Copyright 2005 Oliver Phillips. May be freely reproduced "as-is" for private or commercial use.In Part 1 of this guide, we focused on
potential applications of e-commerce and explained in detail first 5 of my "Ten Golden Rules of e-business" In Part 2 we recap on rules, and explain in detail rules 6 to 10. The other document in this series is also avialable at goarticles.com
Ten Golden Rules of e-business
1.Start re-skilling now. If you don’t have huge financial backing your idea will not get off ground UNLESS you can do much of work yourself. 2.You have more chance of making money if you can take just one step up supply chain. 3.The real profit makers on Internet match supply with demand, but do not sell anything! 4.You can’t just build a site and expect to start generating income any more. 5.There are few truly new ideas - most things have already been done. Exploit a niche, leverage breaking technology, or do same thing but just better. 6.If you come across an idea that hasn’t been done, congratulations you could be on your way - but think long and hard about why no one else is already doing it. 7.Expect any competitive advantage you may establish to be short-lived. Where will your profit come from tomorrow? 8.Be amazed at how little your e-business is worth. 9.Don’t buy an e-business “off shelf”. At least one person does not want it – why not? 10.Establish a budget to build your site then add at least 30% more to build an adequate administration interface.
6. If you come across an idea that hasn’t been done, congratulations you could be on your way - but think long and hard about why no one else is already doing it.
If you do come up with a new e-business idea, then you could indeed be on your way to making your fortune. But before you jump in with both feet and start investing money in project first consider idea very carefully. If we accept that so many things have already been done in e-business, why hasn’t your idea? You may well have spotted an opportunity that everyone else has missed, or idea may be one that others have already considered - but rejected.
Think about why someone might have already discarded your idea? Why might they have decided it was not viable? Thinking about your project in this way will help you be more objective – It’s all too easy to be blinded by your excitement and enthusiasm and miss potential flaws in idea which later prove costly.
If you’ve objectively critiqued idea and can’t find any serious flaws then you might just have a winner.
7. Expect any competitive advantage you may establish to be short-lived. Where will your profit come from tomorrow?
E-business has few, if any, barriers to entry. The technology is mature, technical skills and knowledge are widely available and your website is your business; you could be a large quoted plc but your competitor could run a similar operation from their bedroom and Customers you are both competing for can probably not differentiate between you! Assume that whatever you have done, your existing competitors can do. Also bank on new competition you didn’t expect. You decide to move into a new niche you’ve spotted and there might be 5, 10 or 15 other businesses about to join you. You’ve found a new product to import that you can’t get in UK, blink just once, and someone else is selling it also!
The “e” in e-business does not stand for easy. e-business is anything but this, despite perception. Your marketplace evolves at a frightening rate, product life cycles seem unfeasibly short, competition grows exponentially, all of who can emulate you and in many cases do it better than you! You will have to go extra mile just to stand still!
If you take nothing else from this guide at least remember this; if you do manage to establish a competitive advantage your business planning should assume that it will be gone tomorrow.
In practice this means you take worst case as norm; you scale down your income projections and beef up your cost lines. You consider strategies for coping, exit and, if possible growth, all in context of perfect competition. You make finding and researching new opportunities, part of your core business. Where will your profit come from tomorrow?
Overly cynical and far too negative - I hope so. These traits are far more likely to keep your Business alive than apathy and complacency.
8. Be amazed at how little your e-business is worth.
Traditional businesses are valued using traditional methods. Despite reasonable profits, your Business is still only worth what someone is prepared to pay for it. Though same valuation techniques should be used to value e-business as a traditional business, two factors tend to over-ride however favourable a valuation is returned.
