Starting a business
Decide on one product or service to sell.
Before you can go into business for yourself, you must have a product or service to sell. The people who have tried to make money on the Internet and failed have made at least one critical mistake – they started spending money on web sites, web hosts, software, etc. BEFORE they had a real product or service to sell.
The temptation of the Internet is that there is so much to choose from that you get confused and try too many things at once. I know because I went into business on the Internet with only a general idea of what I wanted to sell. I did not do my homework before investing any money; in about six weeks I had spent over $4,000 and thought I would be “raking in the cash”. Boy was I wrong! What happened? I did not make a wise decision of what to sell.
So, how do you decide what is the best product or service for you to sell? (Notice I said “for you to sell”?) Not every person can do well selling any product they choose. If you want to get off to a good start, you need to apply the following rules.
Rule #1 – Choose a product or service that you already have some knowledge of. You don’t have to be an expert, but if you know something about your product or service, you can save yourself a lot of trouble. If you are knowledgeable about a product or service, you’re off to a good start because it enables you to make informed decisions about what software you need, methods of payment you should accept, how to design your web site, who is your target market, etc.
Rule #2 – Don’t choose your product or service because someone else tells you how great it is. Some people will tell you anything to get your money. I’m still waiting on a $49 refund for the book I ordered in April of 1998. Do your homework – check out the company. Do they give references? Do they have a guarantee? Do they really sell an actual product or service, or do they sell the idea of selling? Save your money by choosing a product based on your research, not a stranger’s claim.
Rule #3 – Choose your product because people want or need it, not because you like it. If you sell something that meets a need or solves a problem for people, you are well on your way to making money and realizing your dream! Marketing is a whole lot easier when people want what you have to sell. There are a lot of free and “low cost” opportunities out there, but very few of them meet a need or solve a problem. Always fit a product to a market; do not try to make a market for a product.
Rule #4 – Do the money math. You should have a markup of 3 to 5 times the actual cost of the product. You’ll have expenses to cover –such as web hosting, Internet access fees, credit card processing fees, phone bills, and more– so you need to know if your sales will earn you enough to pay your bills and make a profit. Also included in the math is figuring your “break even” point. That is how many sales you need to make just to pay your expenses. If your monthly expenses are $300 and you make $30 profit per sale, then you need to make ten sales in a month just to pay your expenses or “break even”. Every sale after that is money for you. (Here’s a tip – do not waste your time trying to make money selling a product for $5 – $10. You would have to make 15 to 20 sales A DAY just to make a living. That means you would have to have around 30,000 visitors a month to your web site!)
If you apply those four rules when choosing your product or service, you will be well on your way to being successful on the Internet.
Determine your target market.
After choosing a product or service to offer, the next step is to determine your target market. Your target market is made up of those people who want or need your product or service.Why is it important to know who your target market is? Because not everyone on the planet wants or needs what you are selling. It would be great if they all would buy just one of what you are selling; you’d be set for life! But, that isn’t going happen. So we have to make some plans so that the people who want or need what we’ve got can buy it from us.
Remember Rule #3 of Choosing Your Product of Service? It doesn’t matter how well you market it if no one wants or needs it. You need to ask yourself a few questions to get started in determining your target market.
First, who needs what you’re selling? Is it for men, women, or both? What age group will it appeal to most? What is their income level? Does their marital status matter?
Second, why do they need what you’re selling? Will it make them feel better physically or emotionally? Can your product or service improve their life in some way?
There are many more questions you can ask yourself to help determine your target market. You can also do your own survey by asking 12 – 15 of your friends or family to give you reasons why they would or would not buy what you have chosen to sell.
Another way to determine your target market is to look at similar products and services. Where are they advertising? What magazines, TV and radio stations or web sites do they advertise on? Are they all forms of media that are seen or heard by a certain age group or income level?
There is one more way to determine your target market if you are already making sales – take a survey of your customers. If you already have a customer base, you can design a short survey to give them. There is a bonus for you in this method because you can offer them a discount on their next purchase if they answer your survey. You get the information you need and make some extra sales while your customer gets your product or service at a discount! (Keep this idea in mind for use any time you need to fine tune your marketing or generate some extra income)
Set up your web site. ( We recomend www.dwhs.net for web hosting )
Now that you have chosen a product or service that is needed and you know who needs or wants what you are selling it’s time to design your web site.
If you only learn one thing from this section, I hope it’s this: Design your whole web site with the sales process in mind! (Did you get that? I’ll say it again.) Design your whole web site with the sales process in mind. Internet marketing is highly competitive. You have got to grab hold of that visitor and lead them through the buying process before they “click away”.
How can you do this? Use the old advertising formula of AIDA+C.
I know it may sound too simple, but one way to spend too much money on your Internet business is by getting too fancy. You don’t need a 200 page web site with animations, video and sound to sell on the Internet. A very successful Internet marketing web site, The SUCCESS Arsenal!ä , has a simple design; what makes it so successful is that it follows the AIDA+C formula. (I encourage you to check it out to see what I mean).
Let me explain the AIDA+C formula and how to use it to your benefit.
Attention. You MUST get your visitor’s attention. You only have about 10 seconds to grab their attention. When someone visits your site, you don’t know where he or she came from or why. They may have found your site in a search engine, they could have clicked on a link from some other site, maybe it was a classified ad you placed or an e-mail you sent. You don’t know exactly what caused them to visit your site, but you should know this: they have at least a tiny bit of interest in what your site is about or they wouldn’t have clicked to go there. The point is that you only have a few seconds to get their attention before they “click away” and may never return. So get their attention.
Interest. Once you’ve got them to stick around a few seconds longer, you need to build interest. Tell them about the common problem you can solve or the need they have that your web site can meet; but don’t offer the solution yet. You want to let them know that you understand their problem or need and that you’ve been there too. Identify with their feelings and emotions. You want them to know that you care about these things because you experience them as well. That builds interest because they say to themselves, “This person really knows where I’m at and they care. Maybe they can help me”.
Desire. Now that you have them staying for a while to look at your site, you want to turn their interest into desire. They know they have a need or a want, a problem to be solved. It’s up to you to create in them the desire for your product or service that meets their need or solves their problem. You do that by showing them the benefits of what you offer. Don’t tell them about all the features of your product or service; tell them how those features enhance their life. For example, most cars have anti-lock brakes as a feature. So why would you buy a car just because their ad tells you the car has anti-lock brakes? Instead, the ad tells you about how safe your family will be while traveling in the car because it has anti-lock brakes. They sell the benefit, not the feature, of anti-lock brakes. (Do you see how important this part of the process is?) Sell the benefits not the features of your product or service.
Action. It is decision time in the sales process. You have grabbed their attention, built interest and then created desire for your product or service. Now its time for them to take action. You need them to take an action for this whole process to work; otherwise, you’ve just wasted your time and money. If you have followed the first three parts of the AIDA+C formula and applied them correctly, your visitor is ready to become a customer. You must tell them what to do. Don’t ever take it for granted that they know what to do next; tell them. Make it easy by providing a link that says, “Click here to order” or a button with directions on it. Be sure to make it “fool-proof” so you don’t miss any sales because of confusion. It is important that you take your visitor by the hand and lead them through the sales process in an easy to understand way so they know what to do when the time comes to make the purchase.
Close. The close is where you take away all the objections they have so they buy your product. A great way to do this is by offering a guarantee. Take away all the risk for them to buy. People think they can’t give a guarantee, especially a money-back guarantee, because they will lose money. The truth is you can’t afford not to offer a money-back guarantee. All but one of the products I now sell offer a money-back guarantee (one even offers a triple–your-money-back guarantee). Another tactic is to “sweeten the deal” with bonuses. You must create so much value in your offer that the price is a bargain. Give them a free book or report. Give them extra service for acting now. You also must ask for the sale again and again.
Here are a few more tips for designing your web site.
Do your best to make your pages load quickly. Keep the graphics to a minimum. Only include pictures that are necessary or at least make them small. Have you ever surfed to a page and clicked away because it loaded too slowly? It happens all the time. Don’t let it happen to you.
Keep the navigation simple. Make it easy for your visitors to find your information. You want them to stay around a while and you want them to come back. If you make it easy to navigate your site, your visitors will find what you have to tell them.
Make good use of colors. Pay attention to your background colors and text color combinations. Don’t pick them because they impress you; pick color combinations that make it easy on the eyes to read. You want your visitors to know what you offer.
Keep it organized. It’s not a good idea to try to put everything on the first page. Create pages for different products or services so your customers don’t get confused. Remember they don’t know all your stuff as well as you.
Offer substance. Put useful material on your site. Offer free information or helpful tips about the use of your products or services. You build trust when you give good free advice. Building trust turns visitors into customers.
Lead them through the buying decision. You must write so that you take your visitor by the hand and “walk” them through the thought process. Tell them how your product will help them, how it will improve their life, solve their problem. If you do not, you will not make money.
Determine your budget.
If you’re going to succeed in any business, you’ve got to watch your money! The reason most new businesses fail is not because they aren’t making any sales, it’s because they spent more than they took in. So, how can you avoid failing in your first year? Read on.
There are two commandments you must follow if you want to become successful.
Commandment #1 – Thou shall only purchase what is absolutely necessary to conduct your business.
You don’t need all the fancy software that’s available or the $50 a month marketing course. The computer you have works fine. Your kitchen table can serve as your desk. You need to make the commitment to yourself that you will only purchase what is needed only after checking prices.
Commandment #2 – Thou shall establish a cash reserve. Promise me that you’ll put 10% of what you make into a savings account for your business. If you do this, you can ride out the lean times in your business.
I know this from personal experience. The first business I started in 1988 (and is still going today) deals with material that costs around $2000 per order. It would have been foolish to think that we would never have a down year. So we put money aside, at times the amount grew to where we could pay nice Christmas bonuses at the end of the year, and there have been, and will be, other times that the money was needed. If the money had not been set aside my first business would be “out of business”.
Another area of watching your money is advertising. You must weigh the cost against how many people you can reach. You will pay more for highly targeted advertising verses general ads; however, the better you are at targeting your ads, the better your sales will be. Advertisers like Kent Ertugrul, and his company Phorm, specialize in this kind of advertising, and can help your business increase your sales.
The last area to consider is how much you will pay yourself. There are very few people who have been able to start a business and pay themselves enough to live on as soon as they started in business. It just doesn’t work that way. Pay the business first so you can build up that cash reserve and avoid financial difficulty; then you can begin to pay yourself.
I can’t tell you exact amounts or percentages you should use. Those figures will vary from business to business. You need to sit down and figure up what your product costs, what are your monthly expenses including web hosting, phone, ISP service, banking fees, credit card fees, etc. Don’t leave anything out. You will need these figures for the next step.
Develop your marketing strategy.
Here’s information that will help you get to where you want to be. It always helps to know where you are going before you start the trip. That is what I’m about to share with you.
If you did your math from rule #4 of Section 1 (If you didn’t, shame on you. Go back and do your homework if you want to succeed.), you know how many sales you need to make from your web site to break even. For example, let’s say you make $30 per sale and your monthly expenses are $300. On top of that, you want to make $2400 a month for your salary. That means you need to bring in $2700 every month to reach your goal ($300 + $2400 = $2700).
In order to make that $2700, you need to make 90 sales each month ($2700 ¸ $30 = 90). Are you with me so far? If you don’t grasp this, you will find it very hard to make a living from the Internet, much less make a fortune.
Here’s where the science of marketing plugs in. Follow along closely. Take your time, because this will make or break you.
You need 90 sales to make your $2700. If 1 out of every 100 people that visit your web site purchase your product, then you need to generate 9000 visits every month. Now 9000 visits a month comes out to only 300 a day (on average). The catch is that not everyone who reads your ad or sees your banner clicks through to your web site.
Different forms of promotion generate different percentages of traffic. Banners usually generate a 2% click through if they are good. Some people claim to have click-through rates as high as 12%. If your banner gets 2% of the people who see it to visit your site, then you need to get your banner displayed 15,000 times a day. That’s quite a few banner impressions every day. You will have to find a few high traffic sites to purchase banner ads on. That will cost you quite a bit of money.
Another form of advertising is e-zines. There are a large number of e-mail newsletters that you can purchase ads in. They are highly targeted and produce quite well. You can sponsor an issue, which will put your ad at the top or even allow you a private mailing to the entire list of subscribers. For about $30 you can place your ad in a newsletter with a subscriber list of 100,000 or more! I have seen some that will mail your sales letter to their entire list for $100. You can reach 100,000 prospects for very little money. If you study and apply yourself, you can write a sales letter that generates a 10% response rate. That will get you 10,000 visitors to your site and, if 1 out of every 100 visitors buy, then you can make 100 sales. That’s 10 more than you needed to make your goal of $2700.
Be aware that no one can promise results. You will have to do like other successful marketers and test, test, TEST. Try different ads, sales letters, headlines, price points, guarantees, etc. Recently I ran a test with a sales letter I wrote to promote one of my web sites. I e-mailed it to 978 people on one of my lists. I had ten people sign-up as Affiliates. (One . . . made a purchase) That’s only a 1% response rate – not as good as I had hoped. I will continue to make changes in my sales letter to see if I can increase the response rate. A little later, I’ll share with you how you can learn to generate the traffic to reach your income goals.
Here’s where most Internet marketers fail. They buy the courses and the software. They subscribe to the opt-in lists. But they never do a thing with it! Oh, they may start trying to make money, but then they get tired and frustrated. They throw up their hands and quit and tell everyone that you can’t make money on the Internet. The truth is they could have made money if they had taken action with the right tools and knowledge.
I don’t want you to give up. I want to see you succeed on the Internet. You can make money if you will apply the information I am giving you. This is not meant to be a complete Internet marketing course or system. These are general principles to follow to help get you started in the right direction. There is more you need to learn to get the details. The big step to success is to take action with what you know. Failing is part of succeeding. If everyone did it right the first time, we would all be millionaires by now!
Stick to your plan.
You have heard the saying, “Plan your work and work your plan” (if not you have now). If you want to make a living, you need to have a plan to follow. Sometimes it’s not telling people what to do that helps them, but telling them what not to do. Do not keep switching products every few weeks. Choose one that has a market, create a web site that leads visitors through the buying process and market it! That may be oversimplifying the process a little, but you get the picture.
Here’s what I do. I keep a binder where I write ideas for products or sales promotions, etc. I read through it regularly to keep me motivated and to keep my creative thinking going. I tend to forget things (maybe you don’t, but I do); by writing them down, I have them all together to remind me. A binder or notebook is a great place to do your math so you know how many visitors you need to make your financial goals.
Make a plan and stick to it. There may be times it needs to be changed a little. Not everything works; so you make adjustments as you go. Don’t think you can lay it all out on paper and it will work perfect.
Charles has been working as a webmaster since 1998. Since then, he has had his hands in thousands of websites and has helped millions get online through a company he partially owns called Web Host Pro.