COMING UP FAST - HOW TO PUT YOUR BUSINESS ON THE INTERNET - Getting your business online gives you access to a global market - and it needn't cost the earth. Andrew Saunders talks to some small companies that are already reaping rewards from the web.
Most small companies have always wanted to get bigger, and now here's the internet, promising them the world. It is an attractive opportunity to expand when you don't have the kind of money normally needed to buy growth. The right web site offers access to millions of potential new customers.
So you are ready for the web. How do you get connected? Getting a site up and running is technically straightforward, says Colin Collino, managing director of Laughing Stock (www.laughingstock. co.uk), which makes and sells comedy tapes by the likes of Rowan Atkinson and Eddie Izzard. He tells internet candidates: 'Don't be frightened of it. Anyone who has started their own business has certainly been through much worse.'
Serena Kelsey, a Hot Gossip dancer in the 1980s and now a bespoke tailor whose suits are worn by Liam Gallagher and Gary Rhodes, among others, recalls: 'For me, getting on the web was painless.' Her strategy was to buy a complete service from a specialist in e-commerce for small businesses. The company designed, built and now operates her site - it even processes online payments. 'I decided what I wanted to put on the site, and how it should look, and they did everything else,' she explains.
This low-stress option comes at a price - on top of set-up costs, Kelsey pays commission on every online sale. But she remains enthusiastic. 'I get instant access to customers all over the world. It's the future of shopping.' Her shirts, ties and ready-to-wear suits have been online since late '97 and the web site (www.kelseytailors.co.uk) now generates sales of £100,000 a year.
It isn't always that easy, however, and for every winning move into e-commerce there are as many ventures that will struggle. Lack of a coherent strategy is the most common reason for failure, according to Jason Finch of Port80, the internet business planning agency. 'A lot of small to medium enterprises are unbelievably bad at online venture planning,' he says.
'The internet should be treated as seriously as if you were opening a new office or shop.' So, go back to your business plan and ask yourself what you want to achieve and how the web can help you do it. How much can you spend and how long should it take?
Before you spend any big money, do some research. Surfing the net can provide valuable competitor intelligence at very little cost. Says Katie Jowle, who with husband Richard sells branded perfumes at discount prices through Fragrance Direct (www.fragrancedirect.co.uk) in Macclesfield, Cheshire: 'Our market is price-driven. Before we went online, we had to be sure we could compete.' She spent a few hours checking what was already out there. And so should you.
Time online will also furnish you with valuable ideas on what your site should offer and how it should look.
You may need expert assistance to turn those ideas into reality, and again the web can help. When you visit a well-designed site, follow the link to the company that built it. 'Use the net to find companies that can help you,' advises Finch. More conventional means also yield results.
Do you know anyone who has recently gone on to the web? How did they do it and which companies did they use? A quick chat about their experiences will be time well spent. The British Chambers of Commerce and the DTI's Business Links are good sources of local companies that can get you on the net, while trade bodies such as the British Computer Society and the Federation of Small Businesses offer pertinent advice. Using these organisations should also help you avoid being ripped off. 'There are a lot of charlatans in the web world,' warns Finch.
Chris Battle, managing director of Jack Scaife, a family-owned butcher, turned to the net because of the spiralling costs of mail-order sales.
'We were spending £7,000 to £8,000 a year on advertising the mail-order business and weren't seeing enough back from it.' Based in the sleepy Yorkshire town of Oakworth, better known for its proximity to Bronte country than for e-commerce, the firm has now been webtrading for two years and its dry-cured bacon attracts customers from all over the world.
Battle admits to being net-sceptic at first. 'It was my daughter's idea.
I didn't think that people who wanted to buy black pudding and bacon would be using the net.' He was wrong; turnover is up 25% to £700,000 a year and, compared with their old ad budget, the web site, which cost £1,000 to set up, was a bargain.
How much your site will cost depends very much on what you want it to do. Most of the expense is in the functionality - the 'back end'. Customer profiling (which tells you who is buying), user personalisation (one-click repeat orders, for example), and databasing (which hooks price and stock information on your site directly to your central records) are great - but expensive.
According to John Rahim at Sebastian Kennedy Associates (responsible for the Kelsey Tailors site), £15,000 is rock bottom for sites with any of these sophisticated features. Start adding extras and you can spend a lot of money.
At the other end of the scale, about £5,000 is sufficient for a minimalist approach to e-commerce. That buys a basic 'fully transactional' web site (one that allows secure payment online by credit card). The good news is that the 'front end' - the pages users see on screen - is relatively cheap, so there is no reason why even a site built on a shoestring budget shouldn't look good.
Running costs are generally low for small business sites - less than £1,000 a year is common. Unless you expect to have thousands of visitors logging on simultaneously, you should be able to get the cost of 'hosting' (providing the computer space occupied by your site) thrown in as part of the design deal. Site updates (prices, products, photographs and design changes) can be surprisingly expensive if done by your web designer. 'Updating the site for each new collection costs around £1,000,' says Kelsey. In many cases, you can learn to do some updating yourself.
Given a certain amount of technical savvy, you can also build your own site from scratch, says Collino, who designed the Laughing Stock site and now moonlights as a consultant to companies such as the eponymous prize-sponsors Booker. 'Small businesses can do it themselves,' he says.
'Proprietary packages work - you just have to learn to use them.' These packages are designed to do the hard part for you, converting your draft layouts into functional web pages that you can assemble into a site.
Although it is the ultimate in budget e-commerce - you can build a site for as little as £500 - be very careful if you go this way. Something that looks amateurish or doesn't work properly is not going to build your business. Even the coolest web site is no good unless it gets visitors ('hits'), and visitors are no good unless they buy. Marketing is critical, says Rahim, and doing it online is very different from doing it in the high street.
'Look for other sites that your customers are likely to visit and trade links with them,' he advises. Called affiliation, this strategy works for Amazon.com and it can work for you.
A 'sticky' web site that has what it takes to hook the fickle e-shopper is the Holy Grail sought by every e-business. Repeat orders are important, says Finch at Port80. 'The cost of getting new customers on the net tends to be high, but the cost of retention is low.'
Offering a high level of customer service is sticky, too. 'Prospects online are looking for at least the same level of service and the same kind of experience they would get in the real world,' says Rahim. Think about logistics and distribution. Goods bought online should be shipped fast - ideally within 48 hours.
Casual surfers use search engines (Yahoo! and AltaVista, for example) to find what they want on the web. If you aren't on the search engine list, your site may never be more than a quiet back street off the information superhighway. 'Meet with their sales teams,' advises Rahim. You can buy 'key words', which get your site highlighted every time someone uses the word in a search. Says Battle: 'We have some key words and they are very useful. People only have to type in 'bacon' and the Jack Scaife site is there.'
You can make real money from virtual commerce, but what brought all these entrepreneurs to the net in the first place was an eye for the future. Kelsey looks forward to the day when customers for bespoke suits can be measured online, and Battle has taken the bold step of closing Scaife's only bricks-and-mortar shop to concentrate on e-business. 'It had been there for 90 years, but I've no doubt that this is the way forward,' he says. l
DOS AND DON'TS OF E-BUSINESS
- Make a plan. Decide why you want to get on the web, what you want your site to do, and how much you have to spend on it.
- Register a good domain name (your web address), ideally the name of your company followed by .com or .co.uk - it's not expensive (around £100) and makes your site that much easier to find. Visit www.allwhois.com and do it now.
- Choose slick design and presentation before going for additional functions. A simple site that looks good and is easy to use is more likely to generate sales than one that may be sophisticated but is confusing.
- Offer discounts to online customers. They know that e-commerce costs you less and will expect to pay less for doing business your way.
- Be proactive. Regular web site updates keep users interested and make your page sticky.
- Don't forget to inform customers who are not yet online. They soon will be. Put your web address on stationery, business cards, vehicles, premises - anywhere people will see it.