During
late 1990's, banks and investors were falling all over themselves to invest in new dot com companies wanting to go public. While owners of those companies became paper millionaires overnight, that does not mean much if they did not sell their stocks when price was still high. I am willing to bet that most did not. Instead, they believed in what they were doing and carried their paper millions with them to bankruptcy court.
As small business owners, we do not have IPO millions to burn. We have to be more careful and thoughtful with our dollars.
As small business people, we often tell ourselves... "If only we had more money to advertise our wares, we would be very successful in our endeavors."
Yet, failed dot com's who are now mockingly referred to as "Dot Bombs", had millions to burn on advertising. So what in world happened? Where did those miraculous, wondrous and theoretical profits go?
Between January of 2000 and end of February, 2002, at least 806 dot com companies went under according to Webmergers.com.
There are a number of lessons we can learn from Dot Bombs, and every lesson learned will permit us to realize elusive Internet profits that big boys failed to manifest.
LESSON ONE:
Almost without fail, all Dot Bomb's presented unproven, theoretical models to banks for their Initial Public Offerings. They had never shown a profit and never would because models they used could not work.
When bottom fell out of Internet advertising market, companies whose business models were based on selling advertising on their sites or in their networks were first losers. Many faced 80% drops in revenue nearly overnight.
You and I were winners. We can now post our advertising on some really high traffic, high profile web sites at very reasonable prices.
Our lesson here is that we must establish our business on a business model that can be profitable at low volumes before we can even hope to be profitable at high volumes. Cash is not secret to online profits! Rather, a solid business model is first secret to online profits.
LESSON TWO:
The dangerous thing about being a public company in a new and unproven marketplace is that your investors are constantly clamoring to see a return for their money.
Most startup companies grow into a profitable enterprise because they have an entrepreneur at helm. An entrepreneur is a risk-taker by definition. He or she is willing to gamble and take chances, even to change direction of a company if road ahead looks dangerous or unprofitable.
With stock holders breathing down ones neck, this kind of flexibility ceases to exist in grand scheme of things.
The lesson is that as a small business owner, we can and must remain flexible. Most especially in an untested and unproven market, we need to sustain our flexibility and keep our eyes on our bottom line and marketplace. Don't fear change. One day, change could very well become your saving grace.
