The Dot Com Doom
By Andres Munoz

So I figure by now you have read yet another Dot Com that
went belly up. It's a sad fact that the once new economy that
was promising untold riches to vast numbers of people is
quickly vanishing. But you shouldn't be alarmed I'm still a
firm believer in the Internet and what it can do provided there
is a well thought out plan behind it.

The reason why the Dot Com bubble burst in March of 2000
was that large investors began realizing that billion of dollars
were being thrown at Internet start-ups with no sound business
plan yet were worth $1 billion on paper. These companies were
not worth that much money. Take for example the Internet
travel agency that only grossed $750,000 in sales yet on paper
it attained a market cap of $1 billion! All they were was a travel
agency and to be worth that much on paper is totally ridiculous.
So many investors like Charles Schwab and Morgan Stanley who
were throwing million of investment dollars at bad ideas said forget
it time to bail out.

These Internet start-up companies had thrown billions of dollars
of their venture capital cash on unproven and often dumb
business plans. The problem here is that capital is the lifeblood
of any company and when investors began to pull out and
demanding revenues from unprofitable companies and could
show none they lost out on their second round of financing.
Coupled with the cost of overhead they realized they where
in trouble.

It also didn't help the fact that so many of these Internet
start-ups were attempting to sell all they had to everyone
under the sun. This was one of the biggest errors they committed
because who is going to buy cloths from an Internet company
were you can go yourself and to the mall and shop around
try on the garment to make sure it fits so on and so forth.
The fact is that many of these companies were selling products
any one of use can get elsewhere at the same price or even
cheaper.

What they failed to do was focus on a smaller portion of
the market that will have a legitimate interest in that product.
In other words they would have been better off with a targeted
niche market and figuring out what they want, developing a
product, and then selling it to them.

Another killer was that countless Internet companies threw
millions of dollars at bad advertising. I say, "bad" because
after you saw the commercial you still weren't sure on what
they were selling. On top of that they spent countless dollars
on ineffective advertising.

Furthermore many of these companies didn't even attempt
to separate themselves from their competitors. They
developed no Unique Selling Point. This is extremely
important for those companies that are competing with
others selling the same products. They must emphasize
what makes their product better than the competition.

One of the most difficult for the eCompanies was customer
service. Unfortunately many Dot Com companies failed at
this basic and oldest service. The fact is that many of the
e-tailors weren't ready for the influx of traffic or the orders
they received. So many customers received their products
late and many received the wrong product. So what happens
the customer is peeved and then is faced with retuning the
product. So what does he do? He calls the phone number
listed on the website and calls only to talk to a machine and
not a REAL person or his e-mail went unanswered for a week.

With all of this you may be thinking, "Why should I get into
the Internet business if all the others failed. I mean is there
any hope left in making real money?"

Definitely! Over the past 3 years online shopping has
increased dramatically. Even though many investors are
avoiding the Dot Coms like the plague (until they turn a
handsome profit) many people like myself continue to shop
on the net spending billions. Why? Well, simply there are
plenty of sites that offer a genuine service and because of
the convenience factor. I'll be honest I stopped buying from
large software stores and now only purchase from the large
online software sellers because many times I find them
cheaper and convenient.

In a final word I still believe that the Internet can
make you money on the side or if you choose full-time.
However, you must be focused on what you want to do.
1) Avoid trying to sell to everyone with Internet access, it
simply won't work you must sell to a targeted
niche market.
2) Education, Education and Education. Remember the three
E's. Try to read everything you can on the Internet and
online marketing. There are vast number of resources
you can access for free on the net.
3) Persistence Don't give up so easily. We all learn through
trial and error it may be a hard lesson but it will be a well
learned lesson.

A definition of insanity is constantly expecting better
results repeating the same behavior.

The point here is if something you're doing is not
working stop repeating the same behavior. Step back
analyze what you're doing and try something different.

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Copyright (c) 2001 Andres Munoz
Andres Munoz is the owner of Mybusiness-resource.com.
Dedicated in helping the home-based entrepreneur in
developing a serious web presence, mail order
business, home-based business and creating a permanent
presence through effective marketing.
http://www.mybusiness-resource.com/


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