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This time last year everyone was trying to jump on the dot
COM bandwagon. If someone even whispered IPO, they were
likely to be smothered in a flood of money that was thrown
at them; or so it seemed. I wrote several pertinent
articles related to the financial side of the Internet.
.com Advertising
http://www.imswebtips.com/issue31top2.htm
and Raising Money
http://www.imswebtips.com/issue37top2.htm
In both instances I noted that the Internet was over hyped
and that many of the companies that were currently
enjoying excessive publicity would be "Out of Business" or
"Significantly Reduced in Purpose" within 12 to 18 months.
If there is anything I can get you to do, it is to look at
the business side of the Internet through squinted eyes.
You may not be able to see what is going on very well but
you will also be less likely to be blinded by the excess
of hype, either positive or negative, that still continues
to plague it. The fact is no one can really see what is
going on so it is easy to talk as if we do.
The news media is especially prone to hyping stories about
the Internet (or anything else for that matter). The fact
is people like to listen to a good story. Boring stories
are well, boring. They don't sell very many papers.
If investment money was being thrown at any company that
attempted to put any business online no matter how far
fetched, how come YOURS was the only Internet business
venture to fail to raise capital? And now it is too late.
Based upon the stories that are currently being published
we can almost expect that the Internet is about to be
unplugged and scrapped as a dismal failure. And you are
still working your butt off to get started!
The fact is if you are still in the process of getting
started, you may be in a good position. The problem with
an industry that is over hyped is that it is very hard and
very expensive to be heard. As many Internet companies
with excess cash and weak business models go the way of
the dinosaur, those that are left will have more
opportunity to be heard and less competition for their
customers. It is just possible that all those advertising
agencies that slammed the door in your face are now
throwing their doors wide open begging you to come in. And
yes, you are entitled to ask what kind of a job they did
with their previous Internet clients.
All the hype aside, the Internet is really no different
than any other business media. If you have a bad business
model, no amount of cash is going to save you. If your
business model does make sense, the Internet is still not
going to save you. You are going to have to have all the
ingredients that are necessary to make any business in any
media work. These include a sound business model,
expertise, sufficient capital and/or determination and a
lot of luck, not to mention star alignment and
intervention by aliens.
The Internet is a wonderful new media that will provide
great business opportunities for those of you that have
the savvy to capitalize on it. Despite the fact that the
GartnerGroup predicts that as many as 95% of the current
Net retailers will go out of business, Jupiter
Communications predicts that a record $12 billion will be
spent making online purchases this holiday season. The
problem here then is not the business opportunity. Twelve
billion dollars for two months in an industry that did not
exist a few years ago represents a lot of opportunity.
One of the predictions I made in my previous articles was
that online only retailers will have a hard time competing
with established Bricks and Mortar retailers that decide
to move online. The reason is simple, it is a lot easier
to learn how to sell online than it is to learn how to
sell the products or services you have to offer.
Established companies have already proven their competence
within their market and can presumably relay on its
revenue stream while they are learning to sell online. An
online only retailer has neither of these to rely on. Once
their investment capital is gone so are they, and it is
now unlikely that they will get anymore.
So where does all that leave the budding Internet
entrepreneur still trying to get started? It basically
means that there is still a lot of opportunity on the
Internet but you had better look at your business model to
decide if it makes sense in this rapidly changing medium.
If your model is Internet retailing only or if your
primary revenue stream is supposed to come from online
advertising, now would be a good time to reevaluate it. If
you are a supplier to these companies then it would be
prudent to ask for cash in advance for your services.
If you have a unique product or service for which there is
proven demand, then you could be in a good position to
capitalize on it. With a lot of the clatter out of the
way, it will be a lot easier to be heard and will cost you
much less to do it.
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