It seems hard to believe now, as everyone is getting ever so excited about Web 2.0, but the Web 1.0 (or dot.com) bubble burst more than seven years ago. This was the day when, amid much champagne-popping and canape-munching and general PR overspend, lastminute.com floated, the Nasdaq index having peaked four days earlier. Exactly a month later, Wall Street experienced its biggest single-day drop in its history, ending a week during which the US markets lost $2 trillion.
Small businesses can learn a great deal from looking at both the first-round Web 1.0 veterans and their more newly minted Web 2.0 rivals. Starting with the former, the companies that weathered the crash and have since prospered - the likes of Amazon, eBay and Google. The days when simply having a brochure site with your company details and a few nice pictures was acceptable are now long gone. Such sites - and there are still plenty around - not only fail the cardinal test of Web 1.0 because they don't boost the bottom line, they may even actually damage the brand and reputation of the businesses they represent.
From Web 1.0, we also know that the successful companies used the web to do something better than it could be done elsewhere; they used it to revolutionise an existing sector or they took a successful existing business and made it work on the web. They offer valuable lessons to any firm seeking to make doing business online more profitable.
Many of these tips may seem basic nowadays, but the simple lessons are always the most effective to implement, and the most often overlooked. And yet a surprising number of businesses (both large and small) still don't really get it, and put up sites that drive customers away.
Most of the Web 2.0 tools available offer simple ways to make your site more dynamic, allowing you to add more content more easily and without having to call in your web developer every time you want to update something. Technologies like RSS (Really Simple Syndication) feeds also enable you to get your content out there to more people more of the time - clearly a good thing.
But this means that you need to budget beyond your build costs and set aside money for maintenance and for creating new content, cautions Tim Howe, founder of KnowHowe, a business that provides web design and software development, primarily to SMEs. 'There is nothing more forlorn than a forgotten site with a news section that includes items last posted months ago. Use feed technology such as RSS to disseminate your news and so on - but only if you are prepared to update it.'
The other area where Web 2.0 can easily improve the site and make it feel more exciting is allowing customers to contribute content directly. Do this properly and you could find that you've created a self-sustaining community of online customers who will update your website for you, as well as improving your revenues and giving you terrific insights into what people really like about your company.
That's the holy grail of Web 2.0, but it can be a challenging mindshift for site owners to make. When you feel very proprietorial about something, it's difficult to let someone else make changes. And it can particularly hard if they are contributing comments to a forum that are inappropriate or offensive - or, worse, wholly appropriate and inoffensive but unpalatable to you. If you ask people what they think in an online environment, they are much more likely to tell you the truth than they would face-to-face. This is one of the web's great strengths, but you have to be prepared to take criticism on the chin.
At the most basic level, what you really need from a website, according to usability guru Jakob Nielsen, are 'the three Fs': the site has to be functional, fast and familiar. 'User experience is critical for success on the web, since that's all there is,' he says.
Most people, he explains, go onto a website with a specific goal in mind - say, to buy an MP3 player. You have to help them accomplish that. People don't want to wait for ever to negotiate their way through gratuitously arty graphics or odd and unfamiliar menus.
Your site should also function like other major sites. So if you invent a tricksy new interface, users won't bother to learn how to use it - unless you are Microsoft. 'A user might admire a pretty site once, but won't return there,' says Nielsen. In contrast, people tend to return to a 3F site. 'The 3F site will generate more repeat traffic and much more business.'
Half a decade after famously profligate and sales-free fashion retailer boo.com went down the pan, many still haven't taken this lesson to heart. Pretty sites with unnecessary flash interfaces and areas that users never venture into abound. And, even with near-universal broadband, some sites still take forever to download.
Anyone tempted to follow the style-over-function route should looks at Craigslist. It's text-based, not particularly attractive but compelling and useful. People love it. Despite having only a handful of employees in its groovy San Francisco head office, Craigslist is regularly listed among the world's 10 most visited websites.
The danger of the ready availability of many Web 2.0 tools is that they have brought needless complexity within the reach of almost anyone. 'Nowadays, tools are free and cheap,' says Andy McLoughlin, strategy director at Huddle, a network of online workspaces aimed at SMEs, 'and the temptation is to spend a lot of time playing with them. This can be a waste. Few people want to listen to a plumber in the Midlands podcasting.' Though, with the web's viral nature, you never know.
At KnowHowe, Howe takes a similar line: 'You need to decide what your objectives are; don't get carried away with web-specific ambitions. Don't use something expensive because it looks impressive; use things that mesh closely with your business's objectives instead. Then get something out there and add functionality as users demand it.'
Howe advises against overspeccing the first build, as functionality can easily be bolted on later: better to get something simple out there quickly and build it up.
But what a small business can concentrate on is using the web to deliver certain things very well. 'It's very good for enabling small businesses to communicate and improve their customer support,' says McLoughlin. 'For instance, the lists for monthly mail-outs used to be very difficult to manage; now that's very easy. And it's the sort of thing that a really small business, like an artisan cheese shop, could use to its advantage.'
This kind of technique can be a real SME strength, because as a small business you are likely to have better-quality relationships with your customers than a large, faceless corporation. E-mail bulletins coupled with your online offering can help you make the most of this goodwill.
The lessons, then, are manifold. First, the level of website your business needs depends on what it is and what makes business sense - and this includes really mundane factors like the cost of postage and how long packaging takes. For many small businesses, the web offers a genuine chance to gain exposure to a vast customer base that just isn't to be found anywhere else. If the maths work, there's no reason why a kipper supplier shouldn't be selling to the French or even the Americans.
Get it right, says Howe, and the web can do what it has always been great at for smaller businesses, which is to allow them to compete with far bigger enterprises on near-equal terms. 'Web 2.0 is a great opportunity for small businesses, as it tends to level the playing field; you do not need to spend a fortune on design, as the content becomes more important.'
SKILL-PILL MOBILE LEARNING - BITE-SIZED TRAINING MODULES, JUST IN TIME
It's an interesting concept and one that could only work in today's rich-media, multi-channel environment. Skill-Pill Mobile Learning provides short, audio-visual training briefs that can be delivered to a handheld media device. The idea is that the user is on their way to, say, make a sales pitch. Perhaps they've been running about or there's traffic. Whatever the case, this brief - the skill-pill - delivers a short burst of training, coaching and calming to put the user back in the zone. 'It is,' says founder Gerry Griffin, 'a cure for infomania.'
Although the delivery system is web-enabled, the pills will typically download to a mobile phone. First a text message is sent - the user is asked if they want to download the pill. If they say yes, then the pill (about 750k) downloads; it usually takes a couple of minutes. Skill-pills can also be linked to electronic calendar management systems.
As well as pepping users up when they need it, says Griffin, skill-pills can also help to provide booster shots. 'Ten billion pounds a year are spent on executive training, and studies suggest that 90% is lost over the course of the year. It's like sitting in the bath with the plug out.'
But Griffin doesn't see the web as magic dust. He once worked out that on good days Hyde Park ice cream vendors did £400 worth of business an hour, and 'it's hard to see how the web could improve this'. But, he adds, when the web is good, it's very good. 'Skype has been fabulous for SMEs. We use Skype video every morning - with people in Germany, Sydney and Washington. They talk and send documents to each other free of charge. That part of our business would be hugely expensive without it.'
WORLD GLOBAL STYLE NETWORK - A SITE THAT TRANSFORMED THE FASHION INDUSTRY
There can be few better examples of how the internet can transform an industry than WGSN, the Worth Global Style Network. WGSN is the world's leading online fashion information database and was recently bought by Emap for £140m.
Launched in 1998 by brothers Marc and Julian Worth, WGSN was identified by MT only a year or so later as one of the most likely of British dot.coms to succeed. It provides the worldwide fashion industry with pictures, news and data (everything from next season's style and colour information to 'coolhunter'-type trendspotting) in a convenient, high-speed format. It's a vast improvement on the old-fashioned hard-copy stylebooks it replaces, which could take six months or more to compile and produce. 'Fashion is a great B2B example of how to use the web,' says MD Steve Newbold. 'Everyone deals across territories globally and needs information very fast.'
A number of external factors contributed to WGSN's success. First, the industry itself accelerated. 'With shops like Zara in Europe you now have new collections on a monthly basis,' says Newbold. The pace of change means that those who are designing for next year need as much information as possible now. The other great boon was the proliferation of broadband: fashion information will always be image-rich, and slow connections act as a bottleneck.
But the company has also been smart. The Worths came from the Midlands rag trade and knew the value of a quid, spending carefully only where returns could be expected. The information WGSN provides is unique and regularly updated, allowing the firm to work on a paid subscription model. By 2002, it was profitable: £14,000 now buys you a five-user licence for a year.
From an initial staff of 15, WGSN now employs 80 people on content alone, plus 130 freelancers. It has a huge database of 3 billion images and 500 million pages of content. These enormous resources, says Newbold, protect it from competitors by creating high barriers to entry.
There's plenty of untapped market to expand into. WGSN may have 2,000 subscribers in 60 countries, but, adds Newbold, 'by our estimation, there's a lot more to be done with our core available market. There are a lot of people who have yet to discover WGSN.'