There are two distinct and different routes into business on the Internet. The first strategy is to set up as a pure ‘dot.com’ company (the dot.com refers to the suffix that identifies the business as an Internet company). This means coming up with a sound idea (that no-one else has yet tried successfully) and launching yourself onto the Internet. To emulate the most successful launches you will need to either have money or borrow enough money to get yourself up and running and then convince a high-profile celebrity or business guru to support your venture. This personality will then be expected to endorse the enterprise as you go for a stock exchange listing to raise the capital that you really need to stay in business. If you time this right (and sorry, you’ve missed out if you haven’t done this already) you can become an overnight millionaire with a business that doesn’t necessarily have to have actually sold anything – certainly it doesn’t need to be making a profit! If you are coming to the Internet now, however, you’ve missed the boat. Dot.coms have been through a rapid period of growth followed by an even more rapid period of decline.

Unrestricted growth could not be supported by the market and rapid decline and loss of confidence followed. The market is now beginning to grow again, but much more slowly and carefully than the first time around.

Fortunes (on paper) have been made and lost almost overnight. There are few (if any) unqualified success stories for dot.com start-ups. Even some of the best known and longest surviving companies have yet to actually make a profit. They depended not only on sales of their own products, but on advertising. Sales have often been slow to grow and distribution has not always fulfilled customer expectations. Advertising revenues were also slow to grow and many advertisers have condemned internet advertising as ineffective, so that even these streams of revenue can no longer be counted as reliable. What the shake out probably means is that a few companies will survive (and eventually prosper) either because they are big enough to ride the storm, or because they are small enough to have carved out a profitable niche market for themselves. Many, however, will sink without trace (along with the many that already have).

 

Related posts:

1. Internet Marketing Strategy – Word of Mouth Advertising

2. The Basics of ‘Break Even’ in Business

3. Economics Basics – Firms’ Objectives

4. Business – The Basics of Ansoff Matrix

5. Understanding Profit in a Business Organization

6. Economics Basics – Profits and Profit Maximization

7. The Basics of Advertising Your Business Using Ad Specialties

8. How to Set an Advertising Budget

9. The Basics of How to Ease Your Business Out by MBO

10. The Basics of Advertising