Creating a web-based business : part one

This is the first in a number of non-technical articles I’ll write covering the basics of what’s required to create a web-based business. These are being produced to assist non-technical entrepreneurs in creating their WebEquity project scopes.
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You have the idea and business plan, and WebEquity has the resources to make that a reality and [hopefully] elevate you from the rat race, but the thought of engaging with an army of techys to create your business gives you the chills. This document is intended to give you a heads-up as to what’s required when creating your online business.

Business plan

No matter how small, your venture should start with a comprehensive plan that will typically include information on the following:

• the goals of the business
• details of the business management
• the marketing plan
• operational details
• the financial plan
• a step-by-step plan of action

There are numerous resources available online for creating a business plan, and they are largely applicable to any country. In Australia, check ou the NSW Department of State and Regional Development’s Guide to Business Planning for more information.

As well as providing information for financiers, contributors and others, your business plan will help you clarify in your own mind exactly what you’re trying to do and how you intend on doing it. The plan isn’t written in stone, either, and is likely to change as your ideas mature.

Choosing a name

With an internet business, choosing a name means choosing a domain name. It doesn’t really matter what the business or company name is – it’s the domain name that will count long-term. Your choice of name may reflect the type of business, but it’s not compulsory, and you should bear the following in mind:

• Choose a name that’s not going to be confused with someone else, especially if it’s a potential competitor. Apart from the obvious ethical problem, and the possibility of legal action against you, in practical terms, as your business grows your competitor might benefit from the confusion more than you.
• Whilst a generic name might appeal for search engine optimisation purposes, building a brand around a generic term is very difficult and it’s almost impossible to protect the name against (ab)use by your competitors. You don’t want them to benefit from your hard work raising awareness of your new product or service. On the other hand…
• Consider the search engine ‘friendliness’ of your domain name. If your new business is selling digital cameras, for example, try to include that term in the name. If you’re providing a dating service, some reference to ‘dating’ within the name will help the search engines identify what your site is about, and every link to the site will help re-enforce that. For more information, you are strongly recommended to speak to someone with search engine optimisation (SEO) skills.
• Short is sweet. Keeping the name as short as possible will have significant benefits. Whether you’re going to rely on people to type the name, or on printed advertising, having a short name is easier to remember and inter-site links won’t be so obtrusive.

It is advisable to register your name before you set out on recruiting your development team, and never publicise a name you intend using that is unregistered.

Creating your WebEquity project profile

Once you have your business plan and a name, you can start recruiting help from your local WebEquity community. As well as building your business development team, posting your project will help you in a number of other ways, too.

You need to create interest in the project, but you don’t want to give the whole game away in case someone decides to develop your idea themselves! Remember to keep any proprietary information or technology, or unique selling points, to yourself whilst making sure people know they exist and just how fantastic they are! If you’ve sold the concept as well as you can and you receive little or no interest, it might be indicative of the response the idea will generate generally. Review your project profile; maybe adopting a different approach will result in more interest, and this could be invaluable feedback in creating your public marketing plan. Conversely, if people are falling over themselves to join your team, you know you’re probably on a winner. Congratulations.

When creating the project detail, try to include at least the following details, even if you say that they’re not yet finalised:

• Hosting – has this been arranged? Who with? What operating system? Do you require someone to host the site for you?
• Design – do you require someone to provide the website design?
• Development – do you require someone to create the website?

Hosting the site

Websites are stored on high-performance computers called servers. Most websites are stored on servers held at web hosting companies, so you don’t have to purchase and maintain your own server. Web hosting companies offer different levels of service designed to cater for websites of all types and popularities. The key differences between services are the operating system (typically Unix or Windows), and this normally determine the technology available to the website developer (Unix = PHP scripting and MySQL database; Windows = ASP/.NET and MS-SQL).

Hosting can be expensive (particularly in Australia). Bear the following points in mind when selecting your web hosting company:

• The hosting company needn’t be local to you – the internet is global, and so are the services
• If you decide to go with an overseas host, remember that their hours of operation might be outside of your normal working hours. Although most hosting companies will offer 24hr support, it may be reduced during peak times in your time zone. There is also the potential that any ‘out-of-hours’ maintenance is planned for your peak times because of the time differences.
• Don’t over pay for optional extras that you don’t need, but make sure you discuss scaleability when setting up. You don’t want to be paying for expensive bandwidth and capacity that isn’t going to be required for months or years, but make sure there is a clear path for upgrading as your website grows in popularity. Upgrading your service or commissioning a new server can normally be done very quickly, so don’t waste money unnecessarily if you don’t have to.
• Your choice of server/service might limit the technology available to create your website. Unless you have a server in place already, it is advisable to speak to the developers that might work on the project before spending money on a server. Different website developers prefer different languages and operating systems. What’s important is the final result – not how’s it’s achieved – so discuss hosting with your developers, too. They might have a server that can be used for developement and testing before launching the website, which will help save more money, too.

Engaging other WebEquity members

Different people have different attitudes towards protecting their intellectual property and working within legal agreements generally, but you are advised to ask any potential contributor to sign a non-disclosure/confidentiality agreement before giving out your world-beating product secrets. A handy confidentiality agreement generator (and other tools) is available from the Australian government’s IP Australia website. Even with this agreement signed, however, it’s still best to limit information to a ‘need to know’ basis until you’re comfortable that the other person is fully committed to the project. If you’re working with multiple contributors, limiting the information that each is given will help protect against any one of them developing the idea themselves.

Personally, I try to get confidentiality agreements signed whenever possible, but I rely more on my gut instinct so try to meet project contributors face-to-face before providing any detailed information. Fortunately, I’ve not yet had to take legal measures to enforce an agreement, but I view them more as a deterrent than as real protection for my ideas. If someone is so unscrupulous as to run off with an idea even when offered a cut of the equity or revenue, they’re likely to it whether you have a confidentiality agreement in place or not.

In terms of the amount of revenue or equity you’re willing to share… that’s another matter for negotiation between yourself and the contributor, but here’s some pointers to open the discussion:

• how much time is likely to be required?
• what would that normally cost at the contibutor’s standard rates?
• what are the revenue expectations of the project?
• is equity or revenue or both on offer?
• how important is the contributor to the final product?
• how much competition exists for a spot on the team?
• equity sharing is for the lifetime of the project; but how long would you like any revenue sharing agreement to exist?
• what if the contribution (e.g. a page design) is superceded?
• what if the project fails? Is a compensatory payment expected/available?
• who owns the intellectual property rights of the contribution?
• what are the timescales for the project?

Summary

I’ve tried to highlight the key pointers for non-technical people to create a successful online venture. This is essentially the same if you’re engaging others on a revenue/equity sharing basis or if you’re paying for their time/contribution directly. The difference working with WebEquity members provides is that they’re willing to invest time and effort to work on projects they believe in, in return for a share of the resultant success, rather than being paid to work on any available project. They have a vested interest in the success of the project, and their work attitude should reflect that.