“\Small Business Chronicles\” by Jack Brandt

So, it seems like six or so months since I’ve posted a blog article here. In fact it’s been seven months now that I am counting them… Yikes! Well, we’re full swing into fall as far as I am concerned. People are back full time from vacations and time off, and its time to focus on making money and growing your business again. And I am here to make a few suggestions on how to do that if I can.

Today’s post is going to be aimed towards the small Web Developer or Hosting company looking to increase business in their local or regional locale. It is the industry I am in so I’m looking to get back to my roots for the selling season. With luck you’re in my industry too.

I am in the channel. I’m in the channel in every way. My company also sells direct to the end customer. We have a retail division that struggles with the same things that the smallest company does all the time. I just happen to be in a good position to work with them as well, so that I can bring you some best practices from our neck of the woods, as well as what’s making money in other businesses as well.

I will be presenting ideas and thoughts in this document to help you to hopefully make more money, create greater stickiness, which in turn increases RPU and creates longer than average terms for you. This is my goal. To help you make more money one client at a time, and when you look back at your financials, with a little hard work, hopefully you will see exponential profits where you had not before.

So, let’s get right to it. As I have stated before small business owners are right where they say they are, stocking shelves, dealing with customers, placing orders, and looking for new business. But, with the advent of the Internet, we know that an ever increasing number of those small business owners are getting on line… And, they are embracing the Internet as a new low cost way to get new prospects, close new business, and creating a flatter world for them to do business in for the long haul.

So, a business owner comes to you and asks if he can open an online store… He or she wants to expand his offerings. He’s already a successful business owner and wants to give an online store a shot. He or she is really not technically savvy, nor can he or she build their own website. But they have an eye for their products and services, can identify trends in their business, and are resourceful and keep up with what’s coming in the future so they can remain successful and continue servicing their customers for the long term. Or, they’ve identified a new service or offering that will be profitable for them in the future. But, again they are not technically savvy.

That’s where you come in. But, you’re too busy, and you want the new business. But you don’t want to screw it up, and you want the new business. You want the new business, but you’re afraid of the upfront support because you’re so busy. What do you do?

Well, maybe it’s time for you to look into some of the great DIY (Do It Yourself Products our there on the market. They will allow you (after some initial setup and work) to help your customers to realize their dream of getting online and selling their wares with a great DIY solution. Not only will it help you to help this customer but to help many other clients with a minimum of efforts going forward, help to create greater profit for you with a lower upfront cost to your customer giving them a better TCO and higher ROI. It’s win/win for everyone involved. You can then focus on selling more, and creating more business for you.

While you might already offer e-commerce solutions built in house, or open source, there are solutions on the market which may offer you and your client additional features, as well as built by a company that has done research on maximizing the purchase experience and your clients profits as well.

So… Let’s take a step back and examine the SMB today. The SMB can be anyone from the brick and mortar store front establishment, a legal office, a manufacturer, a SOHO consultant, or a person starting a side business hoping to live the American dream.

Research is showing that retail sales online will be absolutely huge this year. Sales will be over $200 billion dollars by the end of this year (2006). That’s huge! $200 billion dollars. Much more than last year. Forrester Research a powerful force in statistical information states that online sales will be in excess of $210 billion dollars. This is a compelling reason alone to think about getting into the online e-tail game.

Pet supplies online are huge. Women’s perfumes… Women’s cosmetics…. These are expected to grow at an expected rate of 30% next year (2007). Auto parts and online automobile sales are at almost $16 million dollars. Clothing, footwear, and associated items are at almost $14 billion are also growing like crazy.

Online retail sales (e-tail or ecommerce sales) is really growing. It will continue to grow over the next several years as the end customer gets more comfortable with the concept. My father for the first time this year purchased something online from Ebay. Go figure. My mother made her first purchase as well. An IPOD. Something I never believed my mother would possibly ever purchase. This is proof to me that ecommerce is poising itself for huge growth. I order everything from wild Alaskan salmon, clothing, books, electronics, communication services, tires, and more online. I am a true online consumer.

So why DIY tools again? Lets examine the SMB’s options when setting up an online business. Keep in mind this is hypothetical, yet typical for the SMB.

This is a lot of money for an SMB. Especially a SOHO part timer. So a low cost, low/no barrier to entry, turnkey solution might be a great alternative and make you look like a hero in the long run. Instead of a 14,000.00 dollar solution you might be able to sell them a 300.00 per month account that includes; Security, Hosting, Turnkey store, merchant account and gateway… This might help to ease the pain for your customer, and keep them from going elsewhere in the future.

Just over 20% of all Adults in the United States have sold something online. That number, according to Pew Internet & American Life Project comes to just about 25 million people. Further Pew Internet did a phone survey in September of 2005 which shows that on any average day 2% of all Internet users sell something.

Just about anything you can think of is currently being sold online, or at one time or another has been for sale; Cars, compact disks, books, guns, clothing, games, electronics, the list can literally go on and on. Virtually anything your clients can think of you can help them sell. But, I’m sure you know this already.

However, to my point, several additional consumer side statistics say this… The number of U.S. citizens that say the Internet has increased their capacity to shop has literally doubled from 16% TO 32% since March of 2001. This was another survey done by Pew published in April 2006. Business to Consumer (B2) organizations such as Ebay, and Yahoo are large facilitators of ecommerce. They have grown to a level in which they feel it necessary to help the small business get online. For instance Ebay purchased Prostores and licenses Prostores out to companies like Register.com and Affinity Internet while companies like Miva Merchant license their software to EarthLink, Web.com, and Hostway for example. This allows the developer of the software to cast a wider net to make their solution more available to the small business owner at a more affordable fee. You can approach these companies (hosting companies, Miva, or Prostores) and set up your own channel deals with them to provide to your clients.

With all the above solutions, your clients can create their complete business sites from the templates and e-tail store exactly like what is offered by the above mentioned companies.

Now – not to oversimplify the concepts above; but it’s serious business providing small businesses with an ecommerce solution. It is still a Greenfield opportunity as far as I am concerned. There is huge room to grow creating real annuity streams of revenue for your company above and beyond the up front bang you might get when you sell a site to a customer. Imagine bringing on 10 customers in the time it takes to sell one 14,000.00 dollar customer. In the long run, exponentially it makes sense for your company. Lower costs and more customers, isn’t that what it’s about. Generating more profit with less work? It could also let you be more competitive than the guy down the street selling his $14,000 site to the same customer.

It is also going to be very confusing for your customer if they are new to e-tailing. So some of the development fees can now get turned into training fees, adding some backend revenue to your annuity streams. This is can be a confusing business for the layperson. Every vendor does things slightly differently, and there is no standard for them to follow, per se. I read an article recently that said to help the new merchant to answer the following questions/items:

• How do I want to buy products and services online,
• How do I want to position, deploy, and manage my e-tail platform
• Find the vendor that meets the above requirements
  

It makes sense, and if you use the “Dad principle” you can further make things easier on your client’s customers. By the “Dad principle,” I mean “Can my dad do it?” The concept is one that, if my Dad can do it, anyone can do it. My good friend Doug McDonald came up with that, and I use it today in my thinking.

Now if you are a small business owner reading this, thinking about jumping online and making your Internet fortune, beg of you don’t “just do it.” Make a plan, make it a business. Learn about Search Engine Optimization, Search Engine Marketing (Yes, they are different), RSS feeds, XML Feeds, Merchant Accounts, etc., and make an informed decision. That much I beg of you. Learn about the online retail business that are successful, how they are successful, and why they are successful. Learn about the ones that failed, and try to learn why they failed.

Learn about Shipping companies, their policies, and how they will affect your business, and what software their experts might recommend using that might integrate into your software… The same goes for your vendors, what do they already have in place for you to utilize, making your life easier on the back side…

You should define all of your existing and near future needs, get realistic expectations of what you are getting into, and set some seriously realistic goals for yourself.

If you are the hosting service provider reading this, then you should help your client set the right expectations going forward. Noting is going to sting more than a client that leaves because they thought they were going to be rich in 90 days online. This is a business for your customer. And eCommerce/E-tailing is the new serious business of the future. Like with traditional hosting, as clients get savvy they will want faster more efficient setup of their ecommerce solution so they can hit the ground running.