Starting an Online business

The Second Renaissance

The first boom was a period when the normal laws of business were

temporarily suspended. But the laws of business cannot be suspended for long. They

eventually re-assert themselves. They came back vigorously much like the law of

gravity suddenly re-asserting themselves.

The Schumpeter creative destruction at the end of the last boom had some

good effects. It created the technical and market infrastructure needed to support this

second, more sustainable boom. This has created tremendous opportunity for


Like a brick-and-mortar firm, the new will rise or fall on the fundamentals. In

addition to a solid business plan, a new needs additional elements to succeed.

This article provides a survey of the basics you need to get started.

Hosting and E-Commerce

Choose a domain name ( and a hosting company at which to host it.

Your choice of hosting company is important because their reliability and ability to

increase your capacity smoothly as needed are crucially important. Your e-commerce

hosting account is likely to start out as a “shared” hosting (less expensive option) and

later may grow to a “dedicated” server (more capacity but higher price) later, if needed.

However, the good thing about hosting is that if your host turns out to be unreliable or is

unable to scale up to meet your needs, you can always switch hosting companies. Just

make sure that you register the domain name under your name and not theirs from the


Decide if the goal of your website will be to capture leads (which can be done through

simple contact forms), which you will then follow-up on later by phone and/or email.

Alternatively, is your goal to make direct sales from your website, in which case you will

need a shopping cart system. Regardless of your goal, you should also provide good

quality content on your website that will capture your prospective customer’s interest.

Most hosting companies offer a shopping cart (such as Miva Merchant) with their e-

commerce hosting accounts. Find out which cart they offer, and do some research to

make sure it is a reputable system. Find out how user friendly the system is for non-

technical people to setup and maintain an online store.

In addition to the hosting and shopping cart system, you will need a merchant account

that will enable your business to accept electronic payments (e.g., credit cards). You

may already have a merchant account, especially if you now run a brick-and-mortar

business. For online transactions, you will also need a Payment Gateway (such as or Verisign). The Payment Gateway authorizes payments for online

businesses. Generally, these services will interact automatically with both your shopping

cart system and your merchant account. Once setup, all this happens behind the

scenes so your website is selling your products or services day-and-night, without you

having to be directly involved. Someone from Australia could buy something from your

site while you sleep.

It is imperative that you have the ability to update your shopping cart easily. It is crucial

that you have control of this process, as it is likely you are going to want to make

changes over time.


It is a given that you need a professional looking, well-organized website to sell online.

This does not mean fancy. In fact, fancy can work against you, as it can confuse your

visitors. Your designer can integrate your new website with your shopping cart system.

Make sure you retain a designer who has specific experience in the shopping cart

system you wish to use.

While you will likely hire a design firm to do the initial website design, it is important that

you have the ability to update the website. This means the design firm needs to put

some sort of content management system (CMS) in place or learn to use one of the

Web design/maintenance software packages (such as Dreamweaver or MS FrontPage),

if you do not already know how to use one. You do not want to have to call your website

designer every time you want to make some minor change or addition to your site.

While the designer will develop your site initially, it is important to give some thought to

this process so you can provide plans and guidance to your designer. What are the

goals of your site? Do you want leads captured with a contact form? Do you primarily

want direct sales captured through a shopping cart system? If you have more than a

few items, your database design becomes very important.

Make sure your design consultant has solid database design experience (ask for

examples and references). How do you organize the products so people can quickly

find what they are looking for? What market segments will be visiting your site and how

do you appeal to each? Both site and product navigation are key components of a

useable site.

The next step is to determine the various pages that will comprise your site, what

content will go on each page, and how it will all fit together. While you map this out,

always keep your goals in mind — direct sales, sales leads, etc.

A good way to start this process is to go out on the website and carefully analyze what

similar businesses have done. You can probably get a decent e-commerce website

starting at about $500 for the design.

Once you have done the research, draw up plans for the various pages of your site to

provide to your designer. In addition, since you have been surfing the web, you may be

able to provide your designer with examples of sites as models of how you want your

site to look. This will be helpful to your designer in thinking through what you want.

Achieving Your Independence

During the early stages while you are getting a shopping cart and a website setup, it is

important to spend some time learning the basics of how to maintain them. You could

discuss this with your designer ahead of time, to make sure that you can get some initial

training on updating both your site and your shopping cart. You absolutely do not want

to have to call someone every time you want to change something on your website or in

your shopping cart system. The truth is that once you learn how to do it, making

changes to your website and shopping cart system is simple.

Now What?

You now have a website giving you an online presence and the ability to capture leads

or make sales directly. Now, how are you going to get people to people to visit to your


While clearly a survey article like this cannot answer these questions definitively, it can

at least serve as a starting point. It is important to do some research and find some

articles on each of these topics.

Search Engine Marketing

At some point — if your business experiences enough growth to pay for it — you will

likely consider hiring a professional search engine marketing consultant to help you.

Until then, you need to make some solid progress on your own.

Search Engine Optimization

To increase your site’s ranking in Google and other search engines, it is crucial to have

quality content on your website that includes reference to the keywords that you want to

optimize. The place to start optimizing your site is during the planning and design

phase. This is definitely something you will want to read about further, and discuss with

your designer from the beginning.

Once you complete your site, you will want to seek out reputable directories and other

sites relevant to your industry, and request to have your site listed in these. Ideally, the

link provided on these sites would reflect the keyword you are trying to optimize. For

example, if you are optimizing “financial planner in Seattle” you would make sure that

the clickable link is “financial planner in Seattle” not just This is

easy to do in HTML.

Some directories require payment to be included. Some are worth it; some are not. Be

choosy but err on the side of sites that have a high rank, the Google toolbar (available

for both Internet Explorer and Firefox) can be a valuable tool in determining the

Pagerank of a particular site. For example, Yahoo Directory charged $300/year for

expedited consideration of your submission, which Yahoo organizes by topic. We have

found this to be a worthwhile $300 for our websites.

Pay Per Click (PPC) Advertising

There are a number of services out there that provide PPC like services, including

Google AdWords, Overture (Yahoo), and You will likely want to start with

Google and then expand to one or more other services over time.

Maximizing conversions is your goal but you need to define exactly what a conversion

means to your business. Generally, it is either a lead (normally a customer submitting a

web form requesting more information) or it is a direct sale (a customer actually

purchases your product or service directly). Your website can offer both of these

primary types of conversions or focus on just one – or it is possible you have other

measures of success you want to measure.

If your goal is to get leads, then that is the sort of conversion your website and

advertising should encourage. In addition, do not forget to ask your prospects to request

more information or whatever the action you are seeking.

One of the most effective ways to get qualified leads to your site in the first place is

through pay-per-click advertising. It is important to read and become familiar with pay-

per-click advertising, and then to continue to learn and refine by doing.

In Google AdWords, you set a daily budget (say $20 to start) and a maximum bid on

specific keywords (say $2.50). You only pay when someone clicks on your ad.

Therefore, if you are bidding $2.50 you might only pay an average of say $2.45 per

click. It depends on the keywords you choose and how much you bid. Spend some time

choosing good keywords. Google AdWords has tools to help you choose the most

powerful keywords. You will also want to embed some special code in your website to

enable Google to track conversions.

I have learned through experience that it is best to start with a low bid and increase it

incrementally depending on the number of clicks and conversions you get. Your goal is

not to outbid the competition but to get the maximum number of clicks (and ultimately

conversions) for your budget. Your optimal bid, at your budget, may be much different

from the optimal bid for a larger competitor with a much larger budget. The way to find

that sweet spot that maximizes clicks for your budget is to start low and increase your

bid until you find the optimal bid. That should be your bid for the time being.

Through systematic trial and error, it soon became apparent that the Google Search

Network had a much higher conversion rate than the Google Content Network. I

responded by dropping the content network completely and focusing exclusively on the

search network, which resulted in an immediate increase in our conversion rates.

Over time, I was able to optimize Google AdWords. Now, it pretty much runs on its own

and brings in a predictable number of leads and direct sales. We make adjustments

here and there, and regularly run tests using different landing pages and so on.

Article Marketing

By putting your knowledge in articles for the benefit of others, the benefits that flow back

to you are substantial. You can build a reputation as knowledgeable in your field,

resulting in leads and more sales. In addition, part of the process of article marketing

means including a bio of yourself. This bio usually includes links back to your website,

thus helping increase the PageRank of your website. That means that people who do a

search for relevant keywords are more likely to find your website.

You increase the effectiveness of your search engine optimization efforts by making

clickable links back to your website the actual keywords you wish to optimize – such as

“Guatemalan Shade Grown Coffee” — not just a simple URL, such as

This process takes months to show results but the effort and the patience are well worth

it. Our site went from the fifth page of Google results to page 1 in about a year. It took

sustained effort but it was worth it as we get many more leads and sales because of this

time investment.

The fact is that you have much more to gain by sharing information than by hoarding it.

The most effective means to disseminate your knowledge is to write articles and publish

them on the Web. In return, you can get a higher search engine rank, sales leads, and

new business. If you diligently share your knowledge with the world, rewards will flow

back to you in due time.

Email Marketing

A crucial but often overlooked component of starting an online business is to have an

email marketing solution in place and integrate email marketing into your operations

from the beginning. This insures that you collect customer email addresses and ask

them from the beginning if they want to receive emails from you. Email can include

invoices (often automated), product updates, announcements, special promotions, and

email newsletters.

Email is a powerful tool that can help you reduce costs and increase efficiency but

perhaps even more powerful is the power of email to increase customer loyalty and

retention. As the provider of a product or service that your customers need, you also

have information that could benefit your customers as well. If you produce a newsletter

and regularly put in the time to create useful content, you will increase your mind share

among your customers and they will very likely think of you next time they need to make

a purchasing decision.

Provide consistently good content and special deals for the subscribers to your

newsletter. Make sure that your customers feel they are getting multiple tangible and

intangible benefits from listening to what you have to say.

At a minimum, an email marketing service should make it easy for you to create eye-

catching emails, manage multiple email lists, and place newsletter sign-up forms on

your website. There should be powerful list management, robust reporting, and


Your email marketing service should include an easy way to track the results of your

email campaigns. Who opened your email, how many times, and when? Did they click

on the link you provided? Did they purchase anything or submit a lead? The service

should enable you to track message reads in real time, and read detailed reports online

or export them to a spreadsheet.

In addition, your email marketing service should give you the ability to manage multiple

lists and divide lists into multiple segments. Last, but not least, it is preferable that your

email marketing service provider give you a private IP address, rather than one you

share with other customers. A private IP address is preferable to a shared IP address,

because with a shared IP address you are vulnerable to the shared IP address being

blacklisted because of the mistakes of other customers of your email marketing service

provider. With a private IP address, you are the only one who sends email through your

IP address.

It is also important that your email marketing provider knows the CAN SPAM regulations

and makes it easy for clients to comply with them. Knowledge of and compliance with

CAN SPAM is crucial for successful email marketing implementation, and with earning

and keeping the good graces of ISP’s and other networks. In addition, nothing will ruin

the good will of your customers faster than spam. On the other hand, properly

implemented permission-based email marketing is one of the most powerful forms of

marketing. Done well, email marketing can earn you a reputation as an expert and help

you make giant leaps in customer loyalty.

Getting Started

This article is a primer, a survey, of the topics you need to consider from the beginning

to have a successful online business. You will want to research each of these topics in

much greater depth than I covered them here. It is worth your time to read articles on

each of these topics, and even invest the time to read books as well. The effort you put

in educating yourself about the various components of starting your online business will

pay off, making it well worth the time investment.

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