Wish You Knew Then What You Know Now?

What were the things you know now that you wished someone had told you when you started out? Personally, I wonder whether I would have actually listened had someone told me. Some things I just had to learn by making dumb mistakes. Sometimes twice! But if you are starting out on the web, and you want to skip all that hassle and expense, here is my list. Old-hands may recognize a few mistakes that they have made, too. Please share your words of wisdom in the comments. 1. Business Case Comes First Don't start by building a website. Start by building a business case. I wasted time on domains and activities that would never be profitable because I didn't ask and answer some fundamental questions. Web design, SEO, blogging, social media marketing, writing, networking, posting on forums - all these activities can be worthwhile, but if your aim is to make money, they only bear fruit if they support your business case. Otherwise, they're a waste of your time. Ask yourself:
  • How will this activity make money?
  • What are the unmet needs in the market, and am I able to fill those needs?
  • How much time/money do I need to put into this, and will it pay back more that the input cost?
2. Don't Be Cheap Competing on price only works if you can do volume. Competing on price is ultimately a losers game. There will always be someone else who can undercut you. There are waves of third-world SEOs/E-Commerce Operators/Marketers who can survive each day on a lot less than you can. Where do you go when they undercut your price? You follow them down, until one of you goes broke. If you can't do enough volume to make small margins worthwhile, then focus on quality and service aspects. What is that you do that adds more value than the other guy? Do you have something unique to offer? What can you do better than anyone else? Find out if that one thing is in demand and profitable, and do it. There is another good reason not to compete on price. People tend to value things that are expensive. It's a curious aspect of human psychology that if we believe something is valuable, then it is. Conversely, if you put a low price tag on something, people perceive it as being junk. 3. Give People Three Options Say a retailer wants to sell one particular refrigerator. Does she stock only that refrigerator? No, she doesn't. What she does is she carries one low priced refrigerator, one mid-priced refrigerator (the one she sells a lot of), and one expensive refrigerator. Most people will choose the middle refrigerator, even if the features are similar across all three. The customers price expectation has been set by being able to compare low/mid/high. They tend to go for the middle, "sensible" choice. Not too cheap, not too expensive. Always structure a deal that creates a basis for comparison. And put the choice you want the customer to take in the middle. There is a danger in giving too many options, however. People get confused by too many choices, and when people feel confused, their perception of risk increases. When their perception of risk increases, they are more likely to back away. 4. It's Not About You, It's About Them People don't care about you. They just don't. They don't care if your site runs on Linux. They don't care how much you've invested in usability. They don't care if you're the (self-proclaimed) "best". They care about solving their own problems. Your language must be their language. Everything you do must be geared towards identifying and solving their problem. 5. Business Is About Human Relationships Business isn't about Lear jets. It isn't about business cards. It isn't about conferences, lunches or expense accounts. Business is about the relationships between people. Business is all about what you can do for someone, and what someone can do for you. If that relationship creates more value that you can do so by yourself, you've got the makings of a business that can grow. A characteristic common to successful business people is they have large personal networks. They constantly leverage these networks. It really is about who, not what, you know. Learn to stay in touch with old friends, learn to ask for help, give out before you get back,and understand that everyone you meet is going to know things that you do not. 6. Where Possible, Avoid Intermediaries When I first used the internet, in 1993, you didn't need to buy domain names. You could get one just by asking for one! What if I'd known then what I know now? What if I'd seen domain names for what they really were - undeveloped, directly accessible real estate in a gold mining town. Learn the lesson of domain names. You should take positions where you don't rely too much on the whims of others. SEO, in itself, is a risky business model because your income is susceptible to underlying changes in the search engines sort algorithms. There is an entity between you and the customer, over which you have no control. MLM? Forget it. You need to be the guy at the top of the chain. PPC/SEO? Find a way to lock in those customers so you don't re-advertise to the same people. 7. Know The Power Of Compounding Interest Eh? What's this topic doing in a web column? Well, what are you going to do with your web income once you get it? This is one of those concepts that is so simple, true and fundamental to "living well" in a capitalist society it should be drummed into people the minute they start school. Money literally makes money. What are you doing with that money you're making on the web? Are you buying stuff? What is the true cost of that thing you're buying? It's not just the price of the thing itself, it's also the opportunity cost of that money had you chosen to invest it. If you've buying something on credit, chances are you're enslaving yourself to your future self, unless that credit is used for something that can generate further income or capital gain. 8. Invest Money Across Investment Classes The old "don't put all your eggs in one basket" rule. The internet can be a difficult place to make money. At times, it can be really easy. But ask anyone who has been in the game a while, and they'll tell you it is always flaky. It is flaky, in terms of generating income, because it moves and changes very quickly. Most business operations find it difficult to move and adapt very quickly and maintain the same income level. One way to overcome this risk is to have income coming in from different asset classes. I do this by taking a percentage of my earnings and putting it into rental property and shares. I've done this for many years now. The rental property market, compared to the internet business, is very dull and predictable. But that's a good thing. The steady rental streams cover any down weeks I have in the flaky internet game. The share market returns above all other asset classes over time. Being dependent on one source of income can be precarious. 9. Live Within Your Means My share broker recently gave a seminar in which he asked the question "can you take a 50% drop in house price and a 50% drop in income, and still be happy?" If the answer is yes, you'll survive this recession with a smile on your face. Or any recession, for that matter. Boom and bust cycles are inevitable in market-driven, interventionist economies, so expect them and plan for them. Living within your means creates a buffer zone. Is there big income to be had by leveraging? Of course, but the current crash is showing the downside problems that can occur if you're over leveraged. When betting, try not to use your own money, but make sure you can cover that bet if it doesn't go your way. 10. Those Who Have The Most Time Are Rich Having stuff is easy. If you can get credit, you can get stuff. But what do people complain about not having most these days? Invariably, the answer is time. One of the best things about running your own internet business is that time is your own. Want to go fishing for a few hours? You don't need to ask anyone. To me, that's the most valuable thing in the world. I have stuff, but given a choice between acquiring more stuff, or having more experiences, I choose experiences. And you need to have time for that. There's a book called "Avoid Retirement And Stay Alive". The idea is that retirement has no place in modern society. If you can make work enjoyable by balancing it against the other things you want to do, then you can live like you've got all the time in the world. If you could tell your 18 year old self a few things, what would they be?

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