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Making Money on the Internet:
Spam or scam?

Deciding to do business on the Internet exposes you to risks as well as rewards. Many small business owners and startups are concerned with whether they can profit online. Kris and I are often asked directly: Do people really make money on the Internet? Can I really make money online?

Yes. And yes.

Will you make money online? That depends on whether you make good choices and work your business. Does this sound like a simple decision? Not in the maze of confusing offers, multi-level marketing offers and pay-to-surf programs. Pick the wrong program and your friends, family and casual acquaintances may suddenly put everything you send to them in a kill file. Out of sight, out of mind -- and you are out of the money.

Online business does offer some opportunities to make real money that did not exist at all until recently. The entire world of web development did not exist before the Web was popularized when Netscape Communications commercialized the browser back in 1994.

In a short six years, millions of people and businesses have gone online. eBay's auctions are now estimated to provide the major income for 50,000 of their sellers. It has become possible to find things online that you never knew existed, to pay for them and to receive them in an hour with services like Kozmo.com. In limited areas, you can order groceries online and have them delivered to a freezer in your garage while you are on vacation in another country. Pretty impressive, eh?

The surest means of making money online is to help other people get their business online. Yes, service providers have the best track to profitability. These are web developers, web hosts, online promotional experts, graphic artists, security specialists, shopping cart providers and many others who provide a wide variety of services to business. High school students who formerly had to rely on fast food jobs can now make $45 an hour as web developers. The cost for a business website can range all the way from free, if your time and effort are not charged, to zipping right past how-much-do-you-have?

Amid all of the other ways to "make money online" I am sure that you have noted people who own domains that they never plan to develop. They are speculators who try to pick domain names that will sell at a great profit. You can make money on them but not by registering them and waiting for offers to arrive. Without great choices and good marketing, it is possible to spend a lot of money only to end up with virtual real estate that nobody else will want. Care to check it out?

Loans.com, sold on Great Domains for $3 million dollars, but there are 407 pages of "bargains" offered for $500 each. Thebest.com recently received an offer of $350. There is also a law against cyber-squatting, which means that people who registered the names of celebrities as domains or those of companies can lose the domain without compensation.

Online exchanges open up a number of options to make money. A lot of "big business" money has gone into developing B2B exchanges but they are on fairly predictable lines with commodities such as oil and metal or structured along supply chains for fairly large markets. Consider developing a specialty market where there is demand for products and there is a supply but there is no good, current solution for having the sellers meet the buyers online.

The use of digital cameras makes it easy to show the actual product, or an example, over the Web. I am often asked if I can put producers of handicrafts, textiles, apparel and household items in Asia together with purchasers in the U.S. In example, you can find exquisite Russian lacquer boxes online that sell for $20 dollars apiece if you buy them from Russia or $250 in the U.S. Any time you can find that kind of spread between producer prices and sales prices, you have found an opportunity to make money.

Do you want to sell products online? Are you going to sell business to business, B2B, or are you going to sell to business to consumer, B2C? Is it your own business concept or one that many other people will be doing in much the same way as you? Many of the scams and marginal businesses where you will have to work very hard to make a profit are in B2C. Why? Often, there are too many competitors selling exactly what you are selling and your potential customers cannot find you among the many other sites.

If you are in an MLM (multi-level marketer) that offers you "your own website" you may find it useful for communications with your customers if you can put your own information on it, including special offers. However, your website at www.bigbusiness.com/my_own_business is not likely to receive many outside visitors. Why? They will not be able to find you on the search engines and directories. They will be able to find www.bigbusiness.com online but that will not lead to a sale for you. That is why good web developers will urge that you buy your own domain. Unfortunately, if you are selling the products of BigBusiness.com, they may insist that you use only the website that they provide you for that business. If you own your domain, your business site can be found if you promote it vigorously and effectively. If you do not work to build your business, you will get few, if any, customers.

What if you really have your own store online? Keys to success include:

1. Know who your customers are and what they want. Know why they want it. What problem will it solve for them?
2. The Internet puts much more power in the hands of the customers. If they want a left handed, platinum-decorated wassail cup or anything they can find it or find someone who will make it for them.
3. The online world is 24/7. Your site must be up and working anytime they want to visit it.
4. Make it possible for them to find you! You need an online and an offline promotional strategy. We strongly recommend using Jay Conrad Levinson's book, Guerrilla Marketing, to find smart, cost-effective ways that will work to promote your business.
5. Have good, clean site design that makes it easy for them to find the product and easy for them to check out.
6. Make it easy for them to find it and easy for them to buy it.
7. Give them a number of ways to buy it - online, via phone or by sending you mail.
8. Give them their choice of how to pay for it - take credit cards, take debit cards, take checks online, let them pay for it C.O.D. (Collect on delivery)
9. Having it available for immediate shipment or delivery. Customers are getting used to "right away" service from Amazon and other retailers. If you do not have it in stock, you risk losing the sale unless you can arrange drop shipment from a fulfillment center or the manufacturer.
10. Offer them the option to get express delivery if they want to pay for it.
11. Work to earn their business, every time they visit your site, call or email you.
12. Once you have them as a customer, ask their permission to stay in touch. Ask them what they want, then offer it to them. Repeat business is essential to success. Why? It costs, on average, eight times more to get a new client than it does to keep your regular clients happy. Email is a great way to make these offers, such as advance sales and special discounts, because it costs less to send than the cheapest mailing, flyer or ad that you can place.

When I started research for this article, I wanted to determine approximately how many U.S. small business owners are making at least 20% of their income on the Internet. It was a question that I could not answer.

There were many obstacles to finding this answer, starting with the question, "How many small businesses are there?" U.S. estimates range from 11 million to 48 million. According to AMR Research, there are 24 million small businesses that are either online or could be online easily. Do you count only sales that are rung up online or sales that are influenced by information online? If a customer does all of his research online but then calls a telephone number to exchange financial information, how much of the income from that sale is "online?" 100%? 90%? 0%?

Online sites can provide a way to tell your business' story in greater detail than any ad that you might buy. Now, how many ads have you seen that can take your customer from information gathering through purchase?

Doing business online will not make a bad business work well. Putting something online will not make the money roll in "while you sleep" unless you are working it hard during other hours. It will, however, add a lot of power and the ability to reach customers you might never have contacted without it. It gives you the opportunity to know your customers and gain their trust and business. Do you need an online site for your business? Only you can answer that question. It will be most effective if you use it as part of your overall strategy and not as a single, standalone effort.

-Cynthia Nemeth-Johannes