There have been many changes since I started my business. The Internet was just getting off the ground, and the search engines had not yet figured out a way to squeeze the last dollar out of merchants and visitors. By the same token, a relatively small percentage of merchants had web sites, not everyone had on-line access, and those that did had very slow connections.
However, for those who built their businesses around this new marketing opportunity, it was kind of like the California Gold Rush. Advertising was free, and it was not only nation-wide, but global. There had never been a way of reaching such a far-flung audience so economically.
America’s businesses, start-up businesses in particular, were quick to grasp the advantages of Internet marketing, and wasted little time in jumping on the bandwagon. Larger, older businesses generally had distributorships with specific geographical territories. They were unable to take advantage of Internet sales without violating their distributors’ territories.
In many cases, distributors did not stock large, expensive items and often knew little about them. They could not go beyond their assigned territory in seeking customers, and took a percentage of any sales that they did make. Today, depending on the product line, there is a trend for more and more manufacturers to sell direct to the end user.
By 2001 Google Adwords was in place, and advertising no longer was totally free. These were the small ads that appeared in a column on the right side of pages of search results. All of a sudden, my web site no longer came up at the top of search results, but rather on page 4 or 5. Once I started using Google Adwords, my search results miraculously started surfacing on the first page of results again. I found that AdWords produced good sales, but not as good as regular searches (organic searches).
A more recent development has been the use of YouTube channels as a marketing and sales avenue. Smaller companies using YouTube actually offer a product for sale, or steer viewers toward their web site. Larger companies with or without distributors, tend to have very short marketing videos on specific products, whereas smaller businesses often lave longer videos that provide sufficient information for a purchase decision to be made.
The lack of State sales tax previously motivated consumers to make on-line purchases. Not having to charge sales tax was also an incentive for merchants. It took close to ten years for States to figure out how to charge sales tax on out of State Internet purchases. That being said, eBay and PayPal make it possible for startup businesses to avoid the hassle of charging sales tax and keeping track of the tax rates of every State, and in some cases, like Nevada, County.
While eBay’s 10% or more commission on sales is irritating, it is considerably less than many alternative marketing and sales approaches. Once the initial sale puts vendors and customers in touch with each other, follow-up offers and sales can be conducted directly.
Word of mouth referrals have always been an important source of business, but with a proliferation of on-line forums and chat groups it has exploded, and a company’s reputation can be enhanced or ruined depending on the quality of their products, and after-sale customer service and technical support.
I doubt that my business could have been started and grown in the same way today. The Internet is well established, but constraints and regulations have been piled on that increase the difficulty of starting out in business.
Yet there are opportunities available now that were not available previously. There are readily available resources, like Go-Daddy, for creating a web site. It is now almost as easy to make a sale on a different continent as it is in the next State. By the time my business sold, we had machines in approximately 110 foreign countries. I imagine that has doubled by now.
To sum up my recommendations to those contemplating a start-up business:
1. Determine whether your personal makeup, financial circumstances, and family obligations lend themselves to the risks associated with going into business.
2. Try to start out on a part-time basis, without foregoing your present income until you are able to draw sufficient profit from your business to go full-time.
3. Operate out of your home until a move becomes essential for growth and you can afford it. Avoid the philosophy “If I build it, they will come.”
4. Test your products, your potential customers, and your marketing strategies before investing a lot of money. When you come up with an idea, make a prototype and share it in a variety of chat groups to see what kind of reactions you get from different kinds of potential customers. Use your judgement as to whether someone might steal your idea.
Learn how to put together a small web site yourself, and don’t hire a company to do it for you. It’s not that tough, and much easier now than it was in my day. Experiment with different content to increase your success in search results using relevant search terms.
5. Thoroughly analyze all your production and marketing costs, your overhead, and any other expenses associated with your proposed business, and determine if it will be profitable enough. Don’t just plunge into it and find out the hard way.
6. When it becomes necessary to move out of your home location, rent rather than buy commercial space.
7. Hiring employees adds a host of complications and headaches to a business. There are numerous regulations to comply with, taxes to be withheld and reported, training and supervision, and performance issues. It will add another set or more of hands, but it will take up a percentage of your own time. Consider all the ramifications before hiring anyone.
8. Notwithstanding my comment in no. 7, above, don’t forget that one man can only do one man’s work. While you don’t want to jump the gun on hiring employees, at some point it will be necessary.
The same principle applies to businesses. A business in a single location, serving customers within a limited geographical area will have difficulty being as successful as a comparable business with multiple locations, or one serving customers Nationwide, or Worldwide. That’s why franchises came about – to replicate a successful business in multiple locations.
9. When your business does start making money, even a lot of money, remember that nothing lasts forever. Start an investment account rather than going on a spending spree. A couple of million dollars, properly invested, will go a long way toward securing the future for you and your family.
10. Remember that a successful product must be, or appear to be, available nowhere else, superior to competing products, or cheaper than equivalent products. If it only appears to have these qualities, it will probably catch up with you – more so now, than in earlier times.