Chapter 6
IN THIS CHAPTER
Mapping out your growth options
Investing in the next level of technology
Figuring out what to do after you hit the big time
Creating your final strategy
Truthfully, plenty of entrepreneurs are satisfied with their online businesses staying small. For the rest of us, growth is the carrot that’s continually being dangled in front of us. In this chapter, we share the strategies and resources that allow you (and your site) to finally take a bite out of that carrot.
Entrepreneurs can tell you that the process of growing your business almost always starts out the same way — by planning for it.
Before transitioning your online business to the next level, you have to identify exactly what that next level is. You have to put all your options under a microscope and decide which one makes the most sense to pursue. What are your choices? Well, each of the most common paths to growth has its advantages and disadvantages.
An obvious choice is to add products or services to your existing site. The purpose is to use variety to attract a wider customer base while bringing in larger revenues. This strategy is certainly the one that many entrepreneurs implement regularly, whether they realize it or not. After you consciously identify it as your preferred growth strategy, you can become more aggressive and targeted with your actions.
Here are the pros of expanding your business:
The cons of expanding your business are that they
We discuss ways to expand your product base in Chapter 5 of this minibook.
Buying existing sites is another fairly typical development strategy. You can easily start by making a list of competitors’ sites that might be worth purchasing. Also look at sites that complement your current business. These noncompeting sites offer products or services that are different yet still a good fit.
Of course, the larger or more established a site, the higher its asking price. Sometimes, a better strategy is to identify up-and-coming sites or sites that (like yours) have also remained small.
The pros of acquiring other sites are that they
The cons of acquiring other sites are that they
Maybe you’re not ready to purchase another company outright. A better solution might be to expand through partnering opportunities or affiliate programs. For example, you might partner with a national membership-based organization as the sole provider of a particular service or product.
Expanding your business through partnership agreements is a good idea. You’re typically unrestricted in the number of partners you have, and you retain control — and can cancel an agreement if the partnership doesn’t work.
In a similar arrangement, starting your own affiliate program becomes a viable option. Unlike in a partnership, you're developing a specific program that another site can replicate in exchange for a commission.
Although an affiliate program is often associated with e-books and other content products, it’s a viable delivery method for almost any product or service. You even see traditional e-commerce stores offering a flat percentage of revenues to affiliate sites that sell their products by using links. Or you might see payroll services companies that create affiliate opportunities. In that case, the affiliate earns a flat dollar amount for every customer referral that comes through the site.
The pros of going the affiliate or partner route are that they
Here are the cons of going the affiliate or partner route:
In Book 4, Chapter 2, we discuss signing up for affiliate programs.
Expanding your operations outside your home country is a proposition that’s both exciting and scary. This strategy becomes easier when you have, or a partner has, experience in working outside the United States. However, the return on the investment can be lucrative. Products can become oversaturated in the ever-competitive American market. Yet overseas, the product might be a relatively new and sought-after item with few — if any — distributors.
The pros of taking your business internationally are that they can
Here are the cons of taking your business internationally:
Recruiting a financial partner might be a desirable option for your site. If you do it correctly, you end up with needed money for growth and a business partner who has expertise that you might not possess. Finding a financial partner is a little different from simply going out and finding money to support your expansion because you’re taking on an actual partner in this scenario.
Unlike a bank or another lender, a financial partner is a person who has a say-so in your business. She participates in both operational and financial decisions. You can consider angel investors, depending on the arrangement, and venture capitalists as examples of investment partners (see Book 1, Chapter 4). More than likely, your financial partner will end up being a former coworker, a business associate, or a friend or family member.
The pros of finding a financial partner are that the person
Here are the cons of including a financial partner:
The good old days are connected with a bit of nostalgia. You might remember the heyday of the dot-com era, when companies went public with shares breaking Wall Street records. Well, going public remains a viable option for your Internet business, even if it takes more work (and a good battle against skepticism). Companies such as Google, GoDaddy, and LinkedIn certainly have proven that the dot-com magic is still viable.
Here’s the catch: You have to follow the same game plan as any other company that wants to go public, which includes these tasks:
The pros of going public with your company are that you
The cons of going public with your company are that
For some owners, passing the company on to a family member might qualify as following an exit strategy rather than making plans for growth. We disagree. In this particular strategy, you’re in essence growing your heir, who in turn grows the business. The first step is to decide whether you have a next-generation family member interested in taking over your business. Then you have to take an honest and objective approach to deciding whether that person has the necessary skills or talents. At this point, it’s like hiring an employee whom you plan to groom for a management position. Obviously, it’s not always easy to be objective.
The upside is that you might find an untapped resource who has a terrific energy level and pushes you.
The pros of handing off your business to someone else are that
The cons of handing off your business to someone else are that
Selling your site is considered an exit strategy. Yet, selling your site is sometimes the only way to grow it.
You might be tired, tapped out of money, and looking for a way out. Maybe you recognize that your site has fantastic potential and you lack the experience and knowledge to make it happen. You might also have a limited window of opportunity, or you simply might not have the resources to expand your site within that optimal time frame.
Keep in mind that developing a plan to identify a buyer is quite different from someone unexpectedly calling you with an offer. If selling is your strategy, preparing your business can take as long as 6 months to a year. If you have a smaller site, or have been lax in sticking to a management regimen, you need a few months just to clean up your organizational act.
Depending on your asking price and the current market, finding the right buyer can take another year (or longer). This time frame is where you see the difference between selling as an exit plan and selling as a growth strategy. When expansion by selling is your goal, finding the right buyer match is critical. A professional broker can help you identify key characteristics.
In general, you want to look for someone who has these characteristics:
You don’t have to work with a professional to sell your site. However, a broker often has extensive contacts of potential buyers and can speed up the selling process. Regardless, selling your site might be the ideal opportunity for you.
Following are the pros of selling your company outright:
Here are the cons of selling your company outright:
An alternative to selling your entire business is to sell only its URL. A popular domain name can fetch a pretty penny, which can help you expand your site.
Suppose that you have a limited amount of money to invest in any type of tools for growth. However, a key asset is your domain name. You can, in theory, sell the domain — to provide a needed influx of capital — and retain, as a condition of the sale, the rights to all content and services. That way, you move the content to another domain and use the money from the sale to build up the new site.
This strategy is particularly feasible if you already own a domain for a smaller site that has a similar theme or customer demographic. Of course, unless you have another domain name in your back pocket, starting over might be difficult.
The pros of putting your domain name up for sale follow:
Here are the cons of putting your domain name up for sale:
Ahh, sweet success. Admittedly, the term accidental success is a bit humorous. Ask any rock star or well-known actor about an overnight boost of fame. The honest ones don’t hesitate to explain that years of hard work preceded their “accidental” good fortune.
The same concept holds true for any online business owner. Imagine finding yourself in the throes of a major public relations blitz, with skyrocketing sales following close behind. The reality is that you might be unprepared to handle the level of business that this scenario brings. But we guarantee you that your success is no accident.
How do you prepare for an onslaught of hard-won business? After all, if your site is merely mentioned on a TV talk show or featured in a short segment on one of the news channels, your URL can be rocketed into the glare of the spotlight (in an extremely good way). Before you know it, you would have back orders and your site would be bogged down from the jump in visitors. You wouldn’t be able to get UPS to pull into your driveway fast enough. Lest this blitz of good fortune turn into your sudden demise, you had better be ready.
The following list describes both immediate and short-term actions you should take when opportunity comes knocking at your domain:
Talk, talk, talk. Now, more than ever, you need to communicate with vendors, distributors, employees, and customers. Take time out for daily or weekly 10-minute staff meetings. Take the opportunity to share operational changes and find out about problems that might otherwise fly under the radar in your stepped-up pace of activities. Let customers know about back orders, shipping delays, and any other minor problems that are surfacing. The worst thing about overnight success is that if you don’t address concerns effectively, you lose the customers who came to you during this crunch time of good fortune.
Take notes when you’re talking to customers, especially when they have a positive comment or a success story concerning your product. Turn these stories into case studies or testimonials that you post on your website, and use them as offline marketing materials, too.
Spend wisely. We hope that your burst of success is proportionate to the rising number in your bank account. With years of hard work behind you, you might be tempted to splurge. Instead, think of this influx of funds as investment capital and put it back into your company as much as possible.
Meet with your accountant to review or update your financial strategy. A substantial increase in revenues, and subsequent expenditures, brings along plenty of tax implications. Ask your accountant to discuss your options to maximize the use of your money.
Whether your site is growing because of fate or strategy, your next move should be well thought out. Follow these strategies:
Participate in industry activism. As a small-business owner, you have to focus primarily on your site. Your number-one priority is figuring out how to make your site work, which can be isolating at times. As you expand, you’re in the position to broaden your horizon. Make a point of joining national industry associations or professional organizations in your local community. Get involved with issues that affect your business and your peers’ businesses. Table 6-1 highlights a few of the national member-based organizations that cater to Internet professionals and small-business owners.
Becoming active in your professional community and your industry associations is also a proven and powerful networking tool.
TABLE 6-1 Associations for Online Business Professionals
Organization |
URL |
Annual Membership Fee |
Direct Marketing Association |
$1,500 |
|
eMarketing Association |
$175 |
|
National Federation of Independent Businesses |
$195 |
|
Search Engine Marketing Professional Organization |
$125 |
|
Shop.org (National Retail Federation) |
$2,750 |
18.118.145.114