The aim of Enterprise North East is to get the message across that anyone can start up in business and anyone can be a success.
Published on the first Friday of every month in The Journal.
Make profits online
Jul 21 2006
By Enterprise North East
Business improvement specialist Tony Johnson reveals the true point of having a website.
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I had a meeting with a client recently who was bragging about his website. His firm had been online for more than two years with a site costing £30,000 to create and a further £10,000 a year to administer. So, over the two-year period his firm had spent £50,000 on it.
I asked how much money the site had brought in and he replied: "The site wasn't about bringing revenue in." I asked what was the purpose of it, then. After much blustering he said that the website's point was to allow his clients to track their orders.
In the real world, clients simply ring up and find out what's happening with their orders, so why waste £50K on a website? Would that money not be better spent on two good salesmen or on advertising? This particular firm had to lay off 12 people recently because of a contract loss, yet he's still wasting all that money on a useless website.
The point of a website is to make money, either by selling products or services there and then, or by collecting a prospect's details for later contact.
Whether you're just beginning your business or looking to add another facet to an existing one, your chief focus should be on how you're going to generate income. There are several quick and easy ways to generate revenue on the web. They are:
1. Sell your own products. The main advantage to selling your own products is that you ultimately control how much profit you make on every sale and you therefore have the potential for the biggest profit margin. You know exactly what each product costs and you can try out different price points to see what works best. People appreciate good value, and removing the middleman is a great way to provide your customers with competitive prices that keep them coming back for more.
2. Sell your own services. Whether you're a dentist, an online legal consultant, an estate agent, a fitness trainer or anything in between, you can profit from selling your service online. It's easy to get started selling a service online, but your revenue potential, in most cases, is limited. That's because, unlike someone selling a physical product that can be stored and shipped on demand, you can only provide as many services as your time allows. When you sell a service, you're essentially selling a relationship. And this requires that you spend more time and effort establishing your credibility and developing rapport with your visitors than is typically required on a site selling a tangible product. You not only need to establish the benefits of the service you're offering, you also need to establish the value of you providing this service.
3. Drop ship products. If you want to sell products without the hassles of tracking your inventory, setting up warehouse space and maintaining a confusing shipping/receiving infrastructure, drop-shipping may be the choice for you. This lets you sell products on your site for a profit, while the drop-shipper takes care of fulfilling the order. They warehouse the stock, pack the orders and ship them out to your customers.
4. Recommend affiliate products. This creates a "no-risk" partnership that allows you to promote another company's products or services on your site to earn a percentage of their sales. As one of the company's "affiliates" or promotion partners, you earn a commission each time someone you've referred to their site makes a purchase. You might post a banner on your site that links to the affiliate program's site, or you might publish an article about the company and their products in your newsletter or e-mail promotion.
5. Sell ad space. Once your site has lots of highly-targeted traffic, or a large, targeted opt-in list, you may be able to sell advertising. Advertisers are willing to buy space when they're being directed to large numbers of their target market. Nowadays, though, advertising revenues are a lot less than they used to be, so I don't recommend you plan on making this your sole source of income. Selling ad space can be a great additional profit stream, but it's unlikely to keep your business afloat on its own.
