The Dot Com Crash of 2000 and how it affects Home Based Businessowners
Dave Espino
Late in the year 2000 the final, resounding blows against the Dot-Com industry came to a screeching halt. Many dreams of Dot-Com riches evaporated and many more investor's dreams went with them. While following the Internet economy very carefully and witnessing the initial enthusiasm and eventual exuberance that affected the stock market (particularly the NASDAQ) it was easy to see the writing on the wall. The crash that came late in 2000 was expected.
How does this affect your Home Based Business?
There are several ways that it can affect your business, but before we get into them, let me make this general statement:
What the Dot-Com crash of 2000 did was define who the long term players are going to be in the Online Business world.
I believe that the long term players will be the Home Based Businessowners.
The Internet is a vast "playing field
leveller". It allows the little guys to develop a business that competes
handily with companies ten times their size. In fact, I believe it is easier for
an individual to make money online than it is for a major Corporation to turn a
profit online. Why? Because the individual can focus in on a niche,
target market and a Corporation, by it's nature must "cast a broad
net" and go for the mass market.
A couple of the big companies that have attacked the mass market are Amazon and eBay.
eBay is profitable while Amazon is not.
Amazon has tried to be all things to all people. Granted, their target market is made up of book readers, which are segmented by the many different categories of books that exist, but they have not gone and provided a service of substantial benefit to those market segments.
eBay, on the other hand, has provided a huge service to it's members. This points to the founder's initial dream, which was to develop a large community made up of smaller collecting communities. With "first-mover" advantage, eBay has developed THE place to buy and sell collectibles on the Web. They expanded to allow hundreds of individual categories and have become the ultimate world marketplace.
What does this mean to you, the Home Based Businessowner?
It means that you, as an individual, are uniquely positioned to offer and provide a targeted, unique product or service. A product or service that uses your skills, talents and dreams to develop a successful Online Business!
Why did the Dot-Coms fail? Very simple, they tried to go after too big of a market in too short a time. In their blind rush to mine their Internet Gold, they used up their Venture Capital in many unwise ways. Here are a few things they did wrong. It helps to analyze these mistakes so that we avoid them:
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The Dot-Coms used massive amounts of offline advertising in an "old world" strategy to get people online and onto their sites.
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The Dot-Coms focused on building their "brand". An exercise that used to take decades in the old economy was expected to magically happen in a matter of months.
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The Dot-Coms treated money as if it was water, and they had a never-ending stream of it. The focus on profits that any normal business has, was forsaken for "building brand" and building a stock-option portfolio.
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Companies were built as short-term "profit plays". Build them fast, acquire stock options and sell the company, was the mantra of the day.
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"Grey hairs" were brought in to handle some of the onerous people-management chores, but were rarely consulted or used as the wellspring of business information that they are.
How can you learn from these Dot-Com mistakes and make yours a business that succeeds?
Pay only for advertising that sends you business. Direct response advertising is what you need, not brand building or "image" advertising. Pay per click, affiliate programs, search engine positioning and links from other sites will get you far better results than an "image" magazine ad.
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Don't focus on building a brand, instead, focus on building a community. One of the benefits of the Internet is the easy ability you have to build community by using a Message Board, real-time chat, membership sites and information, e-mail and other creative techniques designed to build an online home for your target market.
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Most of us don't have money that flows like water, so the squandering of our capital and resources is probably not a major concern, but do you invest money wisely in your business? Are you willing to put your money where your mouth is and invest in that software that will return your investment a thousandfold? Do you buy professional-grade products that will reflect a professional-grade image? Or are you so tight with your money that you pass up fantastic opportunities to expand your business and really make it work more efficiently?
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As a Home Based Businessowner, chances are you are building your business for the long term. That's as it should be, but keep in mind the possibility that your business may at some point become an attractive buy for some entrepreneur looking for an established business. Are you set up in such a way that selling your business is a feasible proposition?
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Always keep a humble attitude about your business knowledge and always be willing to learn. Many entrepreneurs begin making some good money and suddenly they're the expert or the guru. Don't let this happen to you. Always be willing to learn from others. Buy Internet Marketing information, get the videos, buy the tapes, be on a constant and never-ending search for the next idea or technique that will add value to your business.
I mentioned in the beginning of this article that there were some ways that the Dot-Com crash could affect your business, let's cover them now:
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If your Home Based Business relies on certain Dot-Coms that were/are unstable, that can affect your business.
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The general public's new distrust of Internet Companies can affect your short-term credibility as a viable company.
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You need to make extra efforts to show your customers that you will be there when they need you. This can be accomplished by including a complete street address on your site, a phone number so they can reach you and throughout your marketing, reassuring them as to your intentions to provide excellent customer service as well as a no-risk money back guarantee.
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With the general public's discovery of wealth-producing power of the Internet, the droves of people that will be setting up websites will flood the market and make it that much more difficult for you to distinguish yourself and your site as a beneficial entity. You must make a constant effort to produce quality products, quality services, quality customer service and quality a website. As in "old-world" businesses, these are (and always will be) the things that separate the winners from the losers.
The Internet is the new frontier of wealth. It has the potential to explode your business, but now more than ever, you've got to play your cards right !