Starting Your Own Online Business: Part 1 of 3 by Dan Parks Sydow December, 2000 Part 1 | Part 2 | Part 3 I've written over twenty computer books, including Internet-related "For Dummies" books such as "Internet For Macs For Dummies Quick Reference" and e-commerce books such as the just-published "E-Commerce Revealed". Because of this, I get a lot of e-mail from people who want information and help in getting small online businesses started. One common thread among these inquires is that when it comes to an individual starting an online business, misinformation and misconceptions abound. People are confused about who can get a merchant account and how much one costs (such an account is necessary if one wants to accept credit card orders). Some people don't understand how to go about getting their own dot-com, or if they even need to get one. Others don't know how to create a Web site. Most people don't know how to go about leasing an online shopping cart so that their business site makes shopping easy on customers - and these same people usually don't know how to integrate such a shopping cart into their own site. And everyone wants to know about the cost! A typical e-mail message I get is similar to this one: "I have an idea for a small online business. I think it will really take off, and I think I can make a few grand a month. However, I'm also concerned that if the business does only okay (brings in maybe just a few hundred dollars a month), I'll lose my shirt! How do I go about getting my own online business started? And how much will it cost me to start and maintain?" How much? How much! That's what everyone wants to know. If you're at all like me, you get very irritated with an article that teases you into reading the whole thing -- and then still doesn't give you the information you really want! So here, up front, is what you want to know. For about $200 you can get your own small business site up and running. After that, expect to pay in the range of $100 to $150 per month to keep your site going. If you think that's a lot, you aren't ready for an online business. If that's less than you thought you'd pay for a complete, automated, online business, welcome to the club. Most people think it will cost much more to get their own credit-card accepting, 24/7 order-accepting, dot-com up and running. In this article, and the two that will soon follow, I'll provide the details of where the above prices come from. I'll also outline just how you can get your own online business started, and how you can keep it running. Of course in this short series of articles I can't cover everything that's in the 140 pages of my "E-Commerce Revealed" book, but I can cull some of the important basics from it so that right away you can set to work on getting an online business started. Where To Go, What To Do You might have a hobby that results in the creation of items others would be willing to buy. Your work, or a friend, may offer you the opportunity to purchase some product at a substantial discount -- a large enough discount that you could turn around and resell the product at a nice profit. Or you might have enough knowledge in some area that you could write a book or pamphlet on that topic. In all these cases opening a bricks-and-mortar store (a "real" physical store) to sell your products would be too costly. Fortunately, you live in the Internet Age -- the Internet is the place to go to make some sales! Many people have ideas for capitalizing on the explosive growth in online sales, but they don't have the technical know-how to get a domain name, create a Web site, integrate a shopping cart into that site, and figure out how to accept credit card orders. If they think they are capable of learning all these details, they usually simply don't have the time to learn it all. It is for exactly these people that I started my own Small Biz Zone small business resource at www.smallbizzone.com. There I offer dot-com registration, Web site design, shopping cart integration, and help in getting a merchant account -- all in a package for one low monthly price. And now, at the risk of losing all my potential business from that site, I'll provide the information you need in order to get your online business going without my -- or anyone else's -- help! If you have a little technical skill, you'll be able to do what it takes. You own a computer, you have an Internet connection, and you're smart enough to be reading this article -- so you qualify! If you have concerns about your ability to organize and set up an online business, or you're worried that you may have too little (or no) past experience running a business of any type, don't fret. And if you have very little money and shaky (or even very bad) credit, don't be concerned! In this series of small business e-commerce articles I'll summarize the steps that almost anyone can take in order to start an online business. Small Online Business Checklist In this and the following two articles I'll cover a number of online business topics. While there are other paths you could take, keep in mind that I'm writing this series of three articles for the person of average technical skills and of very average financial means. An experienced webmaster (one who creates and maintains Web sites) may have other ideas. Someone with big bucks or big financial backing will have still different ideas. These are the steps I suggest you need to take in order to get your own online business up and running. Open a business checking account to devote to funds received from online business transactions. Get your own dot-com (your own domain name, or Web address, or URL). Get Web hosting service so that you can have your own Web site. Obtain a merchant account so that your business can accept credit card orders. Design and create your Web site. Add a shopping cart to your Web site. Automate your business so that it runs and accepts orders 24/7. If that sounds like a lot of work, I assure you it's not! Reading this series should convince you of that. So if you're read, let's get started by covering the first few steps that allow you to get up and running. Open a Business Checking Account You could set up your online business such that a customer writes out a check directly to you and mails it to you. But it's a wiser move to create a business checking account in order to keep your business finances separate from your personal finances. There's a second reason you'll want to do this. If your business is to accept credit card orders, then you'll need a checking account in your business name. When a customer makes a credit card purchase at your site, the funds from that purchase will automatically get transferred from the bank that issued the buyer's credit card to your business checking account. Again, that transaction will be automatic (and will take place within about 48 hours of the transaction). To accept payment by check or money order, and/or to be able to accept online credit card orders, you'll want to set up a business account at your bank of choice. This is a simple matter to do at your local bank. If you already have a savings account or checking account at a bank, simply go to that bank and discuss with them the setting up of a business account. If you aren't an established business, and are starting small, you may want to act as a sole proprietor -- someone who alone "owns" the business. I've placed "owns" in quotes because your business may be so small that it consists of almost nothing to own -- many people start with a computer and desk in their home, and a very small amount of inventory. In such a case it is simple to set up a DBA checking account. DBA stands for Doing Business As. Your business name and your own name will be affiliated with the account, but people will be able to make out checks to the business name, and you'll be able to deposit those checks in your DBA account. For instance, a Mabel Smith wants to start a Crafts by Mabel online business, she would be "Mabel Smith doing business as Crafts by Mabel." Her bank will set up a checking account in the form of: Mabel Smith DBA Crafts by Mabel. Mabel will be provided with a checkbook consisting of checks that have both her name and her business name on them. The checks will also have her business address on them (which is a good reason to get a Post Office box for business use -- if you write out a business check you might prefer that the recipient not have your home address). More importantly, though, Mabel will be able to tell people to make out their check or money order to Crafts by Mabel, and she'll be able to deposit such checks in her DBA account. One requirement to getting a merchant account is to have a business checking account -- customer credit card order funds need to end up in your possession some how! Set up your DBA account and you've fulfilled this requirement. Get Your Own Domain Name One way to get your own online store is to sign up with one of the online malls. Some of these malls will have you fill out a series of online forms to automatically generate a small online store for you. The price for such a service varies, from as little as free on up to several hundred dollars. Before jumping into such a venture, weigh the pros and cons of such a service. For a service that is completely automated (no person will "hand-code" any of your store's Web pages), you may get what you pay for. Such a store may have a very simple, generic look. And it won't provide you with your own dot-com. Some such "store generation" sites exist in order to make a profit in other ways, such as securing a merchant account for you for a "setup" fee of $250 or more (you should be able to get such an account for far less). Consider our hypothetical friend Mabel Smith. If Mabel wants to start up a small online business that sold crafts that she made, and she wants her business name to be Crafts by Mabel, then she'd want to make it easy for people to find her site by giving it a dot-com such as www.craftsbymabel.com. An online mall that automatically generates a store won't give our good friend Mabel her your own dot-com. Instead, she'll exist somewhere off of the malls main page. For instance, if she signed up with Big Mega Mall (yes, I just made that up), then her online store might be located at www.bigmegamall.com/stores/craftsbymabel/. For a couple of reasons this is a less-than-desirable way of doing business. First, as mentioned, Mabel doesn't have her own dot-com -- so people may be less likely to remember her Web site address, or they may be less likely to even find her site in the first place. If they buy a product, and then want something else a month later, will they remember that they went through a mall to get Mabel's item? Or will they just take a guess and try www.craftsbymabel.com to see if her business is there? Second, most people who shop online go directly to the source -- they don't stop at an online mall and then from there go on to a particular place of interest. If someone wants a book, he might go to www.amazon.com. If someone wants office equipment, she might stop at www.officedepot.com. Someone interested in buying makeup online may visit www.avon.com. If you shop online yourself, think of your own shopping habits. How often have you visited an online mall? A dot-com, or Web address, or URL, is also referred to as a domain name. You register (reserve) your domain name by visiting an online domain name registrar. Network Solutions (www.networksolutions.com) is one such registrar. Network Solutions registers a domain name for you for one year for $35 to $40 (domain names are leased, in a sense -- you register for a specific number of years and then renew your registration (if desired) when your registration period is about to end). Be aware that while Network Solutions used to be the registrar king, there are now other registrars competing with them. "A registration is a registration", so it may be wise of you to shop around -- you'll find online resources that register domains for less. There are many, many other sites that will register your domain name for less than $35. Getting your own dot-com reserves a particular domain name for you -- but it doesn't automatically create any kind of Web site for you. A visitor to your new dot-com will get either a Page Not Found error or will see some sort of Under Construction message. It will be up to you (or a Web site designer you hire) to create the files that define the look of your site. More on that later. Next... At this point you know that you need to have a business checking account so that you'll be all set to accept payments once your business is running -- and to satisfy one of the requirements when applying for a merchant account. You also know the importance of registering a domain name so that once your site is up and running it will be an easy-to-find Web site. Having your own domain name also serves the purpose of satisfying another requirement when applying for a merchant account. A domain name isn't the same as a Web site. A domain name tells an Internet surfer where to go, but once that person gets there a site needs to be present! So along with a domain name you need to sign up for Web hosting service. In the second of the three articles in this series I'll discuss Web hosting. In that article you'll also learn more about getting your merchant account. In particular I'll talk about who qualifies (you do!) and how much it costs (not much!). In the third and final e-commerce article I'll discuss how to get started in designing a simple Web page for your business. In that third article I'll also discuss how to add a shopping cart to your site (of course telling you what you should pay for that cart) and provide a few details about how to automate your site so that visitors can make purchases 24/7 and so that the customer and you receive proper automatic order confirmation and notification. About the Author: Dan Parks Sydow is a software engineer, computer programmer, and the author of over twenty computer books. Mr. Sydow has written beginner-level Internet user books such as "Internet For Macs For Dummies: Quick Reference", beginner-level programming books such as "Mac Programming For Dummies", and advanced-level Internet programming books such as "Jumping to Java" (all from IDG Books). Dan is also an online entrepreneur and author of the recently published e-commerce title "E-Commerce Revealed". You can contact Dan at the Small Biz Zone.