You can do a YouTube and make millions
Forget the dot.com disasters. Now is the time to launch an online business, says Rob Griffin
Saturday 14 October 2006
hen Google agreed this week to pay a staggering £880m for YouTube, the innovative site that enables people to upload their home videos, internet entrepreneurs everywhere looked on with envy. The site was set up by its founders less than two years ago.
But it may not be too late to follow in YouTube's footsteps. In fact, there has never been a better time to start an online business. Not only is there a record number of potential customers, due to the growth of the internet, but the most successful ventures have the chance of being bought by multinational giants.
According to James Roper, chief executive of IMRG, the trade body for e-tailing, business is booming, with UK shoppers spending £13.5bn online during the first half of 2006 - 40 per cent more than in the same period last year. "The drivers are choice, convenience and lower prices," he says. "We are also predicting a record 25 million people will shop online this Christmas."
According to Jill Finlayson, co-author of How to Make Money Online with eBay, Yahoo! and Google, the trick is to identify a niche in the market that can be exploited. "If there is a product that is hard to find, inexpensive and easy to ship, that will be a winning formula for success online," she says. "It means you'll have people looking for it, enough mark-up for it to be profitable, and an easier time sending out orders."
Having an interest in the area you choose is also a vital ingredient, as is starting small to give yourself time not only to test the market, but also put together a viable business plan - without getting yourself heavily into debt.
"Using sites such as eBay will allow you to start selling without making huge investments in inventory and to test different price points and products," says Finlayson. "You can also keep your day job until your online business gains traction."
The eBay route is certainly popular. An estimated 70,000 people in the UK earn all or part of their income from selling goods on the site. Many of them have eBay shops that can be set up and maintained from just £6 a month.
Recently, the company launched eBay Express, which is a dedicated e-commerce site aimed at professional sellers.
"We wanted to give small businesses another channel for selling their goods," says Michael Hardcastle, director of eBay Express. "We have millions of visitors every month and businesses selling through us can get access to them. If they did it themselves, it would take a long time to attract the traffic we provide from day one."
Danielle Heptonstall, from Manchester, graduated from using eBay to get rid of unwanted items to using the site to sell a variety of gifts and collectables. As well as the eBay shop, she now has a website - www.hiccupgifts.com - and boasts an annual turnover of £100,000. "It started off as a hobby, but I became so busy that I decided to leave my job at a mail-order company and go full-time," she says. "The eBay part has been the source of the growth for the business and accounts for about 80 per cent of turnover."
Setting up a site requires knowledge of the special codes used to design websites or a willingness to pay for the services of someone who does. Depending on what you need, this is likely to set you back at least a few thousand pounds.
Alternatively, a number of companies now offer packages that provide web amateurs with the tools they need at an affordable price - with the bonus that the sites can be continually updated at no extra cost.
Simon Kimber, the technical director of DoYourOwnSite.com (www.doyourownsite.com), has used his knowledge of web design to produce a range of templates that enable people to put their own sites together. More than 300 firms have used them already in 2006.
Users of the service - which costs from £5 a month plus VAT and includes all hosting and domain name fees - are able to maintain hundreds of pages, send out newsletters to clients and even operate an online shop with thousands of products.
"The original idea was that anyone with the ability to use a word processor should be able to build their own website from our templates," he explains. "Predominantly, they are small business brochure sites for people taking their first steps online."
Kathryn Hamlin and Laura Barker used this site to launch their StillGorgeous.com (www.stillgorgeous.com), an online magazine for women over 35, as well as GorgeousLiving.com (www.gorgeousliving.com), an online department store with links to numerous retailers around the country.
The business currently generates income in the form of commission that comes from the links listed on the site, although there are plans to develop further revenue streams over the coming months.
"Our future plans include launching our own range of clothing as well as starting up a Gorgeous Weddings website which our new director Sarah Litton will look after," says Hamlin. "We see the business as an online magazine that women can dip into, over a cup of tea, that covers areas such as fashion and beauty."
Whichever route you choose to go down, the traditional business rules will apply. You still need to keep a close eye on your income and your outgoings, as well as putting maximum effort into promoting your company.
A lot of this marketing can be done yourself, says Jill Finlayson: "It's a good idea to get out among influential people in your area who can help you create a buzz among your target shoppers. Charitable events can also help increase awareness for your business and drive sales. Donating a portion of the proceeds makes people feel good about shopping with you, even if that percentage is small."
The success enjoyed by entrepreneurs Michael Smith and Tom Boardman, who run the online retailer Firebox.com, illustrates what can be achieved if you successfully fill a gap in the market. In the eight years since the two university friends started selling gadgets and games over the internet, the business has grown rapidly to the point where it now boasts an £8m-a-year turnover and employs 35 staff.
"We knew nothing about business when we set up, but chose a category that we were both passionate about," says Smith. "It's important to be interested in what you're doing because you'll be investing a lot of time and effort into it."
Smith believes the increasing number of people expected to have access to the internet over the next few years - whether that's via their computer, mobile phone or other device - means there will be plenty of opportunities for online entrepreneurs.
"We have already seen firms becoming billion-dollar companies in an incredibly short space of time and this will continue," he says. "I really couldn't think of a better time for someone to be launching an online business."
How to make your fortune online
We asked Firebox co-founder Michael Smith and author Jill Finlayson for their top tips on being successful online:
* Choose something you know plenty about. You will need to devote a lot of time and energy to your site, so it helps if you find the subject interesting.
* Pick a catchy name. It needs to be easily understood, so avoid numbers and ensure you have the .com as this will help should you want to trade overseas.
* Go for a clean look. It's vital that your site is clear, uncluttered and easy to use. You need it to take as few clicks as humanly possible to complete a purchase.
* Be flexible. Offer as many payment methods as possible and give customers information upfront on subjects such as shipping options and costs.
* Promote your site. Get your site talked about. Make sure people can find you on search engines such as Google.
* Avoid seeking funding until your business is established. The earlier you ask for investment, the higher the proportion of your company you'll have go give up.
* Do as much networking as possible with online entrepreneurs. This is the best way of learning and most people will be happy to share their experiences.
'The potential is definitely there'
When photographer Karl Annets launched his website BangerPhotos.com ( www.bangerphotos.com) he just wanted to promote the exciting world of banger racing and showcase his family's involvement in the sport - but now he plans to turn it into a full-time business.
The site, which has been running for three years, has attracted a huge following from enthusiasts around the world. It now receives 400,000 page hits every month and has branched out into other areas such as motorcycles.
As well as generating a modest income from the sale of his photographs, Karl, 41, has also started receiving commissions from national publications, as the site acts as a portfolio of his work; there are more than two million images archived.
The married father of four has already ploughed thousands of pounds into his part-time venture, but is working on a complete revamp of the site to make selling online easier and to help generate revenue from advertising.
"I have always wanted this to be a full-time business and the potential is definitely there," says Karl, who works as a customer service adviser for EDF Energy. "My plan was to get the name known during the first three years, then develop the sales side and start making money in years five and six. Photography is a very cut-throat area, but I am convinced the site will support me one day."
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
When it comes to promoting equality of the sexes, we tend to think that we’ve come a long way in the past 40 years.
Money Alert: Surviving Winter
Simon Read: There may be trouble ahead for cohabiting couples who don’t make a will
Mark Dampier: Strong returns can be found if you go the opposite way to the crowds
Money Insider: Would £150 make you switch banks?
Bargain Hunter: Find the deals that have real value beneath the Black Friday hype
- 1 To help fuel their propaganda machine against the poor, our government has now decided to redefine the word 'welfare'
- 2 Tower Bridge glass walkway 'smashed' by night-time visitor dropping bottle of beer
- 3 Anti-gay hate preacher accidentally tweets 4,000 followers cartoon clip of him 'confessing' to be a 'homosexual sodomite'
- 4 Woman opens professional cuddling shop – gets 10,000 customers in first week
- 5 Grayson Perry: London needs affordable housing because 'rich people don't create culture'
Rochester by-election: Ukip gains second MP as Tory defector Mark Reckless holds seat
'Beast of Bolsover' Dennis Skinner takes Ukip MP Mark Reckless to task moments after he is sworn in
Rochester by-election: Labour MP Emily Thornberry resigns after posting white van and England flags tweet
France 'blocks' Russian sailors from boarding a warship
Revealed: How the world gets rich – from privatising British public services
Myleene Klass: Ed Miliband 'strikes back' by comparing UK's need for Labour's mansion tax to Hear'Say track
iJobs Money & Business
Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...
Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...
£20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...
Day In a Page
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens