WebVan and Pets.com are synonymous with foolish Internet ventures that got spectacular media coverage and angel investors. This wasn’t enough to produce a viable Internet business, however, and the audible crash of many dot com companies belies how easy it is to fail in a Web business when you don’t understand proper money management. The basic rules of business were thought to be obsolete during the crazy day of web start-ups until the fuzzy dreams of virtual stores with little intrinsic value were stripped bare of their fantasies.
Keys to Success on the Web
If you want to start an Internet company the basics of good business practice are even more important. You should have a good handle on the following:
- Money management – Don’t spend all your investor’s money before you’ve even generated a profit. The bottom line still applies for Internet businesses.
- Business logistics – Do figure out what your business model is and how much it will cost to provide services. Offering slashed prices to attract web surfers isn’t enough. You also have to make a sale and deliver that item or service to the customer while making a profit.
- Customer service – Your model has to include good customer service and the ability to retain repeat customers.
- Understand your niche –WebVan was such a disaster because it had no idea that grocery profits are typically minute in comparison to other industries. If it had done a market plan and researched this area, it would have been obvious that groceries don’t have a high profit margin.
- Scope out the competition – If you have a good idea, it doesn’t mean someone else can’t use it. Know how you differ from your competition and what would help you compete in a global market place to attract your customers.