How To Plan Online Business?

2007-09-30T22:06:00.001-07:00

Lee Ann Obringer, Contributing Writer

Coming up with the Ideal Idea

Let's start with the concept for your online business. Actually, let's start further back than that. In the beginning, there were stores and they were good stores. Those stores had "storefronts" and they also were good. They allowed people to see the store and, more importantly, see what was inside the store. From inside the store, people could purchase things. Sometimes they purchased things they needed, but many times they purchased things just for the heck of it. Those were called "impulse buys." To get to the stores people had to get in cars or on buses or trains and travel there. Then they had to carry their purchases back home with them. It was a hard time back then.

Then came mail order catalogs. With a simple catalog that was delivered -- often as a surprise -- to people's mailboxes, stores could now sell more things to more people -- people who were all wearing their bathrobes and slippers. This was a great time for buying things -- especially for buying things people didn't realize they needed until they saw them in those catalogs. To get these catalogs to peoples' homes businesses had to spend lots of money creating the catalogs, and then lots more money buying mailing lists and mailing the catalogs. Then they had to have employees answering the phones and taking orders from the new customers who were sitting in their homes shopping. It was an expensive time back then.

Then, one day some business person said, "hey, this is costing me a lot of money. How can I get people to buy my stuff without having to spend so much money on printing, mailing, and people answering the phone?" That's when the Internet said in its big spidery voice "Me! Me! Look at me! I can do it. Give me a chance!" And they did. Now, not only can customers shop from home, they can visit almost any kind of store in the world, buy almost any kind of product they could possibly need, and comparison shop to their heart's content, all while wearing mismatched sweats and holey socks. They can look at your storefront, buy impulsively, and leave if they can't find what they need. Their purchases come to them in big brown or blue or white trucks. Life is good.

The rest is recent history. OK, so maybe that's not an accurate historical record of the evolution of business commerce, but it does loosely follow the evolution of convenience shopping. Read on to find out how you too can take your business online and sell to the masses wearing their bunny slippers and sipping lattes!

If you are starting an online business from scratch -- meaning you don't have an existing business that you're thinking of taking online -- then the most important thing is to make sure you're starting with a good idea for a business. For some, that means thinking about what they do best and capitalizing on it, but for others it means looking out at the world of commerce and searching for holes, gaps, slight cracks and even just places where there is room for improvement. Either of these may work, but a combination of the two is more the ideal solution. If you are really good at something -- or pretty good -- or even just better than the average Joe -- AND you've seen a need for it in the market then you may have a good opportunity to succeed.

If you're in that idea-forming stage thinking about what you're going to offer then take these things under consideration. According to Ernst and Young, the best-selling products online are:

computer products
books
travel
clothing
music and subscriptions for music
gifts
investments

You may decide on selling downloadable how-to or other information, products, consulting, services of some type for a regional or local area, providing auctions, hobby sites, or even selling words (e.g., syndicated Web content).

You may find that distributing products for several manufacturers' would work well with your skills and could fill a need in the market. Maybe you have connections that will give you better deals so you could sell items at lower prices than your competitors can. Or, maybe you live in an area where a product is produced and could save on shipping costs from the manufacturer to you. Think about the resources immediately available to you. Specialize in something. In order to succeed on the Web you have to offer something slightly different, better, cheaper (meaning less expensive), or have some other "edge." There are many things to consider, but remember that people go to the Internet for information. You may find that your best bet for a successful online business is to offer something information-oriented like books, manuals, how-to's, or do-it-yourself kits.

The ideal business idea will also have inherent positives and negatives, so think about:

startup costs
labor needs
product quality (it's got to be high quality)
competition
the size of your potential market
profitability
necessary product support
legal issues and regulatory concerns
associated costs like shipping, inventory, or repairs
repeat business potential
cross-selling potential

Don't forget to think about what you would enjoy selling. Feeling good about and enjoying what you do to make a living is as important as being successful. Remember our motto here at HSW, "business doesn't have to be boring!" Do something fun. It keeps you young!

As with any other business, before you get too far along in the process you need to write a business plan. Writing a plan, even if your business is small, is never a waste of time. It will always help you organize yourself and improve your chances of success. It will also help motivate you to keep plugging away if you've seen the potential right there in the pages of your own business plan!

The Name of the Game

If you already have a company then your domain name shouldn't be too hard to come up with. If you're starting from scratch, however, you may have more of a challenge. Naming your online business is just as difficult as naming your traditional brick and mortar business -- and maybe even more so.

Think about naming your business something that describes what the business does or is about so the people who simply type into the URL window what they're interested in and add a www. and .com to it may find you immediately. For instance, if your business is creating custom wood molding, you might consider www.customwoodmolding.com for your business name (or at least your domain name). The main rule is to make sure your name makes sense. Single word names that have a cool Webster's meaning but don't really describe the business's function won't stick with people, and may make it difficult for your online business to take off. (Unless, of course, you plan a media blitz announcing the new business to the world -- then you can have a little more leeway.)

There are a few simple rules-of-thumb that you should follow when coming up with and registering your online business's name. First keep it short. Although your domain name can be up to 63 characters, that doesn't mean you should use them all! Make the name as short as you can so it will not only be easier to remember, but also easier to type in.

Secondly, make it as logical for your business as you can.

Third, you should register more than just your primary domain name. For instance, you probably should register any variations you think a customer might type in. For example, HowStuffWorks.com also registered, www.howthingswork.com, www.howstuffdoesntwork.com, and several other variations.

And fourth, include at least the most common misspellings of your name.

How Do You Know What Names Are Available?
You can check on the availability of domain names through many registration sites. For example, go to Network Solutions or Register.com and just type in the name and extension (.com, org, etc.) that you are interested in. The site will search the databases and tell you if the name is available. But, what if the name you need is already taken? Should you contact the owner and offer to buy it? You could. You can also check on some of the other top-level domains currently or soon to be available like the new .biz extension. Let's talk about how the domain name system works so you'll better understand your options.

Domains, Sub-Domains and Hierarchies
Domain names are set up as a series of character strings separated by periods. They are hierarchical but, rather than going from left to right, your top-level domain name will remain at the right end of the name next to the suffix (.com, .org, etc.) and sub-domains will be added to the left. So, www.abcnews.com could add sports.abcnews.com for their sports Web site.

Or, you may register your company name as mycompany.com when you first start your business then later if you added another division to your company you could add the sub domain name division.mycompany.com. This is not a new name that requires registration, it is simply a sub domain of your existing name. Of course, you don't have to do it this way. You don't even have to have your domain name start with www. Usually, the www indicates the host or Web server and can be anything you would like it to be (may also depend upon your site host). Most people are used to the www part, however, and may have trouble accessing your site if you don't use it.

The domain name system (DNS) is currently overseen by ICANN, the International Corporation for Assigned Names and Numbers. It is a non-profit private-sector organization that coordinates the technical management of the Internet's domain name system. Its Board of Directors is made up of a global membership of individual members of the Internet community and supporting organizations representing business, technical, non-commercial, and academic groups.

There are currently six general top-level domain (TLD) name suffixes. Those are:

.com -- for commercial use
.edu -- for educational organizations
.org -- for non-profit organizations
.mil -- for the military
.net -- for network providers
.gov -- for government agencies

ICANN also approved seven more TLDs in November of 2000. Those are:

.aero -- for the air transport industry
.biz -- for business-oriented sites
.coop -- for cooperative
.info -- for information-oriented sites
.museum -- for well... museums
.name -- for individuals
.pro -- for accountants, lawyers and physicians or other professionals

There are also some top-level domain names that make use of unused country codes (ccTLDs -- country code Top Level Domains). The most common ones are .ws, .md, .cc, and .tv. These can be registered just like other domain names, and can even still take advantage country codes within the address as well (www.companyname.uk.ws).

For an in depth look at how the DNS works click here.

Registering Your New Name
You've decided on a name. Now you have to choose a registrar, check the availability of the name, and get it registered. Registration is typically $35 per year, although less expensive registrars can also be found. Be careful when choosing your registrar and make sure you read all of their terms. (Also make sure you read terms when it's time to renew because these things seem to change quite frequently.)

Also, don't hesitate to transfer your registration to a new registrar if you have any problems. Registrars won't typically refund any fees you have paid when you transfer away from them, but some registrars will credit your account with any fees you have already paid to the previous registrar you are transferring your account from. So you may be able to pay for two years with a new registrar and have the account term extended by the amount of time you still had left with your previous registrar.

Protecting Your Domain Name
One of the best ways to protect your domain name is by registering it in all of the generic and national top-level domains that you see might be a potential risk. If yours is a highly competitive market and Web traffic is going to be vital to your business you should definitely take it into consideration. Also, you should register brand names and any generic names that describe your business.

If your company name ends with "company," or "enterprises," or "incorporated," make sure you register variations on that. Don't abbreviate anything that would make it difficult for someone to find your site. Also make sure they won't miss your site and stumble onto a competitor's site.

Your domain name can also be registered as a trademark, or constitute a trademark, depending on how you use it. Check with your attorney about how to go about protecting your domain name in this way.

Buying an Existing Domain Name
If you're buying an existing domain name from a former owner (e.g., when someone has already registered and owns a name you need, or when you purchase an existing company), you have more of a challenge. First of all, it's going to cost you more money. Companies pay many thousands of dollars for the right domain names, and some folks make their living registering those domain names in anticipation that a large company will need to purchase it from them -- usually for big bucks. (You may be able to dispute these with ICANN.) If you find yourself needing to purchase a domain name from a legitimate owner, here are some tips to protect yourself:

Have a written contract that specifies the purchase of the domain name by you and only you. (Just to make sure you're not being scammed along with several others.)
Make sure the contract spells out that all copyrights and trademarks are also included in the deal.
Use an escrow service to handle the money exchange. That way, as a buyer, you know that the seller can't take the money and run because the escrow service will make sure the transfer of ownership is complete before they turn your money over. Make sure you know the escrow service's fee and policies for handling domain names, such as how they deem the transfer of the domain name has taken place and the time span involved.

OK, you hopefully now have an idea, a name, and one of those flashing "under construction" signs at your URL. Now let's move on to the real work in putting together an online business. What will your site DO?

Planning the Party

The first question you should ask yourself -- after you've asked yourself if you think you should really tackle taking a business online, that is -- is what is your Web site's purpose? Why do you want people to come to your site? For a lot of people that question would make them think "well, duh, to buy things! Why else?" But, that's a little short sighted. Web sites are created with all sorts of purposes in mind. Those that don't really have clear purposes end up being big meandering passageways of cyber-fluff. Here are a few ideas to help you give your Web site purpose.

Prospecting
Maybe you want to generate prospects for your sales reps to call on because your product or service is too complex for anyone to buy online. In this case you would design your site as more of an online brochure that would extol the virtues of your product or service and bring the visitor to act by filling out a form to request more information, join a newsletter, or even post a question. Your site can be quite simple if this is the case.

Sell, Sell, Sell
What if selling products directly from your site is your plan? Does that make planning the site more difficult? Probably so. You'll have to consider the number of products you're listing. Does it warrant having a database of product descriptions and prices? You'll probably have to have some sort of shopping cart software that let's people put products in their "virtual cart" with the click of the mouse. You'll need to be able to accept credit cards or other online payment so your visitors can enjoy that immediate satisfaction of having completed something on their to-do lists. You'll need to have information about product returns, customer service, technical support, etc.

Customer Support
Maybe you just need a place for customers to go for detailed product information, troubleshooting guides, assembly or other instructions to download, or to just access a knowledge base. You can also have a live person answering questions via instant messaging. A Web site is great for this as well. You can significantly reduce your costs for customer service by having a well-stocked Web site that covers both the routine and even some of the less routine questions or problems that come up in your business.

Educating Surfers
As I mentioned before, many many people go to the Web for information. When they go there, however, the information had darned well better be free! If you decide information is your business then you'd better have something very interesting, unique, and in demand -- like "sure fire ways to make money with the leaves in your gutters" or "how to make your own high-speed Internet connection for free using only duct tape and fishing line!" OK - these may be extremely lame examples but they got your attention, and if they worked you'd have a gold mine!

Seriously though, you can bring people to your site by loading it with good, unique information, in which case you could either follow a pay-per-piece revenue model, a subscription revenue model, a syndication revenue model, or an advertising revenue model. If the information is truly unique and good information, then this will increase the likelihood of turning visitors into customers and hopefully creating loyal "repeat" customers or subscribers. Or, if you are planning a revenue model based on Web advertising then you have to have content that people want to come and read. People as a whole are naturally hungry for information.

You may also think of educating your visitors as a side function of your site. Think about this as you would a client newsletter. You may already send out an informative newsletter as a service to your clients (and subtle marketing tool), and you probably spend quite a bit of money doing it. By putting that information on your Web site and directing your customers there, you'll not only save money, but save trees too! You can create vast archives of information that will be extremely useful to your clients and potential clients. Your subscription list will also grow more quickly because others will find your site via search engines and outside links. (We discuss this in more depth in our article about promoting your online business.)

Who is Your Audience
If you now know your purpose, you should also have a good idea of who your audience is, and build your site around them.

Say, for example, you are a realtor in the suburbs of a large metropolitan area and you want to build a Web site. Your Web site's purpose might be to promote your listings to home-owners-to-be in your immediate area as well as those across the U.S. who have plans to relocate to your area. With that in mind, you would want to include information not only about the houses you have listed, but the entire area, schools, job market, entertainment, cost-of-living calculators, etc. You want to fill the needs of your audience and encourage them to stay at your site and request more information. You are using your site for prospecting.

Think about who your customers are and what types of things would encourage them to stay at -- and return to -- your site. What are their interests? If your market includes teenagers then you could play up the fun aspects of the site, add some interactive games, resources for homework, colleges, etc. All, of course, as they relate to your business. If your market is working moms then you could include useful information about balancing work and family, childcare tips, etc. Again, as they relate to your business.

Content is Still King
What you put on your site is critical. The purpose of your site will dictate the content, so make a list of everything you would need to meet the site goal, as well as the needs of your target audience. Here are some questions to help you think through it.

(If you currently have a brick and mortar presence) What questions do you get by phone that could be answered via a Web site? -- hours, locations, product lines, pricing, etc. -- These should be prominent and easily accessible from the home page.
Do you need interactivity on your site? -- In other words, do you need to include searchable databases of information, forms for feedback and other information, downloadable content, shopping capabilities, etc.
Do you want to educate your visitors? -- This could be detailed product information, instructions, or other information to help them make a decision about your product -- or anything else for that matter.
How much information about your company do you need?
Can you include product photos, video clips, audio, or online demos? -- Many people like to try before they buy.
Do you need to include a customer support database?
Do you need forums or live chat capabilities?

Structuring Your Pages
Once you know the purpose, the audience, and have an idea of the categories of content for your site you'll need to plan out the pages for the content and site functions. This is known as the Information Architecture in the techy Web world. Organize the pages in order of importance as they relate to your Web site's purpose in life.

Put yourself in your target audience's shoes and think through the processes you want them to go through. For instance, you want them to first of all find your site, but I'll talk about that later. Then you want them to easily find the information they are looking for while being amused and titillated at your comedic antics or the elegance of your site design. You want them to be moved to act on your offer -- whatever that may be -- and bookmark your site for future visits.

Start your brainstorming by getting a large piece of paper and a pencil and drawing a small square at the top center for your home page. Add squares below it for each category page and connect them as you would an organizational chart. The lines connecting the boxes represent links between those pages. For each page that would link from the category pages, draw another box below the category page box. Make lists for the content of each page. Continue this until you get your entire site mapped out.

This may require a lot of erasing and redrawing, but it will make you think through the navigation process. It won't guarantee that you won't have more changes down the road, but it will help get your site design off to a quicker start, and will help you or your designer set up the actual site. Once you have a picture of your site and its functions in mind, move on to our next session that covers the tools your site will need to have in order to perform those functions.

Care and Feeding of Your Customers

Your Web site is an excellent medium for customer service. Don't neglect this very important side of your business by inadvertently leaving it off of your Web site. You can easily provide your customers with a good chunk of the information they would normally have to call you for. Things like product support documents can be put into searchable databases so they can be found and printed easily. Assembly instructions and part replacement guides can make life much easier for those do-it-yourselfers you sell to. The old standby, FAQs (Frequently Asked Questions), is invaluable for saving your live customer service staff (or person -- or you) from high therapy bills for that repetitive speech issue.

Here are some other tips for the Customer Service section of your site:

I know I've mentioned it before, but send out a customer newsletter that also addresses customer service issues and reiterates all necessary contact information.
Create a simple to use form for customer feedback, complaints, comments, whatever they want to tell you. Then... make sure you reply to those e-mails quickly. Check your e-mail frequently each day and respond to problems and questions as soon as you can. Make it your policy to fix any problem that is within your power. (Well... at least those related to your Web site, your products, your systems, or your staff!) Turn any contact with your customers into a relationship-building experience. (You might want to visit our sales articles too!) Excellent customer service is key to success regardless of the medium.
You might even look into having a live person responding to direct questions via "instant messaging" technology. At least then the customer will have a little more assurance of being responded to. Check out sites that offer this and test them out. Technical problems, as well as slow connections can be issues, so be prepared.
Have a good return policy. Look at the return policies of company's like L.L.Bean and Land's End. If it's the wrong size, style or color, or if you just don't like it you can return it with no hassles whatsoever. Even return postage is sometimes paid. This type of policy will give your site's visitors more courage to order that imitation leopard-skin skirt if they know they can return it easily. And... by easily I mean include all of the return paperwork in the box with the order and set it up so all they have to do it put the return mailing label over their mailing label and put it in the mail. Remember, people don't like to have to work hard when they're spending money -- they do that when they're earning it!
Other aspects of customer service fit in with the whole order taking process. Make your order form easy to fill out, and give them some options for shipping methods. If you can (and this might be dependent on your shopping cart software), include live links to the major shippers you use so your customers can calculate and compare shipping costs. Or, as I mentioned in the promotion article make shipping and handling free. Your customers can't complain about that! You can also make ground shipping free and let them pay the additional costs for overnight deliveries.
Pack your orders with care. There's nothing more irritating than to anxiously wait at the mail box each day for a package to arrive only to find that when you open it you have a pile of broken glass or melted candies. THINK before you pack. It pays in many ways. Does your product hold up well in high temperatures? Check out Harry and David's packaging and shipping methods if you're also shipping foods. Is your product fragile? Even just a little bit? Check out Lillian Vernon's packaging and shipping methods if you're also shipping knick knacks and such. And, if there is a problem with the order when it arrives, don't ask the customer ship the product back to you unless it really can be salvaged. And then... pay the return postage yourself.
Keep customers updated on back-orders. There's nothing worse than needing something NOW and going the Web BECAUSE you need it NOW and then having the item be on back-order without realizing it. If you can, build inventory levels into your database system so your customers know when they pull up the product description whether the item is in stock or not. For questionable items you can have them directed to call and check if they need it shipped immediately. Regardless of how you do it, make sure the customer has a good idea when the product will ship.
Product guarantees and warranties. So what is the difference between a guarantee and a warranty? Well, according to Merriam Webster, a guarantee (as it applies to a product) is an assurance of the quality of or of the length of use to be expected from a product with the promise of reimbursement. A warranty is usually a written guarantee of the integrity of a product and of the maker's responsibility for the repair or replacement of defective parts. So, there you have it. One is written and one isn't. Now let's move on to how you should handle them in your business.

If you distribute products for someone else then you're kind of off the hook as far as guarantees go... except... remember that people may still call you when problems arise with products they've ordered from your site. While directing them to the manufacturer may be a simple way to take care of the problem, you won't be winning any brownie points with your customers who are, by the way, already unhappy. By offering to step in and help them with warranty issues, you'll not only win big brownie points with that customer, but you'll probably get some good word-of-mouth advertising because they're going to be so amazed that you stepped in to help them they're going to tell everyone! Now if you're selling "personal" products that may not be quite the case, but it can't hurt. Think about it.

If you sell products that you yourself have developed, manufactured or even just assembled, then you should take the responsibility of standing behind your products. Investigate standard warranties for products like yours and establish your policies to be just a little bit better. Remember, you're competing against the world, not just the guy down the street!

Make use of the information you collect. When you do get product returns due to problems or even just because the customer didn't like it, ask the customer a few questions (in a friendly way) just to help you make sure you want to continue carrying the product (or making it yourself). Customer feedback is gold when you're trying to stay on top of changing trends and likes and dislikes. Your product line has to reflect the needs and opinions of your target market. Stay on top of it or perish!

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