The dotcom bust & doing business online

Is it still possible to make money on the Internet?

The dot com bust was really about Internet stocks. They went up; they went down ... and the media ate it up.

It was also about companies that were built on vast amounts of venture capital. Venture capitalists pumped a lot of money into companies and promoted them like crazy. Then out came the IPO, people rushed to buy the stocks, the venture capitalists made their money ... and then everyone discovered that the companies had no workable business plan and -presto!- dot com bust.

What does this have to do with getting a website? The dot com bust has absolutely nothing to do with the hundreds of thousands — perhaps millions — of people who quietly went about building websites and making money online. They built their businesses and sold their goods and services. Apparently this hard work and good fortune was not — and still is not — newsworthy. Go figure.

This is not to belittle the people caught up in the dot com bubble — would that it had worked out for them — but just to clarify the misperception that the dot com bubble and bust had anything to do with regular old business on the Internet, or that "no one can make money on the Internet anymore".

The "dotcom bust" -- what's in a word?

The phrase "dot com" derives from website domain names, like Dianev.com, which would be pronounced "diane v dot com". The ".com" meant it was a commercial website, as opposed to ".org" (for nonprofit organizations) and ".net" (for networks).

Some years ago, we started hearing about "dot coms." Bandied about wildly but apparently never clearly defined, there are various explanations of what this term meant at the time. However, for the purposes of this article, the phrase "dotcom" referred to companies funded by venture capital.

Back then, the realization of the possibilities of getting a marketing message before millions of "eyeballs" (people) generated terrific interest and activity — as it should. Venture capitalists expended literally millions of dollars in various companies; fantastic offices were built, expensive chairs bought, $25 million websites created, stock options issued, promotion blared to the world — instant fame, instant millionaires! Often this was followed by an IPO — an Initial Public Offering of stocks. And, while the stocks may have done extremely well in the "dot com heyday," unfortunately, simply putting money into a business does not guarantee that it will turn a profit. Also unfortunately, once the investors made their money on the stocks, there was a limit to how much anyone wanted to continue to invest.

With fantastic rents, payrolls and marketing budget requirements, and without financial backing to keep them afloat, many companies simply went out of business. Their stocks crashed too — and so the "dot com bust," which, of course, gained just as much media attention as the "dotcom bubble" and the "New Economy" fable.

Certainly there is more to it than this, and others may have a different take on it. But unfortunately, the media has favored us with headline-grabbing gloom and doom stories while almost totally ignoring the fact that Internet marketing is — and has been — alive and well for the rest of us.

One way or another, what was referred to as a "dot com" meant somehow-subsidized companies doing ... something or other. Here's an example: the book "DOT.BOMB".

I trust that gives a little better perspective about what all this "dot com, dot bomb" was about, and puts the end to worries about regular people and businesses doing business on the Internet.

The "dot com crash" was not about regular websites

Meanwhile, back in the real world, through the "dot com bubble" and "dot com crash," many companies and individual website owners have benefited greatly from the Web. They still do.

The possibility of getting a marketing message before millions of people is still the promise, made good, of the Web. Let's take a look at what it takes:

Business plans, or can you balance a checkbook?

In some ways, the Web is not much different than off-line life. One way to get a company started is to figure out your business plan (what you are going to do and how you will make money from it) and how much you have to invest — and then make choices about where to invest your time and money. This puts a realistic view on things.

Websites are economical advertising

Looking to advertise, get sales "leads" or actual sales? Websites, while not dirt cheap, are one of the best and most cost-effective ways to promote.

True story: 15 years ago, we took out a 1/2 page ad to sell books in a small Chico, California newspaper. Cost of ad: $600 for one ad, one day — one shot. Sales: one book -- $55.95. Ouch.

At the time, I said there had to be a better way. And now, there is.

How much does a website cost?
Let's examine some off-the-cuff figures. First, you need a professional website. Say $2,500-5,000 for the website, $30-50 a month for web hosting, $10-35 for a domain name.

Low figure: around $3,500 (including a year of web hosting).

Merchant accounts, which allow you to take credit cards, have their own costs, but they can be reasonably low. And you'll need about $600 for listings in Yahoo, LookSmart and others.

Yes, it's an expense. It may not be a $250 ticket to instant riches. But seriously, I'm not sure why people who believe that the Internet will make them instantly wealthy also seem to believe that it will only cost them $10. Right.

Of course, you could do it yourself. Some of the above fees will apply, and you'll need to invest some time to design a professional-looking website that works. If you're so inclined, this may be the way to go.

In any case, compared to some of the offline advertising (magazines, newspapers, television) or opening your own ofline store — this is a drop in the bucket, is it not?

Bottom line is that it costs a far sight less than a bunch of ads, and it works for you 24/7, bringing in people who are looking precisely for what you have to offer, and who are willing to read your "ad."

And nowadays, a company without a website is probably losing out if its competition is promoting and selling on the Web.


Diane Vigil founded DianeV Web Design Studio, has served as a consultant to numerous companies, as a moderator and administrator of the JimWorld SearchEngineForums and Cre8asiteforums, on the Site-Report Experts Panel — and has designed and built numerous websites since 1997.

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