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."