Booting Up Your Business

By Nick Pachetti

By last October, Brian Hanson knew he had to hurry up and expand the operations of the Portland, Maine, seafood store that had been in his family for three generations. Space wasn't exactly the problem; he and one of his partners, Walter Compare Jr., had just moved Hanson Bros. Fresh Seafood to larger quarters in the newly built Portland Public Market. But there were rumors floating around town of a new digital form of competition. "One guy sold $1 million worth of live Maine lobsters online around Christmas," says Hanson. "That's when we do most of our business."

The best way to fight e-commerce, Hanson decided, was to join it. So, last fall he began shopping around for a way to establish a presence on the Internet. He contacted local Internet service providers (ISPs) and asked other small-business owners about their experiences. He settled on Global Store globalstore.net) a company that offered to get him uploaded and running for $5,000, plus $150 a month for maintenance.

So far, that investment is paying off. Since mid-February, when Hanson launched www.seafoodnow.com his online sales have grown 15% a week. In one week late last month, he made $5,000, more than six times what he made in his first week online and a solid showing during a time of year when business is traditionally slow. Customers from as far away as Alaska are using the Web to purchase the same 78 products the store sells in Portland, including jumbo gulf shrimp, live Maine lobsters and even Alaskan king-crab legs. Just as importantly, from Hanson's point of view, taking orders over the Internet has freed up some of his 30 employees to help customers at the store's counter. "I couldn't afford to have people on the phone all day processing orders," he says. "The website is a gift from the heavens."

What Hanson's experience points to is the fact that a business owner doesn't have to be the size of Amazon.com to take advantage of the Internet. By the thousands, small business owners are following in Hanson's briny footsteps. Only a year or so ago, getting up on the Web was a major effort and expense. Businesses had to turn to Internet service providers, web-page designers and Web consultants to set up a website that could easily cost tens of thousands of dollars. But in the past year, all that has changed. Thanks to increased competition among providers and improved technology everywhere, a growing number of one-stop shops can create an e-commerce website for as little as $200 or $300. That's a pittance compared with the riches to be potentially made in cyberspace. Last year nearly 9 million U.S. households shopped online, generating $7.8 billion in revenues, a number that is expected to grow to $108 billion by 2003, according to Forrester Research, a technology market research firm, based in Cambridge, Mass. Whether you're looking to set up e-mail relationships with your customers, build a small brochure site to advertise your wares, or construct a full-fledged e-commerce site to sell a wide range of products, there are plenty of providers who will help from start to finish.

If you're just starting to move your business onto the Internet, don't worry; there's still time. While 85% of the more than 7 million small businesses in the U.S. have PCs and two-thirds of those have access to the Internet, only about 1 million businesses have their own websites, according to International Data Corp., a technology market-research firm based in Framingham, Mass. That's up from 200,000 businesses in 1996. So here's how to get started.

GOING ONLINE

Set up an account with a large national provider like America Online or AT&T WorldNet or a regional service like MindSpring or EarthLink; access with e-mail and unlimited use should cost roughly $20 a month. Once you're online, spend some time browsing the Web to get a sense of how other businesses are presenting themselves. Try buying something like a book or a CD online to see how the process works. Stake out your virtual competition; remember once your business is online, your old nemesis down the block will no longer be your only rival.

CHOOSE YOUR WEAPONS

As soon as you've familiarized yourself with the Web, figure out what you want to do with it. Some small businesses are satisfied with e-mail only--it's extremely cheap and opens a new form of communication with customers and suppliers. Others prefer to provide a little information like phone numbers and an address in a kind of virtual yellow pages. A website can be the equivalent of a single page or a thick magazine. A brochure-ware website, for example, holds roughly 10 megabytes of memory or enough space for, say, a page or two of photographs of the store along with a little description.

Many providers will offer this service for free as part of the monthly access charge. Sandee and Mark Larkin, owners of the Harrison, a small bed and breakfast located in Waxahachie, Texas, turned that to profitable advantage. Last year the Larkins were looking to increase business and draw weary travelers to the hotel's steps. Mark's brother suggested Big Planet (www.big planet.com) an ISP, based in Provo, Utah, that, for roughly $500, helped the Larkins set up www.harrisonbb.com a site with among other things an address and telephone number. In one year, bookings have increased 20%, and one online business customer stayed a record three months. "Once your name is out there, it opens up a lot of opportunities," says Sandee Larkin.

THINK SERVICE

For some businesses that strategy works. But today's savvy Web consumers want more than just information; they want to buy things at the click of a mouse. "Brochure sites are dead," says Forrester Research Internet analyst Laurie Orlov. "If you want to move product, you have to have some form of e-commerce."

Mike Spremulli learned that quickly. The owner of Norwalk Music, which is based in Connecticut and sells guitars and other music equipment, Spremulli spent a sick day at home in 1995 developing a small, bare-bones website for his company. It simply explained what the company sold and where it was located. A couple of weeks later, a customer in Meridian, Miss., liked what he saw online and proceeded to place an order over the phone for a Takamine guitar. More orders flooded in. "We realized people liked sitting on the computer buying things, and that's what got us to go big time," says Spremulli. He invested $3,900 with Web consultant Blacksheep blacksheep3d.com and two years ago set up www.norwalk music.com The website, which gives customers full credit-card access and calculates shipping and taxes, now generates 26% of the company's $1.5 million in annual sales and caters to customers as far away as Egypt.

GET GOOD HELP

Once you've decided to take the plunge, finding a reputable website provider is relatively easy--and getting easier. Today there are myriad companies that act as Web consultants, designers, technicians and promoters all in one. Those include Yahoo Store www.store.yahoo.com) BuyItOnline (www.buyitonline. com), Verio (www. verio.com) and MindSpring (www.mind spring.com) Chances are even your own ISP will offer some kind of service. Don't be surprised if it comes knocking at your door--that's how Brian Hanson found Globalstore.net When you start surveying your options, though, keep a few things in mind. First of all, make sure you have the necessary resources to handle Internet commerce. A fully functioning website costs on average $1,000 to start and an additional $30 a month to run. How much do you want to sell? E-commerce providers typically charge according to how many products you market. Offer five, and it can cost $40 a month to maintain the website; offer more than 100, and it can cost $150 a month. It's best to start small to get your bearings; you can always add on later.

Then there are questions about service. Do you have enough employees to fill orders and provide good customer service? These are increasingly important competitive factors in the Web marketplace. You can make the process as automated as possible, but even Amazon.com has humans taking books off the racks to send to customers.

Price and selection are only part of the equation. How much memory does each site include? How many Web pages? Will the provider register the website address as part of the setup package, saving the small business owner the hassle of having to do it separately? Either way, it will cost about $70. Naming your website after your company or using a catchy phrase can be the difference between success and failure. Make sure you own the name, not the provider, in case you want to change services. Will the provider register your website with search engines that guide consumers to your virtual store?

Where the computers that physically store your website data are located is important. Don't let it be in your store. Most small companies have neither the physical space nor the technical expertise to house a server. Seafood-store owner Hanson balked at a solution that involved setting up bulky computer equipment next to his fish tanks. The costs were prohibitive for a small business: $20,000 to get the system up and running and an additional $800 a month to maintain the site. He ended up settling on Global Store's own servers, with no physical in-store service required.

THINK LONG TERM

Can you get technical support and make changes in your website 24 hours a day, seven days a week? Does the plan include credit-card processing, automated shipping and sales-tax calculation? If not, will the website recommend outside vendors? Some businesses do all this the old-fashioned way, with the customer sending his billing address, credit-card number and expiration date via e-mail. At the business end, someone still has to call to get credit-card approval and calculate taxes and shipping costs, which depend on the weight of the package. And outsourcing credit-card processing to a check- or credit-clearing agency can be expensive. Many companies will include this, along with calculating taxes and calculating the weight of merchandise free. When someone buys fish from Hanson, all he has to do is pack orders into boxes. Charges, including taxes and shipping, are already credited to his bank account. How about a virtual shopping cart, to which the customer can add additional purchases? Using the cart, the shopper can calculate the total bill at any point on the electronic expedition. Most businesses will throw this in with one of their plans, but small businesses might want to make sure it's in the plan they choose. Even online customers enjoy browsing the store. How easy to use is the software needed to accommodate that desire and build the website? You don't want to spend a lot of time trying to figure out how to add products.

Finally, be a good consumer yourself: try out all the stuff before buying. Some providers offer free 30-day trial periods.

Of course, putting products online doesn't guarantee they'll sell. One of the biggest mistakes businesses make when they venture onto the Web is building a site and not bothering to promote it. An effective advertising campaign should incorporate search engines, online ads and traditional media such as newspapers or radio. Some Website providers like MindSpring will register your firm free with top search engines Lycos and Excite. Others, Microsoft's LinkExchange among them (www. linkexchange.com) will swap banner ads with other businesses without charge.

There are a couple of other services you need to worry about.

After retiring as a manager from Digital Equipment Corp. in 1994, Al Pink planned to start just such a business with his wife. In 1996 the couple, both avid golfers, opened Southern Appeal (www. southernappeal.com) an online store that sells such golf-related trinkets as golf-club stands and golf-bag-shaped Christmas stockings. Before they could open for business, they had to obtain a merchant account number for credit-card transactions from a local bank in Roswell, Ga., and buy specialized software to keep track of inventory on someone else's shelves. It was a lot of extra trouble, but in the end it paid off: the Pinks have more than doubled sales each year, and their sales are already up 150% for the first quarter of 1999. Back then the Pinks were pioneers; today many providers can usually offer these start-up services as part of a package.

SOME FINAL TIPS

Once your site is up and running, put your domain name (in Hanson's case seafood now.com on everything you send out, including business cards and invoices. If a new version of an Internet browser such as Netscape Navigator or Microsoft Internet Explorer is released, upgrade your site so that new users have an easy time finding your virtual door. Don't go too heavy on graphics; the more complicated a website, the longer it takes to access it. "As soon as people have to download, they disappear," says Mark Bozzini, CEO of LinkExchange, an online marketing-services provider based in San Francisco.

Above all, take the time you need to get the job done right. Hanson, for example, had to miss his first lucrative Christmas season when setting up his online store; it took him six months before opening up for e-business. But his site has remained glitch-free ever since. Now Hanson has installed a live lobster-cam for customers. Even online, he's learned, customers like to see what they're going to eat.