There Has To Be A Business Model

By: RH

I have friends who know that I work with domains and websites run ideas by me all the time. They think the Internet is magic. Just by putting up a website they are going to make money because all they read about are the successful websites.

They are asking me about domain names and where they can get free hosting but have spent no time on a business plan, what their business model will be, and how much money they need to get started.

They all have done no market research, they have no idea the cost of advertising and how to compete.

One guy tells me his new girlfriend is artistic and can make beautiful gift baskets. I asked him if he was aware of the big companies in that business and how much it would cost to compete from a marketing standpoint ?  He just repeats that she is really artistic and has a great eye. I told him that she may be the greatest gift basket maker in the world, but how are you going to compete ? What makes you stand out ? Have you looked at sites like Harry and David, Wine Country or Edible Arrangements ? He had never heard of two of the three.

He just wanted me to help with the website and the domain and just wanted to get something up fast. First off, why fast ? If you are looking for a venture to be successful you don't rush. You should not over analyze and never do anything, but you don't rush it either.

Another friend of mine wanted to start a video site. I asked have you ever heard of You Tube ? He said he was going to be different and was only going to focus on videos that he made. I told him that's fine but how are you going to make money ? Hosting a lot of videos is not cheap, why is someone coming to and what is their incentive to come back to the site ?

He said he was going to charge people to watch videos. I told him people don't want to pay for Hollywood Movies, music or porn. I told him its not impossible but that the content better be quality and unique and that it would still be hard to change viewing habits.

Look in no way am I saying that someone should not go for their dreams of a successful website or business. Absolutely go for it, but go for it with logic, a business model that can work, and knowledge of your competition and the market.

There are a lot of people who get into the domain business with this same attitude. One guy tells me I just want to be the next Frank Schilling, he has $250 and thinks brandables with numbers substituing for letters is great. That is not a good business model and that's not how Frank made it.

I know personally I have looked at a domain on a drop list and envision an idea for a website quick. After thinking about it for a few hours a lot of them are not practical.

Its easy to see a name and say "That name could be used to do this and people will pay this for the product or service" Will they ? You don't know until you try and I know for myself there have been times where I thought that it would not be hard to do this and that. I then thought about competitors and realized I don't have the budget to secure the content they have on their site. I have an idea with no way of competing against other players in the market.

Shane Cultra does a good job on his blog of explaining what its like running a brick and mortar business. I think people need to read articles like his and some of the business blogs out there to get a better picture before starting an online business.

As always when I am writing an article its from the point of view of someone wanting to run a business and not a hobbyist.  If its a hobby you can try everything and anything as fast as you like,just so long as you are not putting yourself in a financial hole. The person looking to build a business has to really scout their industry landscape and really love the industry they want to get into, its just too competitve too not have passion for what you will spend a lot of time and money on.