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October 6, 2000

New money/Old rules

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The Internet economy is filled with stories about fortunes made and lost. While I would love to be able to tell you how to be the next Internet millionaire, the truth is most people make money the old-fashioned way -- they earn it. Despite all that might be new and different in the "new" economy" there are a few business guidelines that apply to all businesses whether they are based on the Internet or not.

The Internet Janitor

I believe the biggest opportunities for new business today is in providing the ancillary services that other companies need. This can involve providing web-based stores, data backup services ,online content maintenance or a plethora of other services. Many companies, both Internet startups and established corporations, are finding a need and/or a desire to outsource these mundane tasks. This is much like the high-tech equivalent of a company contracting out their janitorial services but instead of emptying trash cans you are backing up their data.

Companies want to divest themselves of the responsibility for hiring, firing and managing people who they don't see as integral to the mission of their company. They believe, sometimes rightly, that their energies are better directed towards their core mission. It is more important to them to hire and manage a new programmer than someone who is going to update all the pages on their web site with a new graphic.

While these service businesses certainly don't have the glamour associated with "Dot-Com" startups they do have less volatility. Instead of placing all your eggs in one basket you can develop a clientele of large and small business from both the new economy and old economy, so that your company isn't dependent on any one revenue source. Instead of trying to make your mark as the next Yahoo or eBay, you spread out your risk. In this way, the failure of one of your clients should not bring about the failure of your business.

Many successful traditional businesses are based on this model and I believe it can be just as successful in the Internet economy. Sometimes we all like to believe that the Internet economy is totally different that the traditional economy we have been living with all these years. The fact is, though, there are more similarities than differences. The end result is always the same. The most successful businesses are those that provide a great service or product on-time for a good price.

Filling a Niche

If you are contemplating starting a service-based company it is best to find a niche that no one else is serving and work to dominate that niche. Perhaps you have noticed that companies are not monitoring the status of their web sites, email servers or other online resources. Can you provide a monitoring service that not only reports when a service is unavailable, but also works with the ISP/Web hosting company to restore service? Can you provide consulting services and software to allow companies to do their own monitoring in a better fashion?

The best tactic is to start with a small, well-defined set of services. You should only add more services when you have existing ones operating at peak efficiency. As you develop your initial services you will begin to find other services that you can sell. You can then start providing those services that mesh well with your existing business. Don't try to do everything. There will be some services that will not be profitable or bring about too much risk. Recognize this fact up front so that you don't over-extend yourself. This is a sure path to running your business into the ground.

There has always been a place for businesses that perform tasks that no one else wants to perform. Moreso, these businesses often become very successful over the long run. I see no reason why this shouldn't also apply to Internet and other high-tech companies. Basing your company on this model can mean the difference between sitting at the head of a profitable, well-respected (if slightly dull) company and bouncing from one failed startup to another. While there is certainly an excitement related to breaking new ground, if you want to build a company that will be profitable for you, your employees and your shareholders, it might be better to till the soil that others have already worked.

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Previous Career-Op Columns

October 1, 1999 You want me to sign what?

October, 1998 Troubleshooting

October 3, 1997 On your own: Part 1

Douglas E. Welch is a freelance writer and computer consultant in Van Nuys, California. Readers can discuss career issues with other readers by joining the Career Opportunities Discussion on Douglas' web page at: http://www.welchwrite.com/dewelch/ce/

He can reached via email at douglas@welchwrite.com