Dedicated Server, your costings will be much more complex. You may also be offering several different products at different price points, and possibly so optional add-ons. Each needs to be measured to determine the cost of sale and per uni profit.

Once you have completed this step, you must look again at your expenses and determin how many customers are needed to break even.

For example, if your profit per sale is $7.00, and your expenses are estimated to be $25 per month, you need to make 36 sales ($250/7) per month to cover your expenses.

Once you understand this, you can think about the number of sales you think you can achieve in a given period, and the marketing strategies you need to use to achieve that number of sales. This will determine your marketing budget, and you may want to estimate a “per sale cost of promotions” and add that to your direct costs list. You also need to think about how customers will pay you, the facilities you need to enable payment (credit card merchant account, PayPal account, etc), and whether or not you will accept on-line payment – and how you will facilitate that. Remember to allow for the costs of processing payments. It could cost you as much as 5% of the value of each sale just to collect the money! How will you track customer invoices and payments? Will you install billing software, accounting software, or use spreadsheets?

Think about the support you will need to provide. Will you only accept email support requests, or will you offer telephone support. Will you outsource any support requirements to a Help Desk provider? Will you need a Help Desk software application track requests and the status of support issues? Or can you set up your own simple database or spreadsheet or even an index card file for that purpose? How to Become an ISP: A Short Course for Internet Entrepreneurs


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You will need to draft customer contracts, support policies, and legal disclaimers to ensure that you don't have legal problems if you encounter difficult customers or problems arise that you realistically cannot be expected to manage. A business lawyer can help here, but it's smart to think about the policies you want to adopt and document them carefully before approaching your lawyer. This will keep costs down and make it much easier for him to deliver policies that genuinely suit your business needs. An easy way to start formulating policies is to download your competitors' policies from their web site and assess each of their clauses for its relevance to your business model. Don't copy the policies of another business. Their policy statements are protected by copyright, and in any case are unlikely to be suited to your specific needs. They are, however, useful as a guide to the types of provisions that you need to include. If you are planning to hire help in your business, you might also want to pay some attention to the kind of staff you will need, how you will recruit them, what salary and benefits packages you will need to offer them, and the human resource policies and procedures you will adopt. You should secure information about legal requirements that might apply to hiring and managing staff, and think about how you will attract and keep good people in a competitive market. A formal business plan consists of: 1.

Title page

2.

Table of Contents

3.

Executive Summary: A summary of the business plan — usually no more than 3 pages — highlighting the key features. Typically, this section briefly summarizes the content and focuses on telling a reader why the business will work and how profitable it will be. This should also convey your vision and mission statement.

4.

Introduction: A general view of the industry, the business, the products you intend to offer, and the market you intend to target. This section should focus on telling the reader what needs exist in the market that you are able to fill, what your competitors are not doing to fill this need, and how you can profit from doing things a little differently. It's about the opportunity, and how you intend to take advantage of it.

5.

The Business: (a)

Business name

(b)

Legal structure

(c)

History

(d)

People (including their qualifications and experience),

(e)

Resources i.

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Where will you operate from? How to Become an ISP: A Short Course for Internet Entrepreneurs



6.

iii.

How are the premises equipped?

iv.

What facilities are available at these premises?

v.

What additional facilities/equipment/services will you need?

vi.

How do you plan to obtain the facilities/equipment/services you require?

(a)

What products and services will you offer?

(b)

How will you obtain/create those products? Who will be your suppliers, what d they offer, and why have you selected them?

(c)

What will the products cost you to purchase/create?

(d)

How will you price your products and services?

(e)

Show the relationship between cost and price and the profit on each sale Marketing

(a)

What market will you target and why? Provide a profile of your typical custom

(b)

How will you brand your products, and how do you plan to build brand recognition?

(c)

How large is your market? How did you determine the market size?

(d)

Who are your competitors, and what advantages/disadvantages exist in competing with them?

(e)

How will you advertise and promote?

(f)

What market research have you done to determine if your product suits the needs and preferences of your target market? What results did that research show?

(g)

(a) (b)

(c)

9.

What are the advantages/disadvantages of that location?

The Products

7.

8.

ii.

(d)

What rate of market acceptance and customer growth do you anticipate, and how have you estimated this? Human Resources: What assistance will you need to run the business as it grows? Draw an organization chart showing which roles you will fill, and which will be filled by others. e.g. Under “Administration”, you might show boxes for “Secretary – required at start of year 2”; “Bookkeeper – required part time Yea 1 and full time year 2” Describe your human resource management policies and the salary and benefi packages you intend offering How will you recruit staff? Operations:



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10.

11.

Describe how the business will operate day to day, including software and the systems it will use to manage the relevant tasks; how it will select suppliers; which key suppliers have been selected and why; etc. Financials: Provide tables showing your product costs, anticipated sales growth, gross profit, operating expenses, profit growth, and cash flow projections Conclusion: This again summarizes the plan, highlighting your business goals.

If all of this sounds rather daunting, remember that many great business plans have been scribbled in outline form on a scrap of paper. There are loads of templates available for business plans, that enable you to just fill in blanks. There are also some good business planning software tools available that may be helpful. There are also specialists in business plan writing who will write your plan for you for a fee. Be careful of this approach. Some charge unjustifiably high fees, and no-one can write your business plan without a great deal of input from you. Unless you are able to work closely with a consultant, and they have a good understanding of your business and industry, the end result will not be particularly useful. The key to success is to ensure you understand what you intend to sell, who you intend to sell it to, how you intend to get your sales message to the target market, and how making the sale will return your profit. Remember, without customers who will pay for what you offer, you have no business!

A good business plan is written in an open style that leaves room to add new ideas and make changes. It is never a completed document! You can't possibly anticipate everything, and much of the information that should be included in a business plan becomes available as you build your business and learn more about your customers, your competitors, your target market, and the industry in which you operate. Goals are important in a business plan, because they keep you focused on performing tasks on time. Track your achievements against the goals you set and revise your goals from time to time to ensure they are realistic, but not overly conservative. You should challenge yourself!

Getting Started If you have decided to use an affiliate, pay per site, private label, or managed hosting service with a major hosting provider, it's now time to decide on your supplier and sign up.

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If you've decided on a self-hosted solution, now is the time to purchase your hardware and software, arrange your connection, and setup your server.

Outsourcing Hosting Some hosts set up new accounts instantly, using automated software. Others may take anything from 24 hours to several days.

Once you have signed on, they should create your reseller account and send you a welcome email containing all of your account information, login information, and basic instructions. You can usually start selling websites as soon as your account is establish

Different web hosting companies will use different control panels. Some are user friend Others are quite complicated and make setting up accounts tedious.

When selecting a provider, ask about the setup software available. Cpanel/WHM hostin (www.cpanel.net) is a popular and relatively easy to use choice. It has a user-friendly interface, and includes powerful tools. Selected versions of inteRAD's NetCityz contain an easy to use control panel.

Other popular choices include Ensim (www.ensim.com), Plesk (www.sw-soft.com), and Helm (www.webhostautomation.com). There are many other good control panels. Man are proprietary for the hosts who use them, having been created by their own in-house programmers especially for their business needs. If you are in doubt about any aspect of using the Control Panel provided, ask for a technician to walk you through a trial site setup process to ensure you understand the steps correctly. Setting up an account should be a simple matter of filling out some fields and clicking button. The software should create the account for you.

Setting up Your Own Server Setting up your own server can be a very tedious and demanding process, requiring extensive technical knowledge. Instructions are outside the scope of this Guide.

However, you can set up your own server very easily using NetCityz from inteRAD Technology Ltd. (www.NetCityz.com ). NetCityz is an Instant ISP solution which fully automates server setup and management, and enables non-technical operators to insta and operate their own web server with minimal learning. It's highly secure, and enable very low cost server operations. NetCityz comes with detailed setup instructions, and clear instructions for setting up customer websites using the friendly tool set included.

NetCityz also optionally enables you to offer your customers automated website creatio and management using powerful, yet easy to use, content management and site How to Become an ISP: A Short Course for Internet Entrepreneurs


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management tools. This module also includes a very user-friendly server management module which enables point and click site setup, disabling, and user management. You can also elect to license the e-commerce module, which enables you to facilitate instant, powerful e-commerce websites for customers with full security, easy to use shopping cart, and very easy, fully automated management. This module is great for any business that needs to sell on-line, and also for establishing virtual malls and driving ecommerce for franchise groups, multi-level marketing groups, multi-branch operations, and distribution chains.

Administrative Operations

Planning administrative operations includes considering your: • • •

Billing system Order processing Accounting and record keeping

Billing system Many business operators neglect to consider the work load involved in processing lots of small invoices, payments and receipts. They think that if they can get 500 customers paying $5.00 per month for a service, they will be doing fine. Do you know how much it costs to send an invoice and receive and bank a $5.00 payment? Count the postage stamp, the envelope, the cost of printing the invoice, the paper it is printed on, and the bank fees to bank the check. These are tiny costs compared to the cost of paying someone to process the invoice and payment. Even if you process it yourself, the activity imposes a cost on your business, because this is time you might have spent marketing or selling. Consider asking customers to sign a recurring credit card charge authority to pay for their hosting. This enables you to automatically debit their card each month. Or ask for at least three months, and preferably twelve months, payment in advance. Of course to handle recurring charge authorities you will need to have a merchant facility of some kind. With the right software, or an agreement with a payment processing company such as Paypal or 2Checkout, you can simply enter customer information into your software and it will automatically charge your customer on each due date, based on the terms of the subscription. If you use the NetCityz e-commerce module, it will allow you to enter recurring transactions, provided you have an Internet Merchant Account with your bank. This is a huge time saver. By automating charging in this way, you don't have to send your customer a bill at all. You can simply email an account for a twelve month period at the start of the year, then levy the charges monthly at the rate of 1/12 th the total.

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You can also obtain billing software specifically designed for web hosting companies, su as Modernbill, Lpanel, or WHMautopilot. There are many other options to choose from depending on your specific needs and preferences, and your budget.

Order Processing You will need to process each customer order in some way, or to provide an automation system to handle this step.

Manual processing is quite simple. When you receive an order and payment, you simpl to your control panel and set up the client account. The exact method you use to do thi will depend on the technology systems you are using. Once the account is established, will need to email the customer the information they need to access and use the accoun You need to obtain the customer's domain name, if they have one, and their user name. Some hosts choose to do this using a web-based form or an email form. Or you might be able to do this through the shopping cart software you have chosen to use for payment collection.

Manual processing enables you to screen every order to prevent fraud and abuse. Automatic processing may imply some risks, but it's a time saver if you are processing high volume of orders. The process of registration using an automation system will dep entirely on the system you choose.

For example, if you use a website building program such as inteRAD's Web Publishing Platform (which you can license when you purchase NetCityz), you can optionally set th system up so that customers simply create a website. When the customer pays for the site, the system automatically registers it and sends a welcome email to the customer w their account access information.

Many automation programs also provide tools to help you easily suspend accounts, che customer activity, delete users, etc. A nice bonus is that customer accounts are usable immediately, no matter what time of day the customer places the order. There is no nee for a customer to wait for you to process the order. There is a potential risk of fraud with any automation system, so you need to manually review the created accounts regularly.

Accounting and record keeping A sound accounting and record keeping system is essential in any business. If you negl this aspect of your business, you may find yourself in trouble with the taxation department, or faced with unexpected financial problems resulting from not understand how much cash is available to pay suppliers and fund advertising and marketing activit You might also find it difficult to sell a business that does not have proper records.



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There are many low cost accounting software products available. Many are very easy to use and efficient. Alternatively, you could use a simple spreadsheet, although this method is more difficult for someone who lacks extensive knowledge of how to set up an accounts recording system. Divide your accounting procedures into sections. Invoicing and Debtor management Your invoicing system and debtor ledger tracks customer information, sales, receipts, and amounts customers owe you. The software you use for this purpose should enable you to record: • • • • • • • • •

Customer name, address and phone number Email address Site name and Domain name Billing Due date Subscription ID The selected hosting plan Price Last payment amount and date Amounts outstanding and next due date

Your program should also record all sales of other products and services to the customer, and allow you to quickly check how much your customer has spent with you over a selected period, and what they have purchased. A good system will allow you to print consolidated sales reports for selected periods, to enable you to determine which products are selling, which are the most profitable, total sales volume for the selected period, and sales growth. It should also tell you how much money is owed to you at any specific point in time, and how much revenue you can expect from confirmed subscriptions over the next n months. Creditor management Unless your on-line business is reselling physical product, a creditor system can usually be very simple. Hosting businesses generally do not have a large number of suppliers and purchases to manage.

Your creditor system should allow you to record orders placed for suppliers and track whether or not they have been filled; record invoices received from suppliers; generate a list of payments due; and record details of payments. At any point in time, a good system will allow you to print a report showing the total of all amounts owed to creditors, how long each amount has been outstanding, and how much you spend with each creditor annually. The latter is important information to have on

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hand when negotiating supply contracts. You can often secure a much better deal you can point out how much your business is worth to a supplier.

Some creditor programs also track payment due dates and alert you when to pay account for maximum benefit. For example, if the creditor allows you 30 days to p but offers a 2.5% discount for payment within 7 days, the program may alert you o the sixth day that you should pay now to secure your discount, and if you do not pay it will alert you on the 28th day that you should pay now to comply with the supplier's credit terms.

General Ledger The General Ledger portion of an accounting program tracks your overall financia position and helps you determine your profits and the value of your business asset It may also include a budgeting tool.

The General Ledger should ideally be linked to the Invoicing and Creditor program so that information entered into those programs is automatically recorded in the General Ledger. The Ledger tracks income and expenses, categorizing expenses s that you can readily see how much you spend on advertising, stationery, motor vehicles, accounting fees, etc. This is important information in determining your profitability, and identifying areas where you might be able to reduce expenses to increase your profit.

Your General Ledger program will print a Profit and Loss Statement, which lists y income — grouped according to the source of income, then totaled — then your expenses, and finally your profit or loss, which is calculated by deducting expense from income. Naturally, if expenses are higher than income, your business has operated at a loss. Your General Ledger will hopefully also automate the task of reconciling bank accounts.

Allocate time each month to attend to accounting tasks — paying bills, recording information, reconciling bank statements, etc. Or employ a bookkeeper or engage a bookkeeping service to do it for you. It is vitally important that this task be done regul and done well. Many businesses have closed down because they failed to do their accounting work. Such failure might result in legal action by a supplier who has not be paid, problems with the taxation office, overspending on equipment or advertising, or ju not knowing that you are not making adequate profit and you need to grow your custom numbers or average customer value.

Support Operations

Because it is a major component of your business, we have allocated a separate chapte to support operations. Refer to Service and Support, chapter 7. How to Become an ISP: A Short Course for Internet Entrepreneurs


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Your Products and Pricing

Planning your products and pricing is probably the most important single step in your business plan. Without products, you have nothing to sell. If you price your products incorrectly, they may not sell, or they may sell but not return you a profit. An Internet Entrepreneur might sell any of hundreds of different products, configured in very different ways. For the sake of simplicity, we are only going to look at a few examples. Otherwise, this book could go on forever! It's common sense that pricing has a major influence on profit. There are two simple ways to increase 'per unit sold' profit in a business:

•

Reduce product cost

•

Increase product price

There are two problems with focusing on these two simple ways of driving higher profit: •

Increased product price usually reduces sales volume

•

Reduced product cost usually reduces sales quality

Therefore, to drive successful business growth and high profit margins you must focus constantly on the price/value equation. Try to always:

Negotiate better value deals with suppliers: If you can buy better quality and value at lower cost, you are better positioned to sell higher volume more profitably. Compare suppliers and offers carefully. Negotiate with suppliers to get the best deal you can. Build relationships with suppliers that position you to negotiate good deals. Pay accounts on time, or early, to maintain good relationships with suppliers. Once you have identified a preferred supplier, be loyal. Buy as much as you can from him. The higher your purchase volume, the better positioned you are to bargain for a better deal. If another supplier is offering better deals on a product you want, assess his offer carefully and document it, then approach your preferred supplier with details and ask him to match it. Always favor your supplier if he will match, or nearly match the opposition offer. Your loyalty will buy you long term savings and improved service. When buying, remember that lower price doesn't necessarily equal better value. The value equation includes quality, service and support, warranty, and supplier/customer relationships. • • • • •

•

•

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Add value without proportionally increasing cost: The ease of achieving high volume sales with low investment in marketing will be largely determined by the price/value equation. Increasing value without increasing price usually means more sales, lower marketing costs per sale, and therefore higher profit.

Focus on appeal: Unfortunately, customers don't always understand value. Therefore, to increase sales volume and profit, you must focus on the value your customers see – the added-value benefits that they most want and can readily recognize in your offering. We refer to this “perceived value”. It's often very different from “real value”.

Study your target market: Perceived value varies depending on the target customer. What appeals to one custome may not appeal to another. Of course, you can't usually tailor your product to each individual customer. Therefore, you must try to learn as much as you can about the typ of customer you are targeting, and understand what appeals to that customer type. For example, if you are selling to a very computer literate market segment, generous technical support and lots of tutorials and FAQs may have limited value. Whereas, if yo market is generally not particularly familiar with computers and software, these are lik to be highly appealing and therefore add substantial perceived value. To determine the best product and price offering, you must remember always that: Higher profit results from: • more sales • • •

lower product cost higher product price, or lower operating expenses

Higher perceived value = more sales Perceived value is determined by weighing price, value, and appeal.

Therefore, the best product to sell is the product that offers highest perceived value at lowest possible product cost (cost to you, that is, not to your customer!).

Product Packaging Determining the exact product offering and its price is referred to as “packaging”. Packaging also includes designing the presentation “wrapping” for the product. For physical product, this might mean designing the box, sleeve, or packet. It might also include designing display stands for stores stocking the product.



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Packaging also includes designing the user guide, installation instructions, and any other instructions or information to be included with the product. A key component of packaging is the warranty and refund policy. Terms of sale constitute a major feature of a product package. Even the design of advertising forms part of the product package. In every aspect of product packaging, from deciding included features and price, through to creating the features and benefits statements and deciding how to present them, focus on perceived value. Try to put yourself in your customer's shoes, and determine what low cost changes you can make to the product package that will make it more appealing. Remember:

Better doesn't mean more appealing. Perceived value is very different from real value. You may offer excellent real value, but the product may have very low perceived value. Further, perceived value is relative to target customer group. Your product may have excellent perceived value in the minds of one type of customer, but low perceived value in the minds of another group. Concentrate on perceived value in your market sector.

Packaging Hosting Products Now let's look at a simple hosting business selling hosting plans. Even if you will not be selling hosting plans, you should read this section carefully, because much of the information is very relevant to ISPs selling other products. Creating your hosting plans The two critical considerations in packaging hosting plans are: • •

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Storage and Traffic allowances Price




Your strategy in planning your product offerings will be determined by your overall business objectives, and the market you intend to target. For example, if you are buildi a business selling hosting to musicians who want to provide access for people to downl their music tracks, or to artists and photographers who want to display their images an allow folk to download them, you will need to ensure your traffic and storage allowance are very generous, and you will want to charge accordingly. It simply won't work to pla tight limits on the space allowed. On the other hand, if your target is local retailers, some of your customers may not yet be ready to do business on the web and may only want a simple web site to tell people where they are located and what they sell. You should offer a low cost option with a very small storage and traffic allocation, and an e-commerce option for those who want to actually sell on-line. Of course you must also consider the resources available to you and your options for increasing these as your business grows. For example, if you have 200GB disk space available on your server, and access to 150GB of transfer, You will obviously be unable cater to more than a handful of customers if you allow each 50GB storage and 50GB traffic.

Many hosts oversell. That is, they allocate more capacity than they have to offer. For example, a host may offer a 1GB storage/50GB traffic plan, then take on 20 customers, when he only has 5GB storage and 150GB transfer allowance. These hosts bank on the assumption that customers won't use their allocation anyway. Although it is true that m customers don't use their full allocation, and many use very little of it, the problem with this assumption is that you never know when you may sign a few very heavy users. Also there are certain to be usage peaks. If several customers engage in aggressive marketi activity that causes peaks at the same time, you could find that all of your customers ar complaining about poor speeds, or the load could even bring your system down.

Beware of Overselling Overselling can happen at the retail level – by resellers – causing problems for the reseller's customers and giving that retailer a bad reputation. It can also happen at the wholesale level. If your work with a supplier who oversells – either a host whose reseller program you sign to, or a communications company who supplies your connection — the impact of that practice could be devastating for your business. You need to investigate carefully to ensure any supplier you choose does not oversell.

You also need to take care, if you sign to a reseller program, that the host monitors oth resellers in his down line to ensure they don't oversell. Although their storage allocatio may be physically separate from yours, their bandwidth sales might impact on the qual of your service. Theoretically, they can only sell up to their limit, but in practice the supplier often cannot actually stop them selling so many plans that a peak period can d more than their allocated bandwidth. He can only charge them excess when that happe



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The damage to your business has already occurred, however, before he receives his excess usage bill! For this reason, it may be smart to consider in-house hosting using your own private server. Of course you would still need to check out the supplier of your connection, to make sure their promises in terms of bandwidth availability and operating speeds are valid. For the most part, you will find large Telcos supplying ADSL and wireless connections are reliable and honest about their service capacities. Unfortunately, the same cannot always be said for hosting companies. The single most reliable indicator of overselling is price. It's very simple! Storage and bandwidth costs money. Large hosting companies can negotiate favorable deals, and facilities in some locations are better than others, but if the price of a package is very low by comparison with competitors, you can be almost certain that the low price is achieved by overselling, and the service might prove unreliable. Few hosts will sell at a loss for any length of time. They can't afford to! Confirming overselling can be tricky. You might check out the host and find they have a good track record and no-one has complained about poor speeds or crashes in peak periods. The problem is, however, that this may be only because the host hasn't yet reached capacity. If his policy endorses overselling, you simply cannot predict at what point in his business growth the demand on his facility will peak and start to cause problems. To be safe, be very careful of cheap hosting plans. Compare plans, and choose one that is moderately priced. In this product category, as in all others, you get what you pay for. It's a simple fact that businesses can rarely afford to offer high quality product at substantially lower prices than competitors. A savvy shopper knows this, and seeks moderately priced product from an honest, reliable supplier who offers strong warranties and generous support services. This is the best way to get value. Similarly, the smart reseller seeks a supplier who offers moderately priced, high quality product and service – then sells on quality rather than price. Those who sell on price rarely sustain a profitable operation for any length of time, and usually attract the “bottom feeder” customer who has unreasonable expectations, constantly complains, and frequently fails to pay his account.

Suggested Hosting Plans The table below lists some typical plan allocations, and hopefully will kick-start your planning: Plan type

Mini site/business card site

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Storage allowance

Traffic allowance

4 to 10MB

Suitable for

40MB Very small businesses operators and personal sites




Plan type

Storage allowance

Traffic allowance

Suitable for

Small business site 20 to 50MB

200MB The average small business wanting to provide some support services and substantial product and company information on a site

Large site

500MB Businesses wanting to include some interactive features such as a forum, or for those wanting to offer a number of download files or publish a large number of graphic or sound files

50 to 75MB

e-commerce

100 to 150MB

1500MB Larger, e-commerce sites

The plans above are only examples. Yours may be structured very differently. It's relatively easy to check your competitors offerings. Try to identify competitors who might be in a similar market space to you, and look carefully at their packages before deciding on your own.

Setting Prices Determining prices to achieve a balance of profitability and scalability is an important to a fast growing, highly profitable business.

The first logical step in determining price is to look at your competitors' pricing. Make a table like the one above, adding two or three extra columns for lowest, highest, and most common price points. Then scan the World Wide Web and note the prices your competitors charge for packages similar to the ones you plan to offer. Try to determine the lowest price you are likely to see for a similar package, the highest, and the range y most commonly see. This will be a good starting point for deciding your price.

If you are using a reseller plan, it's also a good idea to try to identify other resellers for same host and check their pricing. This is valuable information, because you can be reasonably certain that they are buying at similar rates to you.

Once you have established price ranges, you need to determine your capacity. This is simple if you are offering only one plan. For example, if you offer only a 20MB/200MB plan, and you have an allocation of 200MB/2GB, you can sell to only 10 customers. With the same allocation, offering only the mini plan, you might be able to accommodate 100 customers.

If you are paying $50 per month for your reseller account, and charging $5.00 per mon offering only the smallest plan could yield a gross profit up to: $5.00 x 100 = $500 - $50 = $450 per month



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If you offer only the largest plan, at $80 per month, your gross profit potential would be: $80.00 x 10 = $800 - $50 = $750 per month If you are offering a few different plans, you need to estimate how many of each you expect to sell in order to determine your capacity and profit. Calculating the profit potential for each plan separately will help you establish which plans might be most profitable to sell, and therefore which you should focus on.

Caution:

Don't offer too many plans. The more products you offer, the more complicated business management becomes. Also, customers don't respond well to too many choices. Lots of options confuse, delaying buying decisions. To an extent, that's a problem in this Internet world. The customer has far too many choices! Often that prevents them making the choice to buy at all! If you keep your offering simple and your benefit very clear, then target a market sector specifically, you will find your chances of business success are much higher.

Competing on Price Many startups make the mistake of trying to compete by offering the lowest price, or by copying the price strategy of a competitor who may appear to be successful. Either strategy can be dangerous! We have already discussed the implications of low prices. Copying competitor pricing is equally dangerous, because you can't possibly know the variables that operate in their business, and how they compare to yours. High volume businesses typically have lower per customer and per sale operating costs. Also, they may appear to be a hosting business when in fact their hosting operation is only a side line or “loss leader” (a product they sell at cost or below to attract customers who may buy other product). Their real profit may come from another area entirely. The right way to determine pricing is to examine your costs relative to the potential to sell volume at a particular price point, and to consider your business goals. Do you want to grow a large customer base, or would you prefer to service a very small, select client group profitably?

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Are you targeting larger customers or e-commerce customers primarily, or is your target market comprised mostly of retailers who will want business card sites. Perhaps you are addressing a student or traveler market with small personal sites for publishing personal diaries and messages to friends. In that case, you will be looking for very high volume sales of the smallest and lowest cost site the market will accept.

How Much Revenue and Profit do you Need? A key consideration in pricing is how much revenue you actually need. To calculate this you should set up a spreadsheet which estimates:

Revenue: To estimate this, you will need to make some assumptions about your product mix You may want to experiment with the spreadsheet once it is set up, changing your product mix assumptions and price points to see how such changes affect your profit estimates. Product supply costs: These are the direct costs of selling a product.

Fixed Operating costs: These might include costs of running an office, telephone rent, electricity, accountants and legal fees, etc. These are costs that aren't directly related to the number of sales and customers you achieve. You should make several columns for fixed costs and estimate your fixed costs at different business size break points. These costs are not directly related to sales volume, but they do rise as the busine grows. Estimate, for example, the fixed costs for a business supporting 50 customers; 200 customers; 500 customers, etc. Choose breakpoints that relate logically to your business plan and objectives.

From this spreadsheet, you should be able to determine the gross profit margin on eac product sold. (Gross profit = sale price – purchase cost). For hosting plans, Gross profit may need to be calculated as: Sale price * estimated number of sales – Plan cost / estimated number of sales OR Sale price * sale capacity – Plan cost / plan capacity. The latter method works on the assumption that you can quickly achieve full capacity on your server, which is unlikely unless you have customers already lined up ready to buy. A better way is to estimate gross profit at selected volume levels.



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Once you know your per sale gross profit at a particular volume point, you can determine how many customers you need to cover fixed operating costs, and you can estimate your nett profit at different stages in business growth – 20 customers, 50, 100, etc. Note:

InteRAD Technology (www.interadtechnology.com) offers a product costing spreadsheet template specifically designed for estimating hosting costs and profits. This easy to use template will help you estimate your profits at different price points, with different product mixes, and at different business growth levels. It could prove a valuable tool both in price setting and in overall business planning.

More Pricing Considerations Consider your market carefully when comparing competitor pricing. If you are targeting a niche market and offering a very different service, you may be able to charge a lot more than hosting companies you see advertising on the Web. Also, consider the possible impact of a price change on sales volume. Use your spreadsheet to determine, for example, if a $1.00 per month price reduction leads to 2 extra sales per month, how does that impact on your bottom line? Some business operators like to test pricing by starting much higher than they think is realistic. For example, having estimated that $5.00 might be the right price, they advertise the product at $10.00 and test the response. If the response is good, you can sell at a high profit and business is easy. If you need more sign ups per week than you secure at this price, drop it by $1.00. Keep dropping it by $1.00 until you either reach your weekly sales targets consistently over a period, or the price is as low as you can go and still make a profit. Remember, though, that price isn't the only factor determining how many sales you will make. A higher price implies a higher profit and more money to spend on marketing. Clever marketing can attract customers at higher price points. Excellent service may enable you to keep prices high and still attract plenty of customers. It might surprise you to learn that some people actually prefer to pay a higher price for product. Many won't accept the cheapest offer. There are complex reasons for this. Some customers like to be seen as more discerning. They don't want to be perceived to be in the “bottom feeder” category. For some, choosing a higher priced supplier is a status symbol, because it tells others that they can afford to buy quality. Some customers examine the value equation very carefully, and select the best value offer rather than the lowest price offer. These are the smart people. Lowest price rarely equals cheapest. For example, if you buy shoes for $150 that last two years, these shoes were actually much cheaper than the $50 pair you could have purchased that would have lasted four months. page 58




Some buyers of hosting services understand that reliability is worth paying for. If servic failures result in a 5% loss of business opportunity, a business making $100,000 profit p annum and growing at 10% per annum needs to save more than $40 per month on hosting costs to compensate!

Similarly, if a service provider takes time to check customer sites regularly to advise on improvements, and fix minor operational errors, the site might deliver, say, 40% more most wanted responses. If 40% more most wanted responses translates to an extra $100,000 per annum sales at 40% gross profit per sale, that business operator has achieved an extra $3333 profit per month by paying a little more for his hosting service It would be a very foolish businessman who would claim a discount hosting service was cheaper!

Don't expect to find the perfect price point. Be prepared to experiment a little, but mak sure that whatever price point you choose, you know exactly how many customers you need to cover costs and you plan to grow your business to achieve that number of customers within a short time period. Businesses can't survive with negative income fo any length of time.

Once you have chosen your price point, tailor your product and service to match. If you choose a high price point, you must deliver outstanding service to justify that price. If y choose a low price point, you will go broke quickly if you offer generous service and support!

Pricing Other ISP Products We began with examples of pricing hosting because hosting packages are probably the most complex products to price.

If you have chosen, for example, to operate an information portal where your customer pay you $250 per annum for a listing, the equation is much simpler. Sale price:

$250 / 12 = $20.83 per month

Service capacity

500 customers

Price of your reseller plan or running $200 per month your server: Operating overheads estimate:

$250 per month up to 40 customer breakpoint $300 per month up to 100 customer breakpoint $350 per month up to 200 customer breakpoint $400 per month up to 500 customer breakpoint



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No. customers needed to cover $200 / $20.83 = 9.6 customers server costs No. customers needed to cover $250 / $20.83 = 12 minimum overheads Total customers needed to break even 21.6 Profit at 40 customers

$383.33 per month

Profit at 60 customers

$750 per month


$1583.33 per month


$2575.00 per month


$3616.67 per month


$9816.67 per month

Selling domain names works on an even simpler formula, because there are no limits to the number you can sell. Profit per name sold

$3.00

Operating overheads

$50 per month

Sales needed to cover overheads16.66 Profit from 50 sales per month $100 Of course, profit estimations can get complex when you start to combine a number of different products and services. For example, if you sell hosting packages, and advertising, and domain names, and website development services, and support services. If that is your plan, work on the major product offering (e.g. Hosting) and estimate a total annual value of other product sales on a per customer basis. For example, if you have determined that you need 500 customers to reach your revenue goal of $10,000 per month just selling hosting services, and you estimate that each customer will spend an average of $1200 each year on other services, you can see that you now only need 84 customers to achieve the same revenue target.

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5: Build your Business Website Every serious business operator needs a website for his own business, and as an Internet Entrepreneur, you'll need to ensure yours is a good advertisement for your business and offers all the necessary facilities for your customers to transact with you easily.

In the on-line economy, your website becomes your medium for projecting your company's identity. It plays a crucial role in defining your relationship with your custom and prospects. The better the website, the higher the odds of your customers making repeat visits, and establishing a solid relationship with you. The relationship forms the basis for predicting a customer's response to offers, promotions, and services.

You should ideally enable an e-commerce website so your customers can conveniently p you on-line. In fact, you should give serious consideration to having several web sites, presenting your offering in different ways to different customer targets. This assists you to achieve better search engine recognition (Provided the content on each site is slightly different. Savvy search engines ignore duplicates!). More importantly, however, it allows you to target specific customer types very specifically with tailored messages, and it enables you to test advertising copy and compare results of different promotions.

As a site host, you obviously have all the facilities at your fingertips to host multiple site Of course if you are only using an affiliate or pay per site program, or a private label program with minimal capacity, you may find it too costly to have multiple sites for yourself. The dedicated server option is the best option for supporting serious e-marketing endeavors.

Building your website

There are many ways to build a web site, and there are also many different views of wh way works best and produces the best result. The Internet industry is still relatively new and immature. There is a great deal that we still need to learn about what really works on the Web. In its short lifetime, though, the Web has progressed through a number of stages.

First, it was the technician's domain, and developing a web site was a complex and cos task that only very large companies could afford.

Next, the graphic designers entered the site development arena. While it was nice to s some visually appealing sites, Web technology wasn't yet up to handling the resource requirements that heavy graphics imposed, and sites often performed poorly. Even wh they loaded fast, the response was poor. We discovered that people usually want to see sites that are visually attractive, but simple, quick to load, and full of information.



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Of course, what is appropriate will depend largely on the type of site. A site selling clothing or furniture needs lots of appealing pictures. Your site is selling Internet Services, so it should focus on delivering valuable information to customers. Keep it simple and fast loading.

Tools for Site Building InteRAD Technology's NetCityz Instant ISP comes with an optional site building and management tool which is amazingly powerful and full featured, and is quite easy to use. Users of NetCityz who select to license this option can offer clients access to one of the best browser-based site building and management automation tools available. It won't replace web developers. It will, however, automate the development process and empower marketers and consultants to build sites rather than requiring technically skilled site builders. Also, it empowers site owners to contribute productively to the development process and to update their site economically. Listed below are some of the other methods you might consider using to build your site, together with some advantages and disadvantages.

Method

Text editor

Advantages

Disadvantages

Cheap and accessible

Requires you to learn or know HTML and is time consuming and error prone. You need to upload (FTP) files to the server on completion.

Composer tools Cheap and accessible. Much Requires you to upload files on provided in popular easier to use than a simple completion and manage versions of browsers text editor off line files, which can be cumbersome. Products lack some of the advanced convenience features of some of the more sophisticated tools. Client side site Relatively easy to use, and More costly than other options. The building software include some advanced disadvantages will depend on the such as Microsoft convenience tools. software selected, but client side FrontPage, etc tools have a major disadvantage Quality varies depending when on it comes to updating sites, the specific client side tool because you have to create files off you select. There are many line and upload them. This is much to choose from more cumbersome, time consuming, and error prone than updating online

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Method

Advantages

Disadvantages

Macromedia tools Very advanced tools which Generally require substantial learning such as Flash and produce some impressiveto master. Dreamweaver, etc.output if you have the skill Some such tools produce output and competing to use them. which is not “search engine friendly”. products from other Whether due to the nature of the suppliers tools or the type of user they appeal to, output tends to be graphic intensive and lack the usability and immediacy that today's e-marketing experts say is required to make a web site effective. These tools also tend to be costly. On-line template- Let you build and edit your Most are very basic and inflexible and based site builderssite on-line from any output a “canned” site which might connected machine, not be particularly effective. anywhere, and there are no Select carefully. Many appear simple uploading worries. The site is created on the server. and free until you make a decision to use it, then impose costly traps. Easy and inexpensive to use and easy to access. Most hosts offer a “builder” of some kind. Professional Often very powerful, withCan be quite expensive. Often not content managerssome nice features, but they really suited to web site building, but seem to often lack the most are more appropriate in an Intranet important features for site or Wide Area Network environment building and editing. for managing specific types of content.



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Method

Advantages

Disadvantages

Professional quality Probably the best choice There if are not a lot of them available browser-based siteyou can find a good product to the public. building and that is affordable. Prices good ones are controlled by management range from very low cost Most – development companies who software or even free with hosting web – use them in house and allow their to very expensive. clients limited access for some types of site updates. Many are under-developed and only address the preferences of the web developers using them. They are designed to make the developers job easier, rather than to empower everyone to build sites.

Building an Effective Site Web sites can be a major business asset, or a rather costly waste of time, depending on their quality. Great web sites drive business growth. Your web strategy should be an integral part of your overall business plan. Don't simply reproduce brochures on your website. Use the power of interaction in an online environment. Make the site information rich, and enable features that invite customer feedback. Keep your site current. Nothing is more certain to turn customers off than a dated web site. As an Internet Service Provider, your web site is the most important ingredient for business success. This is your “shop front”. Your customers will form their first impression of your company from your site, and will expect your site to provide ongoing services to them efficiently. Spend some time making sure your site presents well. It must be visually appealing and functional. It must provide plenty of valuable information, easily accessed. It should reflect your professionalism. Take care to consider all of the following issues carefully when planning your site building project:

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Design issues: A common approach to creating a web presence is to engage a professional site designer.

A professional designer can give your site a very professional and appealing look. The problem is that many business operators do not know how to select the right designer, and do not know how to work effectively with a designer. Looking at the designer's past work is important. Do you like their style? What is much more important, however, is to determine if the selected designer has an understanding of your business, the image you need to convey, the services your site needs to provide, and the type of customer you need to appeal to.

Many designers are poorly informed on technology and e-marketing. They build great looking sites – but the sites lack the functionality and content that is needed for them to be effective. Unfortunately, many site owners have insufficient understanding of the web to know that the site isn't going to be effective for their business.

Prices for design services vary from very high, to ridiculously cheap. The very inexpensive designers can only deliver a “canned site”— a basically modified versi of a templated site that they use as a basis for dozens of other sites. These sites don't deliver. Similarly, very high priced designers are often people who have been in the industry for a long time and have built a client base of high profile clients, enabling them to present as someone with impressive capabilities and experience. They may be very good at their job, but many have somewhat dated skills. Some of them haven't kept pace with technology and marketing trends.

Designers traditionally have not been educated in e-marketing. That's a major industry problem. It may be that the ideal approach to web site design is to engag both a smart e-marketing consultant and a designer, and to approach the project a a team, giving the designer a very clear brief. Alternately, you may want to decide on a layout and overall style and engage the designer only to create the graphics. That is often a great way to ensure the result delivers both visually and functional

A benefit of building your own site is that you express your own style and persona the design. You don't need HTML experience if you use modern tools Self-designed sites are often not as polished, but can create a strong sense of solidarity by conveying the heart of the business owner.

A good web site doesn't have to be flashy. It doesn't need a lot of graphics. It needs to be visually pleasing – which you accomplish by laying pages out simply a neatly, using a limited range of colors and fonts consistently, and using a simple bu appealing site template. A few carefully chosen, high quality images strategically placed, is usually quite enough “eye candy” on a professional service provider site



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The Template Every good website begins with a template, and displays the template on every page of the site.

This is your branding. It reassures the site visitor of where they are and gives them confidence that they haven't accidentally migrated to another site. A template is a bit like your printed letterhead. It frames the content on every page. Like a letterhead design, it might consist of only a header bar, only a left or right side bar, only a footer (uncommon in both letterheads and website templates), or any combination of these four elements. It should include your logo, and be designed in your corporate colors. It might include your company name, typeset as it appears on all your signage and correspondence. This isn't essential, but it is recommended. If the name isn't in the template, it must appear consistently elsewhere on every page. Keep the template simple. You want freedom to design impressive pages and to lay pages out creatively without having them clash with the template. There are lots of elaborate templates on the web, but if you look at the most successful companies, particularly in the technology space, you will see that their templates are very plain indeed. A simple band of color with your logo above can look very professional and attractive. Templates are available for purchase on the web at varying prices. The very inexpensive ones are likely to be in widespread use. You might see the same template on dozens of sites. This isn't really an issue if the template is very basic – like a colored line or row of dots with a logo above – but there would probably be no need to pay for a template that simple! You can make your own template quite easily if you have access to graphics software. It's also very easy to modify a very inexpensive purchased template to personalize it. Alternately, the printer or designer who created your letterhead or business card may be able to supply a digital version of the graphic that you can adapt as a web template, or may be able to adapt it for you. A good rule of thumb for templates is to create an image 749 pixels by 600 pixels. The Home Page The home page gives the visitor his first impression of your company, and often determines whether any other page of the site will be visited.

Remember that people are impatient and time poor. They want information quickly. If they are looking for a service provider, they will most likely be looking at many sites to see which looks like the right choice for them. You home page needs to grab

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their attention quickly, and give them enough information to encourage them to lo further. It should never be just a picture!

Avoid “entry pages”. These are pages with flashy images that invite you to “Click here to enter”. The impatient web surfer either clicked through to your site from search engine or link on another site, or typed your URL to find you. In their mind they have already “opened your front door” by doing so. They don't want to be confronted with yet another door to open!

Remember an important rule. Less clicks means more results! Try to make sure a site visitor can obtain any information needed with no more than four mouse click and give them as much valuable information as reasonably possible right up front on the home page.

Of course the home page should also be visually appealing and carry a strong branding message. It should tell the site visitor who you are, where you are, what you offer, and why they should deal with you.

To maximize search engine recognition, it's a good idea to include a concise site description on your home page in slightly different words to those used in your me tags, but with a similar focus. Include important keywords in this description.

Looking at your opposition's sites is a good way to get an idea how to design your but don't just assume that the web site of a big and successful company is a good model for you to follow. Many successful companies have very poor quality web sites. Their off-line marketing may be highly successful.

About US Pages Every web site needs an About Us page, describing the company and its people. S visitors want to know who they are dealing with. It can be a little frightening dealing with people you have never met. People like to rely on eye movements, facial expressions, and body language to decide if they are comfortable trusting someone with their business. On the Web, a business operator can appear to be anything he wants to be. A dishonest operator can present as a very large, successful and professional company, take money from customers, and disappear the next day!

Your “About Us” page(s) should focus on building trust and consumer confidence. Make sure customers can see readily where to find you (your street address), all t ways to contact you (phone, fax, mail, email, etc.), how long your business has been operating, and what past experience you and your staff have. Talk about any notable accomplishments or awards you have won.

Tell customers why you are different. Tell them about your mission statement and goals, and your ethics and values.



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The About Us page(s) should give customers a very clear view of the advantages of dealing with you, and the service levels and product quality they should expect from you. Some companies like to name the people in the company who deal with particular issues, so that a customer knows who to ask for if they have a complaint or problem. Providing testimonials from happy customers can help build customer confidence. Details of past projects or samples of your work can also be helpful.

Customer service and support pages Be sure to make it easy for anyone browsing your site to understand what support you offer. This will be a key factor in almost every buying decision. At the same time, you should use your customer service and support pages to reduce your work load! It's a great idea to provide a page of Frequently Asked Questions (FAQ) to enable customers to obtain self help before contacting you. Tutorials and multimedia “walkthroughs” are also very helpful to customers. Product Pages Product pages should detail your product and service offerings. List features and benefits. Provide clear technical specifications. Tell customers about any hardware/software or facilities requirements to access your products and use them.

Usually, prices are listed in product pages. Some suppliers decide not to advertise prices. It's a difficult dilemma! Prices can scare customers away, but no prices often also sends them to the opposition. Some folk just won't buy anything that isn't price labeled! Don't think that displaying pricing reveals too much to your competitors. Competitors can easily find out your prices if they want to know. The questions you need to answer are •

•

•

•

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Does my target market want immediate access to price information or are they happy to ask for a quote? Will they appreciate value based on what I can tell them on the Web site, or do I need to talk to them about their needs and explain carefully how my product suits those specific needs? Is my pricing model simple enough to document on a web page, or does my product require consultation and custom quoting? Will my customers be concerned at others knowing what they paid for their service? Do they like to regard themselves as a being in a more elite group who seek, and pay for, personalized service? How to Become an ISP: A Short Course for Internet Entrepreneurs



•

Are my customers price driven? Or are they more focused on the quality of the offering and its suitability for their business?

General Layout and Site Construction Guidelines Websites should comply with WC3 guidelines. WC3 is a set of guidelines drawn up by the Web Consortium to ensure that sites work reliably on all computers and in most browsers, and are usable, for example, by people with minor disabilities. Th guidelines also help you ensure your site design complies with standards proven assist in achieving good results on the web. Visit http://www.w3.org/ to read their guidelines and obtain general advice on site design and construction.

Some of the important considerations are: •

•

•

•

•

•

Restrict your site to about 750 pixels wide. Don't fill the entire screen, because some screens can't display a full width site

Keep text lines to a maximum of half the screen width, preferably less, to avoid reader fatigue

Don't use newspaper style columns that require users to scroll to the bottom an back up to read an article. Avoid presenting text in a way that implies a need to scroll horizontally

Provide links and bookmarks to make it easy to find the information readers are seeking Use headings to draw attention to important topics and divide information into “small bites”.

•

Ensure images are high quality and compressed for fast loading

•

Use lots of “white space” on pages

•

Choose color combinations for ease of reading

•

•

•

Study color psychology a little before choosing, for example, a black background. Colors have very strong meanings and the wrong choices can create a very poor impression. If in doubt, stick to blue or black on a white background. It's safe and professional looking.

Keep menus simple and easy to access. Drop-downs can restrict use by folk with impaired movement, poor vision, specific types of hardware, or just an unresponsive mouse! Place menus either horizontally near the top of the screen, or vertically down the left side. That's where most folk expect to find them. Non-standard placement can lead to confusion that sends site visitors away.



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•

•

•

•

Remember that the band two thirds of the way down the screen is the focal point for most viewers. Place your key messages there! Avoid moving things and pop ups. They are annoying and distracting. Savvy website visitors know that it's easy to put gimmicks on a site, but only amateurs do! Ensure everything on the site is there for a specific purpose. Don't include anything just for the sake of filling space or showing off! Ensure spelling, grammar and punctuation is correct. Nothing looks more amateurish than spelling or grammar errors on a site.

Developing Content Developing content is generally a job for a good marketing copywriter who has a strong appreciation of your business, your target market, and what you want to achieve with your site.

In broad terms, though, the rules for developing content for a successful site can be summed up with the coined phrase: “Kiss it and Put a SCERT on it!”, meaning: •

Keep it superbly simple.

•

Make it Sensible, Concise, Elegant, Relevant, and Timely.

Another important consideration in composing content is to make sure your keywords are repeated throughout your content in an appropriately relevant way. Site Functionality Have you ever clicked a link on a web site that doesn't work correctly? Usually makes you immediately think “amateurs”, and leave, doesn't it?

Make certain everything on your site works correctly. This is vitally important for web developers and ISPs. Customers may think that any malfunction is a feature of the technology you use and therefore will carry over to any service you provide for them. Be sure download file links operate correctly and downloaded files are in appropriate formats. Generally, PDF is best for downloaded files containing text. Avoid proprietary file formats such as .DOC, .XLS, etc. except in special circumstances. People use all kinds of different software applications and the applications they choose to use may not open the proprietary files you supply. You should stick to generic formats that everyone can use readily.

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It's also wise to avoid file types for which specific “plug ins” are required as far as possible. Even if plug ins are free and easy to obtain, some folk won't want to have them on their system. Avoid components that aren't readily usable by everyone unless they are clearly an “optional extra” and there are other ways to obtain information. For example, if you include a “Guided Tour” video showing steps to use your service, include some still screen shots as well so that those who can't or don't wish to use the Guided Tour plug in can still follow the steps.

Your site should be fully cross-browser compliant, and work in any operating environment, otherwise you are sending a percentage of prospective customers away. The message “Best Viewed in Internet Explorer” tells site viewers that eith the site was developed by an amateur who can't build cross-browser compliant sit or you are more interested in promoting Bill Gates' business interests than your o Meta tags, etc. You need to make sure you correctly include your site title, site description, keywords, copyright messages, etc. in your site files.

Keywords and site description and title are vitally important to ensure customers find you.

InteRAD's Site Building solution, bundled with their NetCityz Instant ISP product, automates this process for you, and inteRAD supplies extensive information to hel you select the right keywords and to correctly structure your site for search engin recognition. If using another site building solution, be sure to seek out informatio on how to include meta tags correctly. Also be sure to include a clear link for site visitors to email the web master with comments, questions, or complaints about the site functionality or design.

Legal issues Your site should clearly display any company/business registration and structure information on every page, so that customers know who they are dealing with and can check you out if they so desire.

Your site should also include legal notices, easily accessed. These may include: •

Privacy policy. This details the steps you take to protect site visitors' privacy.

For example, let visitors know if you collect information about them, how you u it, and how to complain or request further information about your use of information about them. There are several groups devoted to improving the management of privacy on the web. Visit their web sites for information on best practices and effective



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privacy management. Relevant sites include truste.org, privacy.org, epic.org, cdt.org, eff.org, 2020tech.org, and aclu.org. •

Copyright notice. This should advise site visitors of your claims to copyright,

and acknowledge copyright ownership of any material you have quoted or republished from other sources. It should also provide information about any trademarks or patents applicable to products described on your site or to brand names, logos, etc.— whether the trademarks are yours or belong to a third party. Make sure that any logos or trademarks belonging to third parties are used in accordance with their guidelines and with their consent.

•

Site Disclaimer. This is an important document which you should have your

insurers check carefully to ensure that it meets their requirements. This document protects you against claims against your business in the event that a customer relies on information obtained from your site, or uses resources provided on your site, and that reliance or use has claimed adverse consequences of any kind for the customer. For example, if a customer claims – rightly or wrongly – that your service did not work and that their business suffered as a result.

•

Terms of Trade. Many sites include terms of trade or terms of sale. These

documents inform customers of the warranties you offer and their obligations in respect of buying your product or using your service. For example, if you are offering site hosting, this document may outline your requirements for notifying a fault or service interruption, the conditions under which you will credit or refund in the event of a service interruption, your requirements for notice of desire to cancel, etc. Your bankers may require an approved Terms of Trade statement to be displayed on your site if you wish to engage in e-commerce. In any case, it's a good idea as it protects you against claims by customers who may be acting unreasonably or who may have caused their own problems by not observing sensible procedures such as reporting problems promptly.

•

Refunds Policy: Often part of your Terms of Trade, this document outlines the

conditions under which you will offer a refund and how it will be processed. This may also be a requirement if you engage in e-commerce, and you may need to satisfy certain legal requirements in respect of offering refunds.

If you purchase inteRAD's NetCityz with the optional Publishing Platform included, templates for these legal documents are included in the package, and you may use and edit these templates for your own use and/or to assist your clients. Read the templates carefully to ensure they meet your specific business needs, and have your lawyer, your insurers, and your bankers also check them to ensure they meet all requirements. Once your legal notices are complete and published on your web site, print all of them from the site and have an independent trusted person sign them to validate that the printed version matches the version published on the site and date them. Keep these in a safe place. If you update or change any policy, print the changed policy document and repeat this procedure, retaining both old and new copies. This page 72




ensures that no-one can claim that the terms displayed were different at a particu point in time when they made a buying decision or read the terms.

Checklist for Assessing Website Effectiveness When your site is complete, check it against this list to ensure you have taken all the important issues into account. There are also sites that provide free analysis and fine tuning of your site. Consider using them to see your site as others see it. 1. Purpose: Is the purpose of your website clearly evident. Does it provide the services your business plan specifies it should provide?

2. Style: Industries, markets, and communities have varying needs and preferences. Techniqu and interface styles that are appropriate for one market may not be suitable for another. Have you tailored your site to the market it is intended to address?

3. Ease of use: Is it easy for customers to do business on your site? Have you made sure clear instructions are provided for using all site features, and buying is made very simple?

4. Tracking Have you implemented tracking systems to determine which pages customers visit, what sites they enter from, and which pages they exit on? Have you made it easy for customers to give you feedback at any point during their visit? 5. Visibility Have you devised strategies for making sure the site is seen? Have you added meta tags and registered with search engines? 6. Graphics Are your graphics compressed properly? Do they display crisp and clear? Have you tested to ensure they don't slow downloads?

7. Search functions and navigation Have you provided an easy to use site search so that visitors can easily find what the are looking for? Have you paid attention to the navigation plan so that everything is easy to access with no more than four mouse clicks? Have you made sure that important links are accessible without scrolling down pages?

8. Security Is your site designed to ensure visitors feel secure transacting on the site? Have you focused content on building trust and confidence? Have you included clear privacy policies, warranties, refund policies, and e-store security statements to explain how y protect customers?



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9. Relevance Is your site relevant to the needs of your target market? Has it been designed for ease of adding new information and updating dated content? Is the content interesting and informative? Is there an abundance of valuable information of genuine value to your target market? 10.Fun Most people browse the web during their leisure time. Visiting a site should be a pleasurable experience. Good sites include an element of fun. Do you offer incentives for people to visit again. Have you included newsletters, forums, games, puzzles, help groups, and other enjoyable features?

There is a great deal more to learn about website design than can be covered in this guide. It's a complex science that requires detailed knowledge of psychology, marketing, presentation, and technology. Much of the knowledge you need, will however, be obtained by studying user response to your site. Keep your first site relatively simple, and plan to maintain it consistently, adding updated content regularly and making changes in response to feedback. Take care that the technology solution you choose for building your site allows easy regular updating. If using a web developer, ensure that you are supplied with all the completed files and that you can readily access and use the software needed to enable you to manage those files properly.

Registering domain names You may already have a domain name registered. If not, or if you need to register more (which, again, is definitely a benefit in marketing and is now very inexpensive), the first step is to select a name. Domain name registrars provide search panels on their web sites which allow you to verify if a name is available. It is getting increasingly difficult to secure good names, so you may need to be creative to find an available name that suits. Don't be too hasty! It's well worth thinking about the impression you want the name to convey. Your domain name is a very important ingredient in your branding and image creation.

Understanding extensions: Domain names are formatted in a number of parts, separated by dots: www.mywebsite.com www.mywebsite.biz

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www.mywebsite.com.au http://greatproduct.mywebsite.com.au

They may be prefixed with “www” or “http”. Most people will expect your domain nam to be prefaced with “www” and may find the need to type “http://” confusing. In simple terms, top level domains are prefaced with “www”, and sub-domains are usually “http: You should therefore use a top level domain for your main business site. You may want use sub domains for special sections of the site or subsidiary sites for special marketin purposes.

The first part of the name (or two parts in the case of a sub domain address) is the site name. You select this. You can use any sub domain name you wish, but the main domain name must be unique and registered with an authorized registrar.

The next part of the name is used to indicate the type of organization. This is no longer particularly reliable, since the shortage of names has led to organizations using extensi that aren't necessarily appropriate to their organization type in order to secure a name they favor. Some extensions are usable only by qualified organizations (e.g. .gov, which indicates a government organization; .edu, which indicates an educational facility).

In general, .com is the extension to use for a commercial entity – a business of any kind There are some new extensions available (.biz, for example) that are, as yet, not commonly used. While it's perfectly ok to use these, you may find that less common or unexpected extensions make it more difficult for site visitors to find you.

The last part of the extension is a two letter code which indicates the country in which live or operate your business. A simple .com extension, with no country indicator, usua indicates that you are located in the USA. This isn't necessarily reliable. Many busines outside the US that seek to appear to be global businesses will choose to omit their country extension.

Choosing a Great Name There are no fixed rules for selecting a great domain name, but here are a few tips to consider: • •

• • • • •

Keep it short. Shorter names are easier to type and easier to remember Choose a name that is easy to spell, easy to type, and easy to remember. Practice typing it a few times to verify that it is easy. The location of keys can make an other wise good name a poor choice! Try to convey the topic of your business through the name you select Avoid mis-spelt words Avoid abbreviations Avoid dashes, underscores, etc. in the name Use no more than three words in the name



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•

•

•

Use your business name or product name if available, or a name that has a logical association with your business (for example, the need you fill) If you have a product to name, it's a great idea to decide on the product name and website name simultaneously and make them very similar. Use only .com extensions. No matter how appealing the name, avoid the temptation to use a .net or .biz or other extension. Customers habitually type .com at the end of the name, and a different extension is likely to send them to your opposition.

Register with a quality name provider. Registration is very inexpensive, but it's worth paying a little more to a provider who offers a high quality, efficient service, because you are relying on this provider to protect your ownership of a very important business asset. Your domain name is valuable. You want to be sure you will receive renewal notices in plenty of time to renew, and that you will be able to obtain information to perform domain name delegation easily. In fact, at this point it might be wise to establish a relationship with a registrar so that you can purchase names for your customers and on sell them at a profit.

Uploading your Web Site This step is unnecessary if you use a browser-based site creation tool – the modern approach. If you use a more dated approach, you may need to FTP your files to the server. There are plenty of FTP programs available. SmartFTP, available at SmartFTP.com, is one quite good option. Some ISP's provide access to control panels which include File Managers. These allow you to browse your computer and select files to upload. You can also use some third party site building software products which connect to the web server when it's time to upload site content. The tools you can use for uploading will depend on the technologies the ISP supports, or the technologies you choose to support on your server, if you've chosen the dedicated server approach.

Promoting your Web Site This is a topic about which volumes could be written! There are literally thousands of ways to promote and market, and every businessman must think creatively about the ways that are most likely to attract the attention of his target market; select the methods that seem most appropriate and suit his budget; and measure responses to determine which methods work best.

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Marketing is an ongoing experiment to determine what works best for your business. Three concepts are important to understand: •

Your web site doesn't promote you! You must promote your web site. Your

web site is a low cost and efficient way to reduce customer service costs, build repea business, and support your marketing with more detailed product and company information and re-inforcement of your marketing message. It cannot stand alone, an it does not bring you customers just by being there! Chances of prospective custom finding it without extensive marketing activity to draw them to it are almost nil.

•

•

Off line marketing is every bit as important as on-line, if not more so, even when sell Internet services. Your target customers may not be particularly Internet savvy or responsive to e-marketing techniques.

Search engine ratings are a relatively minor element of successful marketing. The chances of you attracting a high volume of qualified prospects through a high search engine rating are minimal. There are great ways to use search engines to draw traff and ratings play a part. You must, however, make sure you fully understand the workings and use of engines before you use them in your marketing strategy. Selecting a web site designer because they claim to be able to “get you to the top of the search engines” is a poor strategy. They are unlikely to deliver, and even if they do, it will most likely be of no real benefit to your business.

Refer to the chapter titled Marketing for more detailed information on promoting your

Search engine optimization

Search engine optimization (SEO) is an ever-changing science. Many people become ve frustrated with the lack of traffic their sites receive, and many have paid large sums of money to SEO professionals for poor results. Entire books have been written on SEO, a since it’s a field that changes rapidly, most of them are out of date almost before they a published.

SEO professionals will tell you optimization is not a job for an amateur. Yet many amate find they are highly successful – sometimes more successful than some who claim expertise! Learning some simple rules will assist you to maximize the benefit of search engines: Pay attention to things like: •

•

Make your site title 50 to 80 characters long, and includes your main keyword if possible. Use capital letters. Choose keywords carefully, and don't enter too many. 20 to 25 is about the right number, but you can change them regularly and monitor the effect of any changes. Keywords can also be short phrases. Separate words or phrases with commas.



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•

•

• • •

Write a clear, concise site description using some of the main keywords in proper context. Make it no longer than about 30 words. The goal is to write a summary of what the Web site offers and to let the user know why this site would be useful to them. Start with a short overview and include a few main aspects. Anything that makes the site unique should also be mentioned. Describe the features, not the product or service. Everything listed is a Web site, so making statements such as, "This site" or "Site offers" is redundant. Use American English when writing your site description, but note if the site uses a foreign language. The site description displays below the site title in search engine listings. It needs to grab the reader's attention and entice them to click through to your site. Look at competitor descriptions for ideas, but don't be a copy cat. Search engines will detect and respond negatively to copying. Make sure your content is well-written and relevant, and contains keywords used in context Try to maximize the number of links from other sites to yours Get friends to hit your site regularly. Many search engines rate you according to traffic Submit your site to engines. Submission processes are well documented on most search engine sites, and submission is simple. Sometimes it takes months for engines to process submission information, so send it as early as possible, and repeat every six to eight weeks.

There is a great deal of material freely available on the Web on making your site search engine friendly. A little research will pay dividends.

Assessing Web Site Success (It's NOT about Hits!) When I speak to a small business operator seeking to establish a web presence, I invariably hear that inevitable question “How will I get to the top of the search engines?” SME's venturing onto the web for the first time seem to be focused strongly on “hits”. They view their web site as a tool for attracting new customers, and want to be assured that as many prospects as possible will see their new site. Sadly, many web professionals and marketing consultants encourage a distorted view of the Web and how businesses should use it, soliciting business with promises of high search engine ratings and high hit rates. What they fail to explain to their customers is that “hits” mean neither genuine prospects, nor real opportunities. The chances of building new business by achieving high search engine ratings and high hit rates are not generally high. Here are some of the reasons: 1. There is too much competition, and many of the competitors are more financially capable of paying to get those high ratings.

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2. This method of attracting attention is not geographically targeted. You are paying to attract the attention of people all over the world, when you may only be capable of servicing a small locality. (Of course, this may not be true for all businesses. Some w have a global reach. For the most part, however, SMEs venturing on to the web for t first time are locally based businesses)

3. This method of promotion is only broadly demographically targeted. It lacks the focu that advertising campaigns need to be highly successful and cost effective.

4. The customer seeing your name is only a minor step in the process. Even if you are the top of the search engines, there are plenty of competitor names there with you. You have to attract the customer to click through, and then to remain on your site lo enough to receive your message.

5. The message has to be the right message, delivered in the right way, for any benefit accrue from a click through, even if it results in a serious site visit.

When you think about “hits”, think of shoppers in a mall. Those who loiter around your shop door talking to friends, but have no genuine interest in what you have to sell, are nuisance value. Those who wander in and browse your displays may one day return to buy, but too many of these will interfere with your ability to pay proper attention to pay customers and with the paying customer's ability to find what he is looking for. On the web, a high volume of hits can mean slowed performance and higher site costs, with lit prospect of any serious business growth.

With clever site promotion, a site that is superbly designed to grab and hold the attenti of a serious prospect can drive new business. It's a tough challenge, and one that few w designers are really equipped to meet. It will take some experimenting and an intimate knowledge of your business and your target customer. Certainly those who focus heavi on search engine ratings and hits are unlikely to have a real appreciation of all of the factors that contribute to web site success.

The more likely benefit of a great web site is its ability to drive repeat sales, build customer loyalty, and reduce service costs. Achieving this will, in turn, build the best ne business of all – new business based on direct customer referrals, and brand recognitio One of the key measures to the success of a web site is not how many hits it receives, but how often customers return to it and how long visitors stay.

Only by building an effective web community, to which customers want to return often, can you foster the relationships that result in improved lifetime customer value, and referrals to new high value customers.



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6: Marketing for Success Marketing is an important skill for an entrepreneur. You might be a technical genius, offering great services and support, but if nobody knows you and you can't successfully convey your message to your target market, then you are unlikely to enjoy any measure of business success. The web hosting industry is very competitive. There are many large hosting companies and some say the market is saturated. Recent consolidations and closures and strong price-based competition seems to suggest a lack of opportunity for new market entrants. Thousands of new websites are published every day, however. While there are many hosting companies, the market is growing so fast that existing suppliers struggle to keep up with growing demand. I don't think there is any shortage of opportunity at all! In fact, I think the opportunities are better than ever. I think it's a case of understanding what people want and need and positioning yourself correctly in the market. Frankly, I think the capacity of the larger hosting companies to meet the needs of customers is limited. It's far more likely that your innovative business model and strong service offering will be the ideal solution for many business operators, and they will consider it much more appealing than an offer to host their web site cheaply among thousands of others, with no attention to helping them ensure that they achieve real value and business results from their website. The key is setting yourself apart from the competition in some way, and capitalizing on those differences to market your services.

Targeting a Niche Market Smaller businesses and new market entrants are typically more successful if they target carefully. Don't try to be “all things to all people”, or to directly compete with a strong competitor. You are unlikely to be able to persuade the customers or prospective customers of a major web hosting company to choose you as their preferred supplier if your offering is very similar and you target the same market sector. Competing on price is a recipe for failure. Big companies enjoy economies of scale, and are able to sustain themselves through a price war. You need to make good profits on almost every sale in order to survive and grow. Your strategy should be to set fair prices and focus on delivering high value, but specifically target an industry, or specifically identified group, and concentrate on tailoring your product to meet that group's special needs.

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If you have a specific target market, it will be a lot easier to learn about the needs of your customers and provide services tailored to meet those specific needs. It will also be easier to reach your target market with an effective message, because you will know who you are trying to reach and where they congregate, what they read, what websites they visit, what other businesses they deal with, and what they are seeking. You can much more easily tailor your marketing message to address their specific needs.

You don't have to identify a totally new niche. Just find a niche with growth potential or little competition. It's a great idea to focus on an area of special interest to you – or an area about which you have “inside information”.

Amateur artists, for example, might provide specialty hosting for aspiring artists or vir art exhibitions. If you have a special interest in music, you might want to provide a music download portal and special hosting packages for musicians wanting to promote themselves. Or you might offer an on-line facility for locating and booking musical entertainers. The best way to advertise to a niche market sector is to identify the publications designed for and widely read by those markets. If you share the interests of your target customer, you probably know what he reads, what groups he is involved in, and what web sites he frequents. Therefore, you know where to promote yourself.

Targeting Local Markets The World Wide Web is a global phenomenon that crosses geographic boundaries.

Interestingly, though, even when it comes to services that can just as easily be obtained from suppliers thousands of miles away, many people like to deal with locals.

Many areas currently have no local ISP, and its very likely the businesses there would l to have a local who can offer them personal service.

Many folk prefer to support the local economy. Some like to know they can meet and shake hands with their supplier. Many like to deal with people they enjoy close relationships with – the guy they see at the school Parents and Citizens meetings or cheering his son on at the weekly baseball game, or the lady who plays the organ at the church, or does volunteer work with them at the local hospital on Saturdays.

Customers who prefer to deal with local businesses generally are not particularly price driven in their buying decisions. You may be able to sell your services at slightly higher prices in a local market. Your advertising costs will also be lower, because you can focu on lower cost local newspapers, notice boards, a stand at the local market, letterbox drops, etc.



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You are likely to have much less competition in this market, and to be able to get to know your competitors better and compete more effectively. It's easier to get to know your target customer well and understand what drives their buying decisions and what ongoing services they want. You could easily personally contact a few businesses each day. Think about how much you could earn selling just one e-commerce plan each week for $50 per month. By the end of the first year, you would be earning $2000 each month, plus extra income from Gateway commissions on transactions and additional services that you offer such as site evaluation and consulting, help with site design, etc. The exciting feature of an ISP business is the residual income. Your income grows exponentially each year, because you continue to collect regular income from every customer you have signed up as you continue to add new ones. If your service is good, your customers will actively promote you, so that each customer you attract brings you two or three more.

The Specialty ISP Business The best opportunities may present outside the conventional web hosting area, where you simply charge to host web sites and compete with some major and well established players. There are very exciting opportunities in the specialty ISP area — providing services tailored to a specific market need or opportunity using hosting technology, but not necessarily offering a conventional hosting product. The opportunities in this area are limited only by your imagination! Plenty of entrepreneurs have turned simple ideas into multi-million dollar enterprises with amazing ease. Study the history of Google, Amazon, and eBay, for example. You could achieve similar success with just one great idea and a little persistence! Chapter 9 list some of the specialty ISP businesses that are already becoming quite standard.

Finding customers There are many ways to find customers. There is no limit to the creative possibilities when it comes to marketing, but here are some tried and true methods you might wish to consider. Register with search engines. Search engines are a valuable part of a marketing strategy if used correctly. They are mostly misused and misunderstood! page 82




Research will assist you to understand how search engines work and how to use them productively and inexpensively for effective promotion. InteRAD Technology Ltd (www.interadtechnology.com) offers information on search engines and their productive use, free of charge, to users of its products.

List in Directories Directories exist on-line and off line, though print directories seem to be dying out favor of web based directories which are more accessible, easier to search, and easier to keep up to date.

Directories charge for listing, usually by size of listing or prominence, and /or on a pay per click basis. Big companies dominate the directory space, and it's expensive to pay for a prominent position, but it's probably better to be listed than not listed and many offer a free or very low cost basic listing. A listing will help with search engine recognition if it is of no other benefit. Make sure your listing notes your point of difference. If a musician sees listings by several hosting companies offering standard hosting, and yours offering specialized hosting for musicians, he is more likely to respond to your listing than the others.

Investigate Banner Advertising and Link Exchange Programs There are some good programs available, and some very poor programs. Investigate carefully, and ask for low risk trials to see if programs actually work fo you.

Use Pay-per-click banners and keywords Overture and Google are among the leading suppliers of pay-per-click advertising programs. Specific keywords selected by the advertiser are used to determine wh to show ads in search engines. For example, if your ad is based on the keyword “cheap web hosting”, your ad will display when someone types “cheap web hostin into a search engine.

These plans charge you only for actual traffic to your site (versus cost-perimpression advertising in which you pay for the number of times your ad is seen regardless of its success). It’s a great form of advertising because it delivers very targeted prospects based on your keywords. Unfortunately, it is difficult to obtain high keyword ranking for many common search terms because large companies pay a premium for those keywords. This makes it hard for startups to compete for common terms The key is to be creative. Think outside the box to come up with terms your customers might search on. How to Become an ISP: A Short Course for Internet Entrepreneurs


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Use on-line auctions On line auctions are not used extensively by larger web hosting companies, because they tend to be geared to a more personal selling style.

ebay (www.ebay.com) is the largest on-line venue. It’s a great place to market your services, though the competition there is growing rapidly. As with other marketing endeavors, the key on eBay is to be different and appeal to your target market. Copycats are easy to spot and rarely impress customers. There are other on-line auction sites, like Yahoo, which offer great promotional opportunities. Look for those that remain relatively untapped. If using this promotional method, be sure to familiarize yourself with, and carefully observe, the rules. Failure to do so could damage your reputation. You might also want to look at some of the tools used on these auction sites to automate listings, launch auctions at specified times, etc. Andale ( www.andale.com) is one popular and useful tool in this category. Use Forums Forums are a great place for making contact with prospective customers if you use them wisely.

Look for forums on topics of interest to your target market. For example, if you are targeting musicians, look for forums on country music, jazz, pop music, opera, etc. Again, check the rules of participation. Some forums allow free advertising just by joining and posting your ad. Others may charge. Some only allow ads in a certain category. Generally, forum posts should not be an advertisement or “advertorial”, but should be conversational and directly related to the topic. You may need to be clever about how you promote yourself in a forum post. Answering a question is one great way. For example, if someone asks “How much should I pay for web hosting, and how do I go about finding the best supplier” you can answer by advising on the rates and range of services available and offering a free off-line consultation – or, better still, pointing to a URL where you have published a white paper on how to compare hosting packages and make the right choice. Network on-line and off Generally the best way to attract qualified customers at low cost, networking involves making friends with business operators who offer complimentary services or product or deal in any way with your target customer.

Once you have established a friendship, find win/win ways to support each other's marketing endeavors. Maybe you could offer a free gift to another business page 84




operator's customers in return for an introduction. You could feature information (not advertising please!) provided by him on your web site and he could do the same for you. For example, if you made friends with someone who runs a marketing consultancy, you could publish articles he has written about recent marketing trends on your web site, if they contain information useful to your customers. Acknowledge the source clearly, and provide information on making contact with the supplier and the services he offers.

Ask him, in return, to publish articles about how to choose the best website host, site designer, or the best place to advertise on the web and acknowledge you as th supplier, indicating the services that you provide. Build Strategic Partnerships Partnerships are a step up from the alliances you build by networking. These are more formal arrangements with direct benefits to both parties.

Choose your partners with care, because any failure on their part can reflect badl on you. An example of a partnership would be where a web hosting supplier partners with a web designer. Each refers business to the other, or they actually agree to package a product which includes both site design and hosting. They then market the package jointly, sharing the revenues according to an agreed formula which usually includes an allocation of sales commissions for whichever of the two makes the sale.

Print your URL everywhere! This is the most important, lowest cost, and most frequently overlooked promotion technique! Your website address (universal resource locater, or URL) should be prominently displayed on your signage, on your motor vehicle, on your business cards, on your letterheads, on your invoices and receipts, on every white paper yo publish... indeed on absolutely every document that has an association with your business.

You should also make sure your URL is clearly displayed on every advertisement, and is included in every press release.

Use those Keywords Here's a valuable clue about using search engines effectively. When you print an advertisement, use your main keywords prominently in the ad. Why? Well conside this situation:

A prospective customer is sitting in a dentist's waiting room browsing magazines while waiting to be called for treatment. A magazine features your advertisement, and he is interested. On being called, he puts the magazine back on the shelf. Lat



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at home, he recalls the ad but can't remember the business name or the URL. What he can remember is a key word that attracted his attention in the advertising copy. If he can type that key word into a search engine and find your business close to the top of the list, that advertisement will likely result in a sale. Advertise in print, on television, radio, etc. Web sites don't reduce the need for paid off line advertising. They do, however, reduce the cost. Instead of advertising your product or service, which often requires substantial advertising space, you need only attract the customer's attention and provide your URL. The cost is much less, and you can advertise more widely. Use mail and email promotions and letterbox drops This can be expensive, and must be managed with care. Lower cost suppliers may not actually deliver what you pay them to deliver, and may not be positioned to advise you well on how to ensure your campaign attracts the desired results.

If you can access good lists for your targeted market niche, mail, email and/or letterbox drops can be very effective ways to make an impact. Be sure to familiarize yourself with the laws. Also, it's wise to learn about best practice guidelines and consider the likely reaction of your target market to receiving advertising mail. It may have a very negative impact. Because direct mail isn't typically used by ISPs, it could be remarkably effective to use a well thought-out campaign. Sending mail to existing customers can be a great way to build repeat business and reinforce your branding. Send a postcard thanking the customer for their business, for example, and asking for a referral. Or invite the customer to use one of the extra services you offer that they haven't previously accessed. Or introduce new services via a mail out to existing customers. Spread News Send newsworthy press releases regularly to selected publications. If possible, form relationships with journalists writing for publications that your target market are likely to read. Give gifts Offering bonuses, discounts, and special benefits as part of specific promotions or to customers in selected categories also builds loyalty and repeat business, and often helps you attract a new customer who is looking for a great deal.

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Offering free information is a great way to attract interest and build trust. Offer it your website, in your advertising, in press releases, and on the web sites of those you network with.

Allow others to give away white papers, tutorials or books that you have written, o to bundle them with their products and services.

Free information helps build your credibility and market recognition. It also show your target customer that you have valuable knowledge of your field.

Information published on other sites about your product or service will help impro your search engine rating.

In particular, try to get your information published on sites that your target marke visit but that aren't directly related to your product or service. For example, if you target building tradesmen, find sites supplying building materials or trade associa sites and send your material to the web master with an invitation to publish it. Kee the information focused on helping building tradespeople with a known problem, and not on advertising or promoting your business, but add a link to your website the end.

Many e-marketing experts advise businesses to “give until it hurts”. It's good advi but of course there has to be a balance. You must give strategically. Sometimes yo must give selectively also. There is an unfortunate mentality among many who use the web that everything should be free. They become angry if asked to pay for anything at all. These people are in the”bottom feeder” category. They are not customers, and the gifts you give them will not be appreciated and will not return value.

Gift giving is to be encouraged, but only if it is planned according to a sound strategy that is designed to bring your business high value customers, or increase the value of existing customers. Give your time Lots of organizations appreciate an offer to be a guest speaker at a function or meeting if you have something of value to offer their members and can be reasonably entertaining. Speaking establishes you as an industry expert, and is a great promotional opportunity.

Don't blatantly promote yourself or your business. Speak about a topic of interest the audience about which you have some knowledge – without promoting yourself specifically in any way. Provide useful information to the audience. Let the host d the work of promoting you in the introduction and thanks, and/or ask if you might leave or hand out brochures or business cards at the end of the function. Invite attendees to contact you later for further information or with questions, and tell them how. Give attendees your web address.



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Ask the host to advise attendees of any special price offer or bonus you are willing to offer to those who attended or exclusively to members of this group. When you are contacted later, be gracious. Accept praise and thanks gracefully, and be generous in providing more information. It's a good idea to post a page on your web site for members of the group to read the full text of your speech, and to receive special offers exclusively tailored for them. Any member who couldn't attend in person will appreciate this gesture, as will those who were unable to absorb all the wanted information during the session. Having a specials page, and special member offers, will make members of the group feel important, and will likely result in repeat invitations as well as invitations to speak for other groups that members may be involved with. Gather Testimonials and Referrals Nothing sells more effectively than the personal recommendation of a trusted associate. If your service is excellent and your customers appreciate what you provide, they will provide the strongest, most effective, and lowest cost advertising available.

The best feature of referral business is that good customers usually bring other good customers – not customers who will prove difficult to please or be too price driven. Typically, referred customers have similar wants, needs and values to those who referred them. As for referrals. Ask for testimonials. If you receive them unsolicited, phone to say “thank you” and ask can you use the testimonial on your web site or in your advertising. Offer an incentive program to your current customers to bring new business. As well as giving your customers gifts for their referrals, consider inviting your customers' affiliates to give your gifts to their friends and colleagues. Ideally, you should send your customer a coupon or voucher to give to their friends which requires the recipient to come to you to claim the gift. By claiming the gift, the friend has “opted in” to your database, and you now have permission to market to that person. Growing that opt in list enables you to operate successful marketing campaigns targeting pre-qualified prospects, which generally deliver the best return on investment of any campaign type. Most importantly, offer great service. The better the service, the more referrals you are likely to enjoy.

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The Power of One

The words of a song that became popular in the early 60's began “Multiplication, that's name of the game.”

It might well be the marketer's theme song! In the final analysis, it's what marketing i about. The goal is to multiply the number of customers who buy from you, and/or the amount each spends. In a well run business, this will multiply profits.

Of course you need to be aware of what we term the “Paddy's watermelon truck syndrome.” You see, Paddy was running a roaring business selling watermelons from h truck on the roadside at 1c less than they cost him to purchase. Because his prices we so low, he had no trouble growing his customer base rapidly, but he had great trouble figuring out why he couldn't make a profit. Finally, he decided the problem was the number of melons he could fit on his truck. The solution was simple! He needed a bigg truck!

Naturally, a bigger truck and more sales means bigger and bigger losses if your pricing strategy is incorrect. It's a good reason never to engage in a price war with your competitors. If your pricing is correct, however, more customers and more sales means more profit. So... how do you get more customers and more sales.

To make more sales, service customers more diligently to build loyalty, and source mor products to sell that your customers want to buy.

To increase customer numbers, play the multiplication game! It's simple! Every door to door salesman knows that the more doors you knock on, the more sales you make. If yo make $100 from each sale, and 2 out of every ten customers approached buy, then you need to knock on ten doors each day to make $200 per day. Simple!

In an Internet direct email marketing campaign, you might reasonably expect to sell to between .07% and 3% of those you mail to. If your conversion rate is 3%, you need to mail to 1,000 people to make 30 sales. Now what if you offered those 30 people a smal gift in return for the names of five friends who might be interested in what you have to sell? You started with 1,000 “cold” prospects. Now you have 30 customers, 150 hot prospects, and 970 cold prospects (They are still prospects. Many don't respond to the first mail they receive. Experts say you should mail 5 to 7 times before giving up on a prospect.) Now, suppose you mail 150 hot prospects with an offer of a free gift in return or five referrals. Say 15% of hot prospects buy. You now have another 22 customers, and 750 hot prospects. Watch how the numbers continue to grow if you repeat this strategy:



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Mail to

Customers converted

Hot Prospects referred

Total customers

750

112

3750

164

3750

562

18750

726

18750

2812

93750

3538

See how the numbers grow! It's mind boggling really. Just think what you can do with a database of 93,750 prospects. Even from a cold mail out yielding minimal response, you would make 65 sales. Since 15% is more usual from pre-qualified customers, you are likely to yield over 14,000 sales from a mail out to a database this size, and to think you started with just 1,000 names, and you've only run five mail outs so far. At the rate of one a week, you are into Week 5 of your business operations, and you already have over 3500 customers and a prospect database to work to gain 14,000 more. Imagine where you might be by the 50th mail out. Try setting up a spreadsheet and experimenting with different percentage returns to see how you can grow your business by simple multiplication. Don't forget though, that you need each customer to bring you 5 more. You'll need to ask for referrals regularly, and offer incentives for customers to provide them. Keep customers happy. One happy customer typically brings at least three more without you even offering incentives or asking. Incentives increase the referral rate.

Public relations

A public relations specialist may be beyond the budget of a startup, and will prove a complete waste of money anyway if not carefully selected. It's important, if you engage one, to ensure it is someone who is familiar with your industry, knows your market sector, and has good contacts with journalists and media companies in your product and market area. PR services typically cost upwards of $5000 per annum, but a good PR agent can skyrocket your company to instant success. If you can't afford a PR agent, consider engaging one for specific tasks at “jobber” rates. For example, you may want to engage a PR agent just to “polish” your press releases and distribute them, after you have drafted the content. There are lots of self-help books available to help you be your own PR agent, write your own press releases, etc. The most important consideration in “doing it yourself” is to remember that others are typically not interested in you, or what you do, unless you can highlight something that has relevance to them. Reporters discard hundreds of press releases daily because their

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reaction on reading the first few lines is “so what? Who cares?” That's a natural reacti to “Bill's Hosting releases New Hosting Product”. Consider, however, the potential reaction to “Jim's Used Appliances cleared $500,000 worth of old stock in two days last week using Bill's Hosting's creative new Web Advertising Program” or “New Web Site for local Surf Club helps raise $50,000 for lifesaving equipment in just one month.”

Put yourself in the reader's shoes. Think about what will interest a reader who does no know you, or care what you do!

Down lines

Building down lines can be a great way to expand your marketing.

If you have a product or service to sell that has substantial value and attraction, and is well differentiated from competitor offerings, it may be reasonable to assume that othe will want to sell it to their customers – either as an addition to their current product ra or as the basis of a new business opportunity.

Down line selling may enable you to target markets you cannot readily access. For example, markets outside your geographic reach, or niche markets in industry areas of which you have limited knowledge. Down liners may also help you get to clubs and associations as a preferred supplier to members. You have to share your profit with your down line resellers, so make sure you price accordingly. Be generous! When down liners make sales, you make money. Give them a decent incentive to work at selling!

Be supportive. Down liners need to know they are selling a quality product and their customers will be able to access support information and help when it is needed. If you are generous in supporting your down liners, they will be more effective at both selling and support. Gradually, their knowledge will increase and their reliance on your suppor will decrease, enabling you to support more customers with much less effort.

Tracking Marketing Results

Remember my statement that marketing is an experiment? No experiment is worthwhi you don't carefully monitor and record the results. If an experiment works, you need to know why and be able to exactly replicate the steps to repeat the success.



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If an experiment fails, it's important to understand why and to determine which element(s) might be changed in a repeat experiment to change the outcome. Often, the difference between success and failure is simply repeating the experiment with one minor change. In marketing, it is vital to track exactly what you did, how you did it, how much it cost, and what results accrued. You then need to measure results against costs (including time and effort costs), to determine which marketing strategies are most effective and drive the most profitable business growth. You then focus on those strategies. Return on investment (ROI) is the most important consideration in business. How much did your advertising campaign cost? How much business did it attract? What are those customers worth to you? How much will a new item of equipment cost:? How will it benefit your business? What is the value of that benefit in dollar terms? It isn't always easy to put a value on a benefit. It's important to try, however. In particular, you should understand the value of a new customer. Here's how you determine the value of a customer: 1. Ask yourself how much the average customer spends with you each year. If you keep good accounting records, it should be easy to work this out by printing reports your software can output. Let's assume your average customer spends a total of $200 per month on services you supply. 2. Ask yourself what direct costs you incur to service the average customer for a year. For example, if you spend 20 hours each month on support calls, and you have 200 customers, and you rate your time at $50 per hour, your average customer costs you 20/200 = 0.1 hours x $50.00 = $5.00 per month If you pay $100 per month for bandwidth and you expect to have to buy a new server at $2500 every three years to support 200 customers, hosting your average customer costs: $2500/36 = $69.44 + $100 = $79.44 per month /200 = $0.85 Assume you spend $300 per month on administration and accounting, including paying bank charges and merchant service fees, etc. That's another $300/200 = $1.50 per customer per month.

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It's important to separate out any product sales that have a raw cost attached to the or sales that involve you subcontracting other suppliers. Let's say your average customer buys a domain name each year which costs you $20.00, and contracts 5 hours of site development work each year, for which you pay a developer $250.00. This increases the average cost of your customer by $270/12, or $22.50 per month. Add up these costs and you can see that your average customer costs you $29.85 per month to service. Don't count marketing costs, because those are costs of acquiring customers, not costs of keeping them!

3. Now subtract the cost of the customer from the average spend. You can see that a n customer is worth $170.15 per month, or $2041.80 per year to your business.

4. Next, determine how long the average customer remains a loyal customer and continues to buy. If your customers are typically moving on after 2.5 years with you, then they are worth a total of $2041.80 x 2.5, or $5104.58 to you.

Now that you know the value of a customer, you can determine how many customers yo need to accrue from an advertising campaign to make it worthwhile. If a campaign involves running an $1000 advertisement weekly for 12 weeks , and ad creation costs $1500, it costs $13500 for the campaign. You need it to bring you 3 customers in order make a profit.

Now compare with a campaign of letter box drops which costs you $300 for flyer preparation and $3000 for delivery. It needs to bring you just 1 new customer to make the same profit.

By measuring in this way, you can tell which promotions work best. However, you will need to find out and record where each customer heard about you in order to track successfully. This is sometimes difficult, but make it a practice to politely ask each new prospect you speak to “May I ask where you heard about my company?” and record the response.

Happily, some advertising programs have results tracking systems built in, and tell you exactly how many responses were received.

Customer Acquisition Costs By tracking and measuring, you can establish a Cost of Customer Acquisition. For example, if a campaign costs you $5000, and brings 4 new customers, your cost of customer acquisition for that campaign was $1250.00. Since you know that a customer is worth $5104.8 to you over 2.5 years, you can see that acquiring a new customer in that campaign increased your profit by ($5104.80 - $1250) / 2.5 = $1541.83 per annum.



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Now you can determine that you need to repeat this campaign successfully (or one equally effective) 6.5 times to increase your profit by $10,000 each year. Looking at the equation another way, you know that your new customer cost you $1250 to acquire, and costs you $29.85 to service. You also know that the customer returns you $200 per month. Therefore, it will take $1250 / ($200 - $29.85) = 7.35 months to recover the cost of a customer. Now you know that you must keep each customer at least eight months, matching the average spend rate, in order to make a profit on acquiring that customer, assuming the cost of acquisition of the customer is $1250. Of course, there's another way to increase your profit, and that is to increase the average value of a customer. Some businesses find this easier to do that accruing more customers. How do you do that? Simple! You add additional products and services to the range you offer that encourage your customers to spend more dollars with you each year. For example, if you decide to offer a bulk email advertising service that costs you virtually nothing to implement, and 50% of your customers use that service 4 times a year, at a cost of $1000 each time, you have added ($1000 x 4) * 50% = $2000 per annum to the average value of a customer, or $5000 over the average life of a customer. While you can learn a lot from observing how competitors market, nothing works quite the same for you as it does for another company. Every company is different. Therefore, your marketing will need to involve repeated experiments and careful tracking and measuring on an ongoing basis to be effective. Expect to make plenty of mistakes. If you aren't making mistakes, you aren't trying new things and therefore you are missing out on the vital lessons that you learn from experimenting. You may be missing out on discovering the best marketing strategies for your business. Every business has failed marketing campaigns. Just keep trying! If something works, put everything you have into repeating the success as often as possible. Don't hold back unless there is genuine reason to believe you won't be able to service the customers and you will have unhappy customers as a result. Successful entrepreneurs take risks, and grow their businesses as fast as they can. They rarely hold back if an opportunity presents for growth. Servicing 100 new customers a day might be a challenge, but usually the revenue they generate is worth the effort it takes to find a way, and its amazing how much energy and initiative you can find to deliver under pressure when you can see big rewards for your effort.

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7: Service and Support

If you offer basic hosting services, requiring customers to arrange their own site buildi and file uploading, most questions will be basic questions about the setup and administration of their hosting account.

If you are familiar with the control panel, you should have no problem addressing these queries.

It's likely that there is on-line information at the website supporting the control panel y use, and there may even be an email address you can use to ask questions or request additional help.

Many hosts have extensive documentation accessible from their support page. Some h tutorials as well.

One advantage of being a reseller is that you can ask your provider for help if your customers ask questions you can't answer, or if you get stuck performing a server management task. You should be sure to select a host with a strong reseller program an good support service. You may even want to ask for some names of resellers you can speak to about service levels and support.

Once you begin to offer additional or specialized services, the support requirements change dramatically. If you intend to offer additional or specialized services, either ens that you have the ability to support users of these services, or arrange for outsourced support from a competent provider. Again, your service suppliers may be able to assist you with support, and some will give very generous support to you as their reseller.

If you purchase software solutions or tools for use on your server, be sure to check wha support is available from the supplier. You should expect to receive strong support and some help in applying their solutions in your business if you deal with a quality supplie course if the price of the product is low, the support services are likely to be at extra co There are no “free lunches” in this world. No supplier can afford to offer generous free support with a low cost product. That isn't to say you should avoid low cost products. Often an inexpensive product and a “pay as you go” support program is the most economical way to get a quality product and support service. You pay only for the supp you need, and you usually get the support you pay for. Your choice of a support system depends largely on your own aptitude and preference.

If you are familiar with the web hosting platform and with basic server administration tasks, you may wish to support your customers yourself – particularly while your custom base is small. Other choices include: •

hiring a support tech to work for you



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•

outsourcing your technical support to a specialist provider

Outsourcing companies typically offer one or more pricing solutions including per-ticket, per-customer, per-server, flat fee per month, or per representative hired. You might find an individual locally who is willing to manage your help desk part time in return for free hosting. A support technician who is employed elsewhere may welcome a chance to work a few hours in the evenings and weekends to gain experience, and might be happy to be paid “in kind” while the workload is low. Many outsourcing companies are located in technologically advanced areas in low-cost countries such as India. The savings you accrue by using such providers may be accompanied by additional problems and challenges due to the tyranny of distance, so make sure you adequately research your solution before making any commitments. You may want to divide support into different categories and allocate different tasks to different providers. For example, you might feel quite competent to handle inquiries about account setup, but want to outsource DNS questions There are many smart techniques for minimizing the support load. These include: •

•

•

•

• •

Creating a community forum where customers can help each other. Often experienced technicians and system administrators join such forums because they enjoy helping others. Offering free hosting to an experienced person in return for their help running your forum and answering support questions Building a Frequently Asked Questions page on your web site to record questions and answers. Creating tutorials and multimedia “walk throughs” and posting these on your website for download Publishing white papers and simple manuals on your website for download Creating a very detailed “Welcome” email containing lots of useful information for your customer and details of how to find information and answers to questions. (Of course you should invite calls or emails to your support line if all else fails!)

Communication Options Are you offering email only, live chat, or telephone support? Whatever options you choose, make sure you inform your customers both what support is available, and how to access it. Be clear! Telephone support is expensive to provide, and customers will expect to phone you for support unless they are told very explicitly that phone support is not available or is at extra cost.

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Think carefully about the cost of providing support, because this is a major component your customer servicing cost.

Email support is relatively easy and cheap to offer. The advantage of email support is th you can set aside specific times to deal with support requests. You don't have to permit constant interruptions to your other work.

Telephone support imposes high costs because you must generally respond immediatel That means stopping whatever you were doing, and dealing with the question. Then, if you can't answer immediately, you might have to carry the cost of returning the call. If you do offer telephone support, you might want to consider setting specific hours during which customers may call, and advising that you do not return calls but ask customers to call you back at a pre-arranged time if a follow up conversation is necessary. Customers usually expect some free support, but it's perfectly acceptable – in fact, advisable – to put a limit on the number of support requests that can be made free of charge. Of course any support request resulting from a service failure, interruption, or system malfunction of any kind should always be free. Live chat is another option for providing support. It can be very efficient if properly used, but do make sure there is an operator on hand during business hours to respond to calls. There are many providers of live chat software or services. Some offer free web-based clients for download. Others offer subscription based services. Remember to check the bandwidth implications of live chat. You may find offering this form of support imposes an unacceptable traffic load.

Regardless of the support options you provide, be sure to clearly document in your term of trade and on the support pages of your website how you charge for support.

You should implement a recording system to measure support calls and the time they ta to respond to. This is an important component of your operating costs, so you must measure it. It can be as simple as a spreadsheet where you record each call against th customer name and place an estimate of time spent on the call.

There are lots of good help desk software tools available which will both assist you in tracking open matters and maintain records of calls and time spent responding. Some may wish to look at are Kayako and Perldesk, which are offered on subscription. There also free tools available, and plenty of options for outright purchase at varying prices.

A good help desk application will accept an email inquiry from a customer, addressed, for example, to [email protected], and will automatically open a help desk ticket on receipt. When you answer the ticket, it will send an email to the customer, who can then reply from their help desk account, or by replying to the email.



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Sales and Billing Support

You will need to offer sales and billing support as well as technical support. If you engage a bookkeeper or clerical assistant, they may be able to manage much of this for you. Ideally, provide a different email address for customers to use to obtain sales and billing support, because these questions should go directly to the person who manages invoicing and receipts.

Choosing Support Staff or Agents

Support agents or staff may need root access to your account. That gives them a great deal of control over critical aspects of your business. If they are incompetent, they may disrupt service for your clients and/or bring your server down. Sadly, there are many malicious and mischievous people around in the Internet world, and some folk get a buzz out of damaging other people's business, or just experimenting with servers in ways that cause all sorts of problems. It can be very difficult to assess competence and attitude in an interview. Some people can “talk the talk” very well, but when it comes time to demonstrate their ability, you find that they have very little. For this reason, you need to exercise extreme caution in engaging staff or appointing agents to assist you with support. Check their references thoroughly, and make plenty of inquiries of anyone who might know them or have had dealings with them. You should also carefully test their interpersonal skills. Unfortunately, many capable technicians have terrible people skills! Some can't write a coherent sentence, and send emails that look horribly amateurish. Others are rude and impatient with people if they receive questions they regard as dumb, or if customers have difficulty understanding responses. In an Internet business, support is a major component of product quality, so be very diligent in managing how it is provided if you want to maintain good customers relations and build a strong brand.

Using Support Requests to Up-sell and On-sell Many years ago – before the Internet became popular – I built a lucrative business selling a niche market software product I imported. This product formed the basis of a great business, because once you purchased it, I could offer a host of specialized add-on options that were very appealing and enticing. I did very well out of selling these add-ons to my customers.

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After some months of high volume add-on sales, my supplier contacted me to tell me th neither he nor other distributors of the product were achieving success selling add-ons and asked my secret. I was happy to tell him. It was really simple:

Every time I took a support request call from a customer, I would give them generous help to solve their problem, then – when they were feeling very grateful for the help an very pleased with my service – I would end the conversation by saying “Oh, by the way. have I told you about our latest new add-on product..” or “I have the perfect add-on product for your needs.” Delighted with my service and relieved to have found a soluti to their problem, they would buy almost every time! My supplier stunned me with his response! “Unfortunately” he said “that won't work for us, because our support and sales divisions are quite separate. Sales people don't take support calls.”.

If you aren't up-selling and on-selling, you aren't maximizing the value of your custome Customer loyalty is valuable to a business. You build loyalty by repeatedly delivering va Customers like to buy from their preferred suppliers – and trust me, they are buying fro someone all the time! It might as well be you. Continually sourcing or developing products that compliment your product range and making them available to customers builds profits – usually more successfully than continually finding new customers. Whatever it is you sell, there are dozens of additional products your customers need. Ask them! Invite them to tell you what else they would like you to supply, then simply supply it.

Hint for success:

Never keep your sales and service divisions too separate. If your service staff can't sell, they don't belong in the service section of your business.

In a good business, everyone sells! From the receptionist, to the bookkeeper, to the service technician, everyone is an ambassador for your business and everyone should know how to discover more about customer needs and preferences and make the most of every opportunity to introduce customers to a buying opportunity.



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Building an Added Value Attraction into your ISP business

Every business can find clever ways to build added value and added attraction. Get creative in looking for ways to service customers creatively. When you add value, you build loyalty. Often, the key to differentiating your business and winning customers from your competitor is that small added value offering that brings customers back to your site regularly. Consider these ideas:

• •

•

•

•

•

•

•

•

garden.com offers an interactive planner for people to plan their gardens amazon.com recommends books to customers based on preferences determined by examining their earlier purchases some wedding planning portals offer free seating plan creators and free sample speeches real estate sales sites often provide information on how to establish the value of your home, or how to prepare your home for a sale that attracts the best price paint sellers offer interactive tools to help you select colors and visualize results by viewing pictures of rooms and applying selected colors to walls and furnishings many retailers offer member programs that entitle repeat buyers to special offers and discounts some sites record the pages visitors spend most time on, to figure out their area of interest, then make special offers based on that knowledge some sites let you record favorite pages or configure personal pages that help you find the resources you need quickly many sites let you participate in discussion groups with other customers to share information and ideas

There are endless ways to add value to the customer experience. Just keep asking customers how you can best be of service to them. Listen carefully to the responses – then respond! Adding value builds loyalty and brand recognition, and adds profit.

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8: Succeeding in an Internet Business

The Internet has changed the face of business in ways that many successful companies are still trying to come to terms with. It has challenged conventional marketing wisdom and changed the dynamics of business competition, resulting in the failure of many previously highly successful companies to maintain their market lead, and the emergen of new players who have overtaken long established market leaders. The key to Internet success is to understand the new marketing rules. The Web has changed the whole concept of buying.

Power has shifted from the vendor to the buyer. All business relationships must now assume that the customer is fully informed of competitive offerings, and it is the custom who will make the rules of engagement. Business will be done when the customer wan it, and the way the customer wants it.

In the past, vendors targeted customers using data mining and database management. Now, customers find vendors, research, and make selections according to the informati supplied on web sites. To win business, you have to supply more enticing information, give the customer a better web experience, and make it easier to buy from you than from your competitors. To keep business, you have to: • • •

Excel at each stage of the buying cycle Build relationships Match your processes to your customer's expectations

Empower customers to help themselves • Help customers succeed by providing added value The asset that will continue to deliver competitive advantage to an enterprise is in-dept information on the customer's demographics, psycho graphics, and on-line buying behavior. •

The secret to Internet success is to recognize that getting the right content, information, services and support to the customer in the fastest possible way creates higher value and satisfaction.

Empower Customers to Help Themselves

People like to help themselves. It gives them a sense of achievement and independence removes the risks attached to building relationships with sales people who may become pushy and irritating, and make unwanted repeat contact. It removes the risk of being influenced, in a weak moment, to make a buying decision they will later regret! How to Become an ISP: A Short Course for Internet Entrepreneurs


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Allowing people to help themselves helps you reduce workload and cost – provided that helping themselves doesn't mean building incorrectly unfavorable perceptions of your products and rejecting your service in favor of your competitor's offerings. Help customers help themselves by providing sources of information and helping customers to ask questions. Anticipate questions and provide answers in advance. Make sure the answers are easy to find and easy to understand.

Empower Customers to Succeed Nothing succeeds like success! Make it easy for your customers to succeed, and you win their loyalty. On the other hand, if they encounter difficulties when doing business with you, their frustration and annoyance may well lead to them taking their business elsewhere. Success begins with finding the information he wants about you and your product. If it isn't readily available, and he has to contact you to ask for it, he has encountered the first difficulty in the process. Next, make it easy to buy. Nothing is more certain to send a customer to your opposition than an e-store that malfunctions, or is poorly designed and difficult to use. Make it easy to use your product. Provide tutorials, self-help through FAQs, hints and tips, user discussion forums, etc. Make it easy to contact you and easy to know who in your organization helps with specific types of problems. Tell customers clearly how best to make contact and provide information to ensure a quick solution. Respond promptly to every inquiry. Add value. Give customers that little extra! Introduce them to suppliers who can fill other needs. (Careful! Make sure there is no risk of the introduced supplier disappointing, as that will reflect badly on you!). Provide newsletters containing useful information. Don't overdo the added value. You need to sell add-on products to customers to drive revenue growth, and unless you charge for some services you may find the cost of servicing customers prohibitive. The rule is to give just a little more than the average customer expects.

Show Appreciation Everyone likes to be appreciated. An occasional thank you note, small thank you gift, or other recognition of your appreciation of your customer's loyalty might be the deciding factor when a customer considers moving his business to a competitor with a tempting offer!

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I read once of a battler who, after a run of very bad luck left him homeless and pennile secured a job with a car dealer as a salesman – something he had never done before an had no confidence in his ability to succeed at. This fellow ultimately became one of the most successful car salesmen on record, and he did it through keeping a simple index c file of every prospect and making it his business to find out their birth date. He studied births, deaths and marriages column in the local newspaper daily. Every prospect and customer received cards at Christmas, Easter, on birthdays, and on special occasions. Cards to good customers contained an offer of a discounted service and safety check, o voucher to secure a discount on a car accessory.

He sent postcards to customers telling them of new model releases, good deals on discontinued models or demonstration vehicles, and even about sales or special offers a the car accessory store, tire store, or service station down the road. And he sent every buyer a special thank you note and small gift a week after their purchase. You can bet this guy summed up his prospects and customers quickly and discarded index cards for those who were unlikely to be serious prospects for a good sale. Having selected his targets, though, he made sure that, when it came time to buy, his name was at the top of the list of those they may consider doing business with.

A photographer I know who does wedding and child photography sends his customers a congratulations card on each anniversary, with a note inviting them to have an annivers portrait done. He scans the birth notices continually to make sure he knows when a couple whose wedding he photographed give birth, and sends them a a congratulatory gift. Who do you think they choose to photograph their newborn? Of course he follows with cards on the child's birthdays, each containing a friendly note reminding the paren how quickly children grow and change, and how valuable those precious portraits will b when the child has grown. In the Internet world, showing appreciation is easier, less costly, and probably even more important – if only because the ease of doing it encourages more of your competitors to engage in this valuable business building practice.



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Build Lasting On-line Relationships

Building on-line relationships differs from building conventional business relationships.

The customer is in charge. This makes the relationship much more volatile.

Since everyone has the same objective of keeping their customers, you need to find ways to continue to sell and to get the largest possible share of the customer's wallet. It is important to identify the customers with whom you want to establish business relationships. Focusing too broadly will impose unwelcome pressure on your time and resources for inadequate return. Even in the pre-Internet business world, savvy businessmen knew that 10% of customers caused 90% of problems, and it was very smart to identify them and send them “gift wrapped” to their competitors! In the Internet world, it's smart to identify the customers who will deliver the best lifetime value, and focus on providing excellent service to that group and extracting the maximum value from them. Focus your relationship building efforts on those who: • • • •

• •

Understand and appreciate value Are able and willing to pay for quality Have reasonable expectations and a fair approach to business dealings Ask for help when it is needed, articulate their problem or need clearly, and listen and respond to advice Bring you referral business Show appreciation for your efforts

This may seem like reverse thinking. Business operators are conditioned to believe that the responsibility for the relationship lies with the supplier. While it is vitally important for the supplier to initiate the relationship and to invest ongoing effort in maintaining it, it is a two-way street! Some customers can't be pleased, no matter how hard you try. Some do not understand the value equation. They may be always looking for the lowest price, or the free bonus. They may be unreasonably demanding in their service requests, and quick to blame you for problems they directly cause by not accepting and responding to sensible advice. If customers do not respect your need to make fair profit from what you do, or are unwilling or unable to pay a fair price for strong value, then they will prove unprofitable to service. Choosing customers who promise high lifetime value, then servicing them well, is the best approach to building a profitable and rewarding business – on-line or off!

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Branding is More Important than Ever

Branding has always been important. In the Internet world, it's more important than ev The single biggest barrier to closing a sale over the Internet, or even inspiring a custom to contact you, is the impersonal nature of the medium and the fear that impersonal characteristic creates. People don't know who they are dealing with on the Web. They know that it's easy to look like someone you are not, and to defraud. They are naturally nervous about doing business on the Web. The only way to overcome that nervousness successfully is to establish a recognized brand.

Until your brand is established, and to drive business results while you are building it, must focus strongly on building customer confidence through the design and content o your web site.

Make the site easy to navigate and easy to download from. Provide site search utilities and keep it up to date with interesting information. Most importantly, use it to build relationships.

Encourage visitors to contact you and provide ways for them to tell you about their nee and preferences. The more you can find out about your customer, the better positioned you will be to win their business!

Differentiation

Hopefully you have, by now, recognized the importance of being different.

To succeed, differentiate your product and target a market that appreciates that differentiation.

Failure to differentiate and target is likely to mean business failure. Differentiation on price is rarely sufficient. Price is directly related to value. To change price without changing value is to either drive customers away (if you price high), or to price yourself out of existence (if you price low).

However you differentiate yourself, you need to continually ask yourself a key question Why should customers buy from you?

Answer honestly! Try to put yourself in the customer's place and look at your business objectively from the outside.

If you have difficulty doing this, maybe you should actually ask some of your customers prospective customers, and people you tried to sell to who decided to buy elsewhere. T might give you a very clear perspective on what it is that you offer that is attractive, an



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to whom it is attractive. It might also help you understand who will not find it attractive, and why. You might want to change your product offering or pricing in response to the comments of those who didn't buy. Remember though, that no business can – or should try – to be all things to all people. If your target market appreciates your offering and is happy to buy from you, let others go elsewhere and don't concern yourself over the loss of their business. If they are not part of your target market, chances are they will be difficult and unprofitable to service anyway. It's a big world. Live and let live, and just enjoy your share of the market! There's plenty of growth and profit opportunity to go around! Let's look at some of the ways successful businesses differentiate themselves:

Differentiate your marketing style: Looking at websites for hosting companies, it seems to me that 98% are using the same marketing strategies and the same tired advertising messages. This must be very boring and confusing for customers trying to make a choice. If you blend into this crowd, customers are unlikely to notice you. Try being a little creative with your marketing messages and where you advertise. Be different! For some ideas, you might want to look at other industries – outside the hosting and even the entire Information Technology arena. If you target a niche market, try looking for the more successful suppliers to that market and observing their marketing approach. If you target a local market, consider copying the strategies of the most successful local businesses outside your industry, rather than geographically remote competitors. Look at the advertising and marketing strategies that your target customer appears to respond to. The Web is a relatively new industry, and some of the business players in this industry are quite immature. Looking at older industries enables you to learn from more experienced promoters who long ago discarded the notion that screaming colors, flashy banners, and low price offers win business. Some have developed much more sophisticated ways to stir the emotions of their target customer.

Differentiate pricing strategies Have I convinced you yet that the lowest price isn't necessarily the best approach to winning profitable business?

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Neither is copying the pricing model of a successful competitor. The variables in his business are likely to be different, and his value proposition isn't the same as yours. He may not even be targeting the same market space. Price-based competition is the lazy man's way to win business, and it attracts bottom feeder clientèle who are a pain to service, as well as pricing you right out of business because profits are just too low to sustain operations long term.

Clients who don't want — or simply can't afford — to pay for value are not clients that y want to waste your time servicing. They will demand increasingly higher and higher va for their miserable monthly fee. They will complain when their unrealistic expectations not met. They will change suppliers without a second thought if their offer looks like saving them 20c a month, without considering the comparison in value, your excellent service record, or the possibility that the saving will be short-lived because the new provider will have to either raise his prices or go out of business within a few months.

Hosting is cheap. Anyone who can't appreciate your need to make a profit and apprecia your value proposition isn't worth having as a customer. Price differently! But do so for a logical reason.

Match your price to value, or value-add to differentiate your pricing. For example, you might want to charge comparatively high prices for hosting, but offer eight hours free e marketing and site design consultation to every client each quarter.

You may decide to provide a monthly newsletter containing site design tips and market ideas.

Or you might actively assist your clients to network and build effective strategic allianc with other customers who host with you.

Differentiate your service: Again, looking at web sites seems to indicate that all hosts offer very similar services, and that, as with pricing, many think its just a matter of publishing the longest possible list of service inclusions to win business.

I wonder has it occurred to some hosts that most of their customers don't even know what half the terms used in their service description mean, let alone whether they wan or not!

Now, I suspect that if you could describe services in a way that has real meaning to you customer, you would have a very real strategic advantage. It seems everyone offers 99.99% uptime guarantee, and 24/7 service. Can they really deliver on those promises? Given that most are resellers, they probably aren't even in control of the uptime! You could forgive customers for not putting much store by promises that seem unrealistic or that might be interpreted in different ways.



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If 20 of the services in the list are described in technical terms that have no meaning to a customer, how is adding another 10 going to impress anyone? On the other hand, what if you offered your customer a free, detailed site critique? Maybe you have written a guide to effective site promotion that you could offer free? Or perhaps you could offer customers a comprehensive guide to e-commerce security and managing an e-store easily and efficiently? Or be very different and don't offer a standard benefit that others claim to deliver, but rely on the improved credibility you achieve by offering less. For example, change 99.99% up time guarantee to “uptime honesty policy” and “free white paper on understanding uptime and site accessibility issues”. What about changing 24/7 support to “24/7 system monitoring. Generous telephone and email support available 10 a.m. to 2 p.m. Monday to Friday”. This approach relieves you of obligations that you may not be able to meet, and also highlights the fact that some of your competitors may be over-promising, and might under-deliver.

Differentiate your brand: The names you choose for your company and brand can be a major differentiating factor. Names convey impressions. They should be chosen with care. The wrong name might portray a lack of professionalism, or might suggest a specialized high priced offering when you are targeting a broad mid-range market. The limited availability of domain names often leads to careless selection. It's worth investing time and effort to secure a name that creates the right first impression. If a name you really want is taken, check to see if the name is currently in use. If not, it is sometimes worthwhile trying to contact the owner and making an offer. If the domain does not have privacy protection, you can find out who owns the name from a search at http://www.whois.com/. Often “domain squatters” register or acquire good names, and just wait for someone wanting the name to approach them with an offer to buy. Only buy if the price is very reasonable. Some squatters try to command thousands for names. A few hundred dollars is the most you should pay, but at $200 or less, a good name might be a bargain. Your product or package names, email addresses for support, billing inquiries, etc. are all part of the naming equation. You should try to achieve consistency, and ensure that all names contribute to building the image you are striving to convey. Make names reinforce your branding message.

A Great Differentiation Opportunity August 2004 reports by Yankee Group, a leading research and analysis firm, revealed that the SMB web-hosting market is seriously under-developed.

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Only 36 to 60% of small to medium-sized businesses with Internet access operate a business web site. Yankee Group attributes this to poor marketing, and says most Web hosting firms promote in technical language, and focus on technical benefits that SMBs not understand.

Yankee Group also reports that small business operators resist the newest technology d to perceived associated high costs and risks. They are looking for guaranteed return on investment, and a very low price. Technical support services are a key component of peceived value for this market group.

The report suggests a differentiation opportunity for hosts willing to do more to inform small business operators of the software and marketing tools available to make their w site more effective.

The small business operator wants to be walked through the entire hosting process ste by step, and shown exactly how a web site will improve his business and marketing process.

The report went on to reveal that more and more SMBs want to improve their existing presence, and integrate more applications into their web site to provide better custome service.

It seems from reading the report that small business operators are at last recognizing t it isn't a case of “build it and they will come”. Web sites are a business process improvement tool, not a recipe for quickly and cheaply drawing masses of new custome Is this a message that you can convey effectively to your target market? Here is a great example of a differentiation opportunity. You can offer the same services as your competitors, but simply describe the services in different terms – terms that small business operators understand. Add value by offering FAQs and White Papers explaining the benefits of a good web site and how to achieve the best results, and walking customers through the comparative costs and benefits of various different hosting options in clear, non-technical language, and you may find you achieve a major strategic advantage over well established com petitors.

Building your Image

Even the way you present your address can have an impact on your image. For examp compare these two addresses: inteRAD Technology Ltd 2/15 Anthony St West End

InteRAD Technology Ltd Suite 2, inteRAD House 15 Anthony St, West End



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The address on the right conveys the impression that inteRAD is big enough to control a multi-suite office building, while the one on the left implies simply that the company occupies an office in a complex. Branding starts with names. It involves much more, however, •

•

•

Your logo is important. It should be simple, professional, and easy to print clearly in either black and white or color. Test how it appears when faxed. The design should be consistent with the image you are trying to portray. Company colors matter. Did you know that color psychology is a complex science about which volumes have been written. You can find quick and simple guides to color meanings on the Web, and it's worth studying them before making a decision on colors for your logo, template, letterhead and signage. Fonts should be carefully selected to be easy to read, and consistent with your image. For example, if you offer a high priced professional service to those in the legal, accounting, and business consulting professions, you wouldn't want to typeset your name and address in the Comic Sans font!

Consider engaging a professional “Image Creation Consultant” to design a complete corporate image for you. If their price is reasonable and they are well regarded professionals with a track record of delivering quality images, it could be well worth the investment. Make sure you give clear instructions and that the consultant understands thoroughly the market you are targeting, the image you wish to create, and the key psychological messages you want to convey. Also, make sure the consultant delivers all the work in digital files in formats you can use whenever you need to. Many graphic artists try to force you to come back every time you need to use a graphic file in a minimally modified form. You should avoid working with them. The costs of working with a provider who does this are excessive and unjustifiable. If designing your own image: • •

•

•

•

•

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Choose one or two fonts and colors and use them consistently everywhere. Have stationery – letterheads, invoice forms, order forms, receipts, etc – designed and printed to feature your logo and colors and reflect your branding. Design your web template to complement your stationery, using the same colors and style. Create signage on your office and on your motor vehicles using the same color combinations and key psychological messages. Use the same colors and messages in your advertisements, fliers, posters, brochures, etc. Create a header or footer to display on multimedia productions which includes your logo and company name set in your company colors.




•

Consider including your logo in emails.

There are a few key “don'ts” in the Internet world that don't apply in the paper world. B aware of these:

1. A professional business operator wouldn't send a message to anyone printed in plain fonts on plain paper, with no logo or colored template. A professionally printed letterhead or memo form would always be used.

When emailing, many businesses assume the same rules apply and create elaborate graphical email templates. The problem is that such templates are very resource hungry and make inefficient use of bandwidth, sometimes imposing cost on recipient Some recipients turn off features in their email client that allow graphics to display. Some systems may actually reject the email because of size.

2. Another common practice is to type the message on a digital letterhead template an transmit it as an MS Word document attached to an email. Again this is unwise.

Some recipients do not accept emails with attachments. Many reject Word documen specifically, because they are aware of the security risks attaching to emailing .doc files.

Some recipients may have difficulty opening a Word document, because they don't happen to use Microsoft software. Others may simply find it inconvenient and time wasting to have to open an attachment to receive a message that could just as easily have been sent as text in the body of the email.

3. When sending newsletters to customers, some businesses send elaborately formatte emails containing heavy graphics, or attach .doc files to the email. The comments above apply.

When sending emails, you should be mindful of the recipients time, security issues, resource requirements, and convenience. Wherever possible, simply type the message the body of an email and send. It may be a good idea to include a simple, small, well optimized graphic of your logo, and perhaps typeset your name and address under your signature in your company color. That is as much decoration as is appropriate in emails

If you have a genuine reason for wanting to send an attractively formatted document, y may want to attach a PDF file (in which case the text in the body of the email should clearly explain what you have attached and why) or send a link to a HTML file on the w

When emailing newsletters, format the newsletter as a HTML document on a web site, email the link. Many good hosting companies can assist you to do this, and can provide easy to use software to make creating the newsletter in this format a very simple task. fact, once you have learned the technique and accessed the software to do it, you may want to offer a service to your customers to prepare and send their newsletters for the or to help them with newsletter preparation. How to Become an ISP: A Short Course for Internet Entrepreneurs


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More Ways to Brand The way you or your staff or agents dress, the way you answer the telephone, the way you respond to support requests, the way you manage a creditor calling to ask when payment will be forwarded, the way you approach negotiations with a supplier, the way you furnish and decorate your office meeting rooms, the magazines you leave in your reception room for guests to read while waiting — all of these and more contribute to the image you create of your company. In everything you do in the name of your business, you should strive to convey the impression of professionalism, and reinforce the image you seek to establish. Building a strong brand builds strong value in your business, and assists effective marketing. It doesn't take a multi-million dollar budget to build a brand effectively. In fact, with a little effort, anyone can do it. Even if you are only moderately successful, just trying will put you well ahead of most competitors – who haven't even really thought about branding at all!

Enthusiasm is Infectious If you are not excited about your business, how can your customers get excited about what you have to offer. Don't be afraid to show your enthusiasm and excitement. Let customers see that you have confidence in your products and service and that you enjoy what you do. People trust those who clearly enjoy their work and have confidence in their ability to make money from their products. Create a buzz. Get your customers talking about the exciting and creative things you do in your business. Take advantage of every opportunity to do something “outside the square” that gets attention and starts people talking about you. Do things that will excite your customers. According to motivation speaker Zig Ziglar, a sale is a “transfer of enthusiasm from one person to another”. If you take a “business as usual” attitude, your customers are unlikely to get excited about anything you do, and without excitement, they have few reasons to make a purchase. I recall my surprise the first time a customer said to me “Well, it's obvious you love and believe in this product, so I guess I should try it”. After hearing that, I realized that by showing that I loved the product and believed passionately that it delivered the claimed benefit, I gave my customers the confidence to go ahead and try it. Even if they didn't know me, my passion inspired their trust – and their curiosity. If you can see that someone genuinely believes in a product, doesn't it make you want to try it to find out if it can excite you as much as it excited them?

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Learn Something New Each Day

The technology industry is a fast moving and highly competitive industry. If you allow y knowledge to become stale and dated, you will not prosper in this fast paced environm Knowledge is power. The more you know, the more flexible you can be to adapt to change. The better equipped you are to adapt to change, the more likely you are to survive new industry trends and new competitors entering your market space. To ride the wave of success, you need to continually read about marketing trends and technology trends. Watch your competitors and monitor what they do. Observe your customers.

In the new on-line economy, information is the key to success!



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9: Examples of Success One great way for businesses to find ideas and to learn what works is to study examples of success. There are some exciting examples in the Internet world. Not since the gold rush have there been so many “instant millionaires”, and so many amazing opportunities to demonstrate incredible growth patterns. Let's look at some case histories of successful ISP ventures.

Bloemenveiling Aalsmeer, The Netherlands Bloemenveiling Aalsmeer is a growers co-operative in Aalsmeer, The Netherlands, that conducts large horticultural auctions. This operation generates more than $US 1.4 billion annual revenue, selling more than 17 million flowers and 2 million+ plants daily 2. Bloemenveiling Aalsmeer embraced the on-line revolution by building FlowerAccess (www.floweraccess.com). In 1999, FlowerAccess was already supporting 500 retailers worldwide, and expanding rapidly. The co-op has built an e-market exchange that expands the reach of growers and enables faster delivery of flowers and plants. It brings growers and buyers together, creating an on-line trading environment that works across countries, currencies, time zones, and cultures. FlowerAccess builds in the distribution expertise of wholesalers that is an essential link in the e-commerce supply chain between growers and retailers. FlowerAccess has transformed a thriving, centuries old business, opening opportunities in global markets.

ebay

Sotheby's, a leading auction house, was founded in 1778, and became a world leader, with a $1.9 billion valuation by 1999. Imagine the surprise of Sotheby's management team when eBay, started in 1995, achieved a 1999 valuation of $22 billion! It's hardly surprising that Sotheby's decided to embrace the concept of on-line auctions! ebay's simple concept is now being mimicked by many, but it's outstanding success is unlikely to be replicated by a copy cat. ebay is now a household name around the world, and millions of buyers and sellers exchange wares on the portal daily.

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The business idea was simple. Provide a place for buyers and sellers to meet! The knowledge that buyers need to meet sellers and sellers need to meet buyers has underpinned the growth of almost every enterprise for centuries. Applying this simple concept to an ISP business resulted in one of the most notable business successes in history for the founders of eBay. What ensured their business success was not an especially novel or clever idea, but a strong focus on making it easy for sellers to sell and easy for buyers to buy.

ebay's founders thought about issues like trust. They built in a “feedback” system to enable buyers and sellers to build ratings that evidenced their honesty and integrity, an to allow comments – positive and negative – to be published for future traders to read t establish the credibility of those they were considering doing business with.

They thought about payment systems that made for ease of paying and ease of receivin payment.

Many of the facilities on eBay were not present at start up. They have been conceived a added over time, as eBay's management has learned about the wants and needs of its customers.

Their success resulted from implementing the idea. They did not wait until they had all answers. They conceived an idea based on a fundamental and proven concept that had underpinned the success of business enterprises for centuries, and they moved quickly implement it ahead of competitors. The operational aspects evolved over time, as customers revealed more about their wants and needs and the eBay team discovered n ways to fill them.

Netgrocer Netgrocer's success began with the simple realization that pushing trolleys down crow aisles, searching shelves for wanted items, standing in line at a checkout and lugging groceries home gives few people pleasure – but is an unwelcome necessity of modern l Home delivery businesses have existed for centuries in various forms. Peapod, another line venture, takes shopping orders on-line, does the shopping for you at your favorite grocery store, and delivers to your door.

Netgrocer buys its products direct from manufacturers and ships direct to the consume

You go to the company's website, select from the items in stock, and type in your credit card number. The items are shipped to you the next day via Federal Express. The delive fee is more than covered by savings you achieve.

By buying direct from manufacturers, NetGrocer saves its customers an average of abo 20% on supermarket prices, yet is still able to operate profitably due to its buying powe The concept for Netgrocer evolved from considering the opportunity to replace a long chain of wholesalers, distributors and retailers between the manufacturer and the How to Become an ISP: A Short Course for Internet Entrepreneurs


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customer, inflating prices by imposing a requirement for each of the up to 13 intermediaries to profit from the product changing hands. An important benefit of NetGrocer is its capacity to assist manufacturers to test products on-line, with advertising targeted directly to a select group of consumers. Marketing on the Internet is directly and immediately measurable, which implies huge savings when releasing new lines, and makes it possible for smaller companies to get their products onto shelves nationwide without huge investment. Netgrocer's founders spent eighteen months developing their business – largely because of the need to build custom software to drive the portal. From its launch in 1997, customer numbers doubled every month!

Priceline Priceline (www.priceline.com) is a classic example of an entrepreneur embracing the concept that the Internet has reversed business rules, and using this reversal to their advantage. In the old world, the seller set the price for the buyer. Competition, and the ease of comparing competitor offerings, means that in the Internet world the buyer has greater power to determine the price. Priceline recognized this, and turned the age old paradigm inside out! It lets the customer set the price, then invites sellers to decide if they wish to meet that price. Buyers set their price, and guarantee their commitment to purchase by entering their credit card details. The buyers “conditional purchase offer” authorizes priceline.com to purchase the product on the buyers behalf, if it can find a seller willing to meet the offered price. Sellers can individually and privately fill demand at selected price points, without making a global offer and without having to reveal publicly the price they offered an individual buyer. Initially, Priceline focused on two very competitive product areas: new cars, and airline tickets. Gradually, they have expanded into a range of other markets. The “name your own price” now extends across rental cars, hotel rooms, home mortgages, telephone services, and many more commodities. The system delivers compelling benefits for both sellers and buyers, enabling the founders of Priceline to enjoy continued rapid business growth.

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Note:

Priceline have patented their concept, so study the patent and seek legal advice before deciding to simply copy their idea and apply it to different commodities or services.

Drugstore.com, Inc. Drugstore.com, Inc. (www.drugstore.com) is a leading on-line source for health, beauty and wellness products. It offers thousands of personal health care products, combined with loads of information to help decision making, and personal services via a licensed pharmacy.

The premise behind this business is simple. Drugs, health products, and personal care products are not typically products customers need to touch, smell, and feel before making a purchase decision. In this market, decisions are based on information about t benefits of a product, possible side effects, suitability for addressing specific types of health problems or needs, and confidence that expert advice and help is on hand readil the product appears to have side effects or to not deliver as expected.

An on-line portal is uniquely equipped to deliver a large volume of information, easy access to wanted information via search facilities and a structured site design, and an e way for customers to make contact and ask for help when it is needed.

The convenience of not having to wait in a store for the pharmacist to find time to respond to your questions, and not having to physically go back to the store if an afterpurchase question arises, gives Drugstore.com obvious customer appeal.

Autobytel Autobytel lets customers research their dream motor vehicle. Customers can compare price and dealers, and study digital photos, before making a purchase request.

The benefit of Autobytel for dealers is a major reduction in marketing costs. The avera cost of selling 100 cars through Autobytel can be as little s $18,500, versus $101,500 through a traditional system. For customers, the benefits include cost. Seller savings on marketing are passed on to customers, reducing prices by between 7 and 14%. Autobytel also recognizes the customer's preference for seeking information privately, without pressure from salespeople, and in the comfort and convenience of their home, their own time.



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This recognition enabled the founders to achieve sales of over 50,000 cars, generating $1.6 million per hour in car sales for its dealer network. 3 This win/win solution for buyers and sellers of motor vehicles has been enormously profitable for Autobytel, and has led to the implementation of a large number of car selling portals of various kinds, selling both new and used cars – and even facilitating private sales of used vehicles by owners. Similar developments in the real estate industry recognized the potential for empowering home buyers to research offerings in comfort and privacy, and to narrow their focus before asking for guided property inspections. Hundreds of portals also enable private sellers and buyers to come together, bypassing realtors and saving the cost of commissions.

Bestoffer.com

The brainchild of two Stanford University School of Business students, who developed their business plan while studying, Bestoffer.com applies the Autobytel concept to used cars. It combines elements of eBay's auction concept with the 1990s used car mega center. Note: inteRAD Technology's NetCityz Instant ISP features an optional, generously

featured Vehicle Trader module capable of facilitating immediate commencement of your on-line auto sales business. Handling new or used product, the module can also be adapted to selling motorbikes, bicycles, boats, caravans, and a range of other similar products which can be readily categorized by make and model and have standard feature options.

Chrome Data

Chrome Data Corporation is one of many companies that built a successful ancillary business to support an existing successful on-line concept. Chrome Data addresses the need for vehicle finance. It links consumers, banks, and automotive network members, providing information and loan application handling for vehicle buyers conveniently, and with absolute privacy. The benefit of an ancillary business is that you can trade off the success of another entrepreneur. To start an ancillary business, study successful web-based businesses and identify what their customers may need that they don't provide, and that may not be readily accessible to their customers. Then build a model to supply that commodity or service to their

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customers. If you plan well, they will incorporate your advertising into their portal, eve naming you as their preferred supplier in many cases, and directly referring customers

Motley Fool

Motley Fool (www.fool.com) was started by two brothers in a shack behind the home of one of the founders in Alexandria, Virginia. The founders were investors, and sought to disperse financial information to other investors, via a paper-based newsletter. After six months of operation, having grown sales to $20,000 per month, they pulled a prank which caught the attention of The Wall Street Journal. The brothers posted a phony stock tip on Prodigy about a fictional company selling portable toilets to East Africa. Gullible readers went searching for more details.

The resulting attention led to an offer from America On-line to include the newsletter a part of its service. Instead, the brothers launched their own on-line newsletter.

In early 1996, the brothers opened shop on the Web, timing the opening to coincide wit the release of their first book, The Motley Fool Investment Guide. The new site markete their book, and grew Fool Mart, selling books, computer software, baseball caps, and boxer shorts, and making huge profits from advertising on the site.

Motley Fool succeeded by changing the stock advice game, making the subject more fu and interactive.

Since its debut, offering investment advice on-line has become big business on the Web and stockbrokers and investment advisers are among those moving their businesses rapidly on-line.

There is still plenty of opportunity in this industry. The market is huge. Everyone wants learn how to invest and make money! The key is simply to find a way to do it a little differently and appeal to a slightly different market sector. Note:

A licence may be required to give investment or financial advice. Check legal requirements before commencing a business offering advice of any kind.

Barnes and Noble

Barnes and Noble (www.barnesandnoble.com) is an example of an established business that achieved growth and secured its market position by embracing the Internet.



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Barnes and Noble had to go on-line to survive competition. Books were yet another of the many commodities that buyers purchase based on information rather than on appearance, touch or feel. Competitors, like Amazon.com, threatened the giant chain's market position. Barnes and Noble already had brand recognition. What was needed was an e-commerce platform that would reliably service a large and growing customer base. The company's on-line store succeeded brilliantly, thanks to a focus on site usability and ease of access, and ease of tracking and filling customer orders. This focus enabled the company to achieve 380% annual user growth.

Other ISP ideas that have been successfully implemented:

The case histories above relate mainly to ISP pioneers – people who entered the industry in its infancy with great ideas that grew quickly. Can you replicate their success? Of course you can! Back in the 1600s a well respected source advised that every book that was needed had already been written. Thousands of respected men have suggested that everything conceivable has already been invented. There are retail stores in every city selling every conceivable commodity, yet new ones open daily offering similar product, often almost next door to competitors. Not all do well, but many quickly race past their competitors, growing at astonishing rates – just because they found a way to do things a little differently. Either they succeeded in packaging a product for higher customer appeal, or they were more successful at building their brand and customer loyalty. Here's a list of small ISP businesses I know of in my locality that were started by ordinary people, with no I.T. expertise or experience and limited capital, and are delivering growth and profits adequate to afford the owners the security and lifestyle most of us aspire to.

Moving Directories:

A portal designed to help newcomers to an area to find reputable, trusted suppliers easily.

Wedding Links

A portal for brides to be and their loved ones to find reception venues, celebrants, entertainers, caterers, gown suppliers, etc. and help to plan their special day

Holiday Weddings

A portal for couples wanting to combine a wedding at an exotic location with their honeymoon. Helps couples find the ideal place and arrange travel, accommodation, and the perfect ceremony

DIY Sell

A portal for advertising your home for private sale

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Brisbane City Life

A portal providing information on facilities available in Brisbane. Makes its profit by se advertising.

More Examples of e-Business Success And here's a further list of profitable ISP businesses you may not have heard of, and certainly haven't achieved the growth of eBay or Amazon.com, but have enabled their founders to achieve their lifestyle and income goals: •

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Nextmonet.com is an on-line art gallery, selling artwork at prices from $700 to $2500

Treeloot.com is an on-line contest site which grew to 3.5 million unique visitors i 18 months of operation Cellular Unique sells mobile phones on-line

Websidestory's HitBox was started with $400, and is a multi-million dollar busine providing web site traffic analysis services Rx.com is an on-line drugstore

E-commerce Success allows successful e-biz entrepreneurs to tell their stories o doing business on the Web (a site worth studying!) Cyberstudy helps students prepare for exams Pointcast broadcasts news, weather and industry updates directly to desktop computers over the Web. Preview vacations is a travel site that lets you view photos and videos of your travel destination

CD-Now retails music CDs, tapes, and videos. In December 2002, CD-Now entere into an affiliation agreement with Amazon.

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Kauai Exotix is a flower farm that ships tropical blossoms direct from Kapar, Haw

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Never GrowUp is an outlet for adult toys and games

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ImproveNet is a matchmaking service for homeowners looking for contractors to do home improvements and renovations

Internet Shopping Network sells computer hardware and software for a network suppliers Computer Literacy bookshop sells I.T. related books and courses



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•

Discovery.com sells advertising

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The Chocolate Factory sells chocolates on-line

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Virtual Vineyards sells wine and gourmet foods on-line

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Molly Maid helps you find, and book, cleaning services on-line

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M/S Database Marketing conducts market research via surveys

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Shrink Link is an on-line psychiatry and psychology clinic

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JDD Publishing sells marketing help. Internet E-Mail: Beyond the Basics, by business owner Jim Daniels, explores the advantages to marketing on the Internet without going onto the World Wide Web. Jim has built a successful ISP around email marketing and newsletters

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Quote.com delivers stock reports, company profiles, and annual financial reports

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Moms on-line is an on-line network of stay at home moms

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The Register is a bed and breakfast directory

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Down Under Topless Sandals sells bare soled strapless sandals that stick to your feet with adhesive. (Another example of differentiating for success!) Golfweb provides tens of thousands of pages of information on everything related to golf. Corporate Creations helps customers set up new corporations and get trademarks registered. Mobilis is a lifestyle magazine for mobile computing Tripod Inc. offer tips on writing resumes, budgeting, and personal finance for 1834 year olds (another example of targeting!)

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White Rabbit Toys is an on-line toy store

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Master Musicians sells top-brand musical instruments.

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Future Fantasy Bookstore sells science fiction and fantasy books (a great example of how targeting succeeds!)

Guiltless Gourmet sells nutritional Gourmet food, and concentrates on promoting health eating habits by providing lots of nutritional information On sale Inc. is an on-line auction service selling computer-related products How to Become an ISP: A Short Course for Internet Entrepreneurs



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Rusty Zipper sells vintage clothing

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Eurosport is a sports equipment cataloger

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PowerExpress sells hard to find rechargeable batteries

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Photo disk sells royalty free digital images over the Net

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Located on a cattle ranch seven miles outside of Kersey, Colorado (population 1200), Jake and Me Clothing has sold their wares to people in places as far away as Japan and Thailand.

All of these have plenty of competition. Are the owners concerned? Absolutely not! enjoy the profits achievable from their market space. Do the owners believe their market is saturated?

Definitely not! They know that there will be new competitors opening up on the Web daily, and they are happy to share their market space with those who have the common sense to understand that its all about finding your niche, and servicing it well.

New business ideas will continue to drive new business initiatives as long as civilization we know it continues. Some of these new initiatives will fail. Others will be only moderately successful. Some will replicate or surpass the most notable successes of pa decades. It takes just one good idea, worked consistently by someone who understands what it takes to make a business succeed – and perhaps a small amount of luck – to build a business model that can catapult you to billionaire status in just a year or two. For others, those good ideas will form the building blocks for enterprises that give you income security, lifestyle, and life choices – and enable you to provide security and lifestyle opportunities for those you love. Don't be afraid to emulate someone else's success. Copy their business model, and see if you can find ways to differentiate yourself sufficiently to secure a corner of their market. It's a huge world, and you only need a tiny percentage of the market to build a successful and profitable enterprise. Identify a need. Talk to people around you and find out what irritates them. Quiz them about their buying and information seeking experiences. Find out what others are not doing to satisfy customers. Listen carefully when people recount their shopping experiences and describe their frustrations.



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It may just take one complaint from a friend to trigger an idea for satisfying a market need that could be worth millions!

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10: Succession and Exit Planning I'm sure it seems very odd to be considering exiting a business you haven't even started yet! Why on earth would you want to? You are building this business to achieve income and lifestyle. When you succeed in that ambition, will you really want to give it all up? Motivational specialist Stephen Covey advises “Begin with the end in mind.” It's good advice, because we simply never know what the future holds. There are all kinds of reasons why you might, some time down the track, want to exit your business: •

It might grow too big. Perhaps you enjoy a hassle free small business environment an close relationships with your customers. If your business grows to a point where it requires lots of staff and large, expensive premises and equipment, it might cease to a pleasure running it.

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You might be offered a price that's just too good to refuse!

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You might see an opportunity to “go public” and make a lot of money

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You might decide that building a business was so much fun and so rewarding that yo want to do it again, from scratch. You might see a new opportunity that you would like to pursue You might foresee industry or market changes that will reduce your business revenue and growth in a few years. It would be smart to sell out before that happens, and look for a new opportunity.

You might decide you want to relocate, or family circumstances might force you to relocate. Some ISP businesses are portable, but if your clientèle is almost exclusively local, you probably would be better served to sell out and start over in the new local After all, you'll have all the knowledge and experience to be very successful second time around, and you might make a very substantial profit from the sale of the business.

You might experience health problems or have an accident that affects your ability to work

•

You might just be ready for a change after years of building your business.

•

You might want to retire one day

It's never too soon to start planning. If you don't plan, you may find that when the time comes, there are barriers that you hadn't anticipated. I've heard many sad stories of entrepreneurs who started very successful businesses and enjoyed a great lifestyle and income for many years, but at retirement time find themselves locked into a business th How to Become an ISP: A Short Course for Internet Entrepreneurs


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they can't sell for a price that will fund their retirement adequately. I also know of entrepreneurs whose families, after the business owner's death, simply couldn't keep the business running long enough to retain its value until a buyer was found, and have been left without income and unable to realize the value their loved one spent so many years building. All business owners eventually leave their business one way or another. Surely it's smart to think ahead about how to ensure that when the time comes, you leave it on your terms and accrue maximum benefit for your efforts leading up to that time? We live in a fast moving world. Business and technology trends are constantly changing. Honestly, it really isn't smart to plan more than five years ahead. You might review your plan in five years and decide to continue for another five, but you should review. Each five year plan should include an exit strategy, just in case a situation arises within that period that leads to a decision to exit. Here are a few tips to help you protect your financial interests in the event that it becomes necessary or desirable to exit your business. 1. Consider succession strategies. You may need to train a relative, friend, or staff member so that there is someone with adequate knowledge to take over running the business in the event that ill health, accident, or death prevents you from continuing to manage your enterprise. 2. Keep accurate and honest records. This includes accounting records, support files, etc. These records will be important in the event that you want to sell your business. Make sure these records are easy to access for anyone who needs to fill in for you and must reference invoices, accounts files, etc. 3. Document procedures for performing important tasks in your business. Make it as easy as possible for someone else to take over your work for short or long periods by recording all the things they might need to know. 4. Focus strongly on building brand recognition and brand value. A business that has a well recognized and respected brand commands a strong price at sale time. 5. Build your reputation and the quality of your customer database. If you service customers who are “bottom-feeders” — that is, resist paying for anything and complain constantly – your business will have poor resale value. You need to focus on developing a database of loyal customers who are happy to pay fair prices for good service and appreciate the service you offer. This establishes good will in your business, and good will forms a large component of the business sale price. 6. Record your growth patterns, so that you can show a business buyer how your business has increased and the impact of expansion decisions you have made.

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7. Regularly review growth opportunities and strategies. Document the opportunities y see and your ideas for taking advantage of them. Demonstrating potential for future growth and business development is an important part of negotiating a good sale pri

8. Talk to others in your industry – especially if you are looking for a buyer. Often, your buyer will be found among your suppliers or your competitors.

9. Explore with accountants and lawyers the opportunities for going public, or merging with a competitor There are many opportunities that small business operators automatically assume are not accessible to someone of their size or station. Not so! Most large public corporations started out as small businesses at one time or anothe and grew.

The Sale Price

How much money can you expect to make through the sale of your business? This will depend on how successful you have been in building your brand, good will, and a track record of growth and profit. Of course, supply and demand, market conditions, luck, and the urgency of making the sale will also have an impact.

Typically, a well established business with proven profit figures and growth potential is valued according to the formula:

Total Annual Revenue for past 2 years + value of tangible assets.

If you have a very strong brand, proprietary intellectual property, patents, registered trademarks, etc. these may add further to the price. The great thing about a business with low entry costs and low risks is that you can easily realize your investment and make a profit by exiting, then start again in another area or a different niche market and do it all again! In an industry as diverse and fast moving as the ISP industry, there are just so many opportunities, it's hard to imagine a successful Internet Entrepreneur not wanting to repeat his success several times over!

Notable Exit Successes Few business operators start a business with an early exit in mind. However, serial entrepreneurs often build businesses to sell, and repeatedly establish new enterprises



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“cash out” quite quickly. It can be a great way to make money, and very rewarding for those who enjoy starting and building something new. If your goal is income and lifestyle, however, you may be less inclined to want to think about exit strategies and building business value for an eventual sale. Think again! Income and lifestyle are highly achievable if you attain a strong sale price for your business! Successful Internet Entrepreneurs have achieved astonishing prices for businesses that were relatively new. As you plan your new ISP enterprise, and determine just how much effort you are willing to invest in this undertaking, consider the following notable achievements: • •

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Netscape sold to AOL for $6 billion Yahoo! Paid $3 million for GeoCities, to gain access to its millions of users and communities eBay paid $250 million to buy Kruse International, an auction house, and Billpoint Inc. Three months after the site launched, Bid4Vacations sold to Sequel Venture Partners for $2 million Astrology site, Astronet, sold to AOL for a six figure sum and AOL added Astronet to their site. The site went on to become one of AOL's most popular sites and Hearst New Media bought Astronet for more than $1 million.




Parting Advice

Hopefully, this book has given you both valuable knowledge and confidence to go ahead and start your own ISP business, and many of the tools you need to make it a success. You don't need a huge bank balance to begin. Highly successful enterprises have been built on an overdraft or personal loan of just a few hundred dollars.

There may be good reasons for higher levels of investment, but don't be too hasty in contracting technology suppliers or embarking on programming projects. There have b many classic cases of entrepreneurs and business operators paying tens of thousands o dollars too much for technology solutions which proved inferior, or quickly became date

Technology solutions are getting cheaper. Do you research carefully. Look for platform bases solutions that can be tailored in various ways to suit different needs. Evaluate your suitability for entrepreneurship carefully. What you need to succeed is energy, initiative, and determination. The sources of help and advice available in today's world are endless. Just browse the Internet and you will find literally hundreds of offers of help to become a successful Internet entrepreneur.

Be discerning. Many of those seeking your attention are selling a very specific busines opportunity, or promoting a specific cause.

Look for sites that support entrepreneurs and small business operators with practical h and advice. Build a good relationship with an accountant and a corporate lawyer. Consider engaging a good Public Relations consultant – even if you need to offer servic or access to facilities in lieu of cash payment in the early days of your business.

Read, listen and learn. Most of all, enjoy what you do. Your enjoyment will be reflected success. Customers trust those who clearly approach their business with gusto and are happy with its progress.

Most important of all, don't wait for that “unbeatable opportunity”. The opportunity is now. With sensible planning and an investment of energy and passion, most ideas can b developed to form the basis of a great business enterprise.

Dare to dream a little – then take that all important first step to making your dream com true. Each subsequent step becomes a little easier. Should you fail, get up and try aga In this industry, you are not beaten until you elect to stay down, and it may be that it takes just one more try to strike. You can join the next generation of Internet millionaires.



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NetCityz is a product of inteRAD Technology Ltd., designed to automate the establishment and operation of Private Internet Servers, the construction of Web Communities, and the operation of “virtual shopping centers” and “virtual trading centers”. Some versions of the product automate the implementation of website building, content management, e-commerce facilitation, and server administration features on a web server. Repeated references are made to this product because the author has found it to be uniquely beneficial in the establishment and operation of many types of ISP businesses. The author has used the NetCityz product, and found it to be of high quality and to offer exceptional benefits for specific applications. While references to the product are made honestly and in good faith, by describing or referring to this product, the author makes no specific recommendations and offers no guarantees in respect of the NetCityz product or its suitability for any specific purpose. Although alternate products exist that offer some benefits and features similar to those found in specific modules of NetCityz, the author is not aware of any direct competitor product. Detailed information about NetCityz is available at http://www.netcityz.com/ or http://www.interadtechnology.com/. Although references are made in this publication to other products intended for server management, the author has limited specific knowledge of these products or their application and makes no recommendation of them. Readers should do their own research before selecting any software or hardware product. The author has a financial interest in inteRAD Technology Ltd.

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Becoming an Internet Entrepreneur

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