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8 Steps to Making Your Web Business More Valuable          Print the current page
by Robert Moskowitz

Never before in financial history has it been so undeniably relevant to ask: If you’re so smart, why aren’t you rich?

With continued growth of the Internet, and venture capitalists’ frenzied rush to invest in businesses that sometimes seem little more than a gleam in an entrepreneur’s eye, it’s possible today to develop a new business, go public, and cash yourself out not only before you turn a profit, but before you graduate from college.

For proof, check out the scour.net story. Here is a quirky little company started by a small group of engineering students attending UCLA in the mid-1990s. Their big idea was to create an online index containing the actual URLs of the web sites with popular audios, videos, and pictures today’s college students and other young people want to experience. Once they got it running you could click on a scour.net link and immediately hear the music or see the pictures. Within a few months, they had attracted a fanatical group of frequent users, and today they’re logging hundreds of thousands of page views every month. Not surprisingly, investors are eagerly offering them large sums for a small share of the company.

It’s less of a pure Internet play, but the Blair Witch Project turned Hollywood’s marketing dogma on its head. Made for a budget of about $50,000, the film attracted more than $100 million in box office business. How? By building an enthusiastic advance audience using a web site combining excess film footage and innovative story telling.

So if you’re smart, maybe you too can be rich. Here’s what it takes:

A Business Model
You can’t generate value in the Internet business world without a suitable business model. These days, the Internet Gods are smiling on business models that contain the following elements:

  • Scalable - It’s one thing to serve 250 people a day with 5 employees, but success on the Internet requires that you be able to serve 250,000 people a day without needing 5,000 employees. In other words, structure your internal operations to vastly increase the volume of the business without vastly increasing costs.

  • A New Paradigm - Venture capitalists say they’d be reluctant to fund a Fortune 500 company’s idea for doing business less expensively, but they’d be happy to fund a business idea that will steal half the customers from that Fortune 500 company. Think about doing new things in new ways on the Internet.

  • Business To Business - While Internet businesses that serve consumers get most of the new media’s attention, statistics show that the market for businesses serving businesses is five times as large and profitable. So why sell the CDs when you can clean up big time by selling the CD cases and shipping materials?

A Business Plan
Most Internet success stories touch on a love-hate relationship with their business plans. This thought process assists in focusing your thinking. Remember that the business environment is changing so fast that if you write a traditionally long and narrative plan, and you keep it current, you’ll never have time for anything else.

That’s why a lot of new businesses on the Internet think in terms of a brief plan, bullet points, or an outline that covers the important topics of a traditional plan without requiring hours to rework and polish every time you make a change. You can revamp these types of business plans in minutes.

A Proven Concept
So you say you can get a million people to put all their appointments and commitments on a web-based calendar and refer to it many times a day. Fantastic! But no one’s going to fund that idea until you prove the concept by getting the first few thousand people to do so.

Even if you give away the service, lose money on every transaction, and provide only half the features you eventually hope to offer, the first step in web-based success today is to get lots and lots of people to use your web site the way you want them to.

Suitable Back-Office Records
Despite the long hair and informal manner, today’s web-based millionaires have all the skills of traditional button-down collar desk jockeys! You want credibility in the Internet community? You’d better have exciting pro-formas, impressive web site activity logs, and a favorable cash flow statement before you knock on the door marked Internet Winners Only.

A Dynamic Team
Aside from cash and technology, the main currency among Internet entrepreneurs today is human capital. You won’t get far without a dynamic management team that includes someone to herd the bits and bytes into their proper formations, someone to make useful connections with other successful organizations, and someone who understands how to develop and maintain customer loyalty.
An Enthusiastic Pitch
Assuming you’ve got all the elements for a successful Internet business, don’t hide your light under a bushel basket. Your operation needs a front man or woman who is not afraid to go to meetings, make positive impressions, charm the venture capitalists, and convince other Internet players that this vision is going to become a reality. Until they start believing it, the real opportunities just won’t appear.

A Penchant For Perseverance
In the real world, it takes more than one meeting to make the right connections and collect enough support to push your new company over the top. In fact, it takes a lot of meetings that go extremely well. If you’re easily discouraged, you’ll probably give up before you get there. In this environment, only the persevering will prosper.

A Bit Of Luck
When all is said and done, it pays to sit next to the right person on that airplane, or bump into a receptive investor at a neighborhood potluck. You can’t succeed in the Internet world without a bit of luck. Never forget that the harder you work, the luckier you get.