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- The Steps to Starting an Internet Business – Part 2

Welcome to part 2 of the steps to starting an Internet business. In the first post, I covered the initial 4 steps you’d need to begin your Internet entrepreneurial career. In case you hadn’t thought about it yet, one of the biggest plusses of an Internet business is that if you’re successful you won’t have to fill your gas tanks with $4.50 swill for the drive to work everyday. You’ll be ahead right from the start!

Here are the next steps you’ll need to take on your journey toward Internet business success.

Steps to Starting an Internet Business # 5 – In the previous step you found a niche to market to. In this step you’ll determine exactly what you’ll be marketing to your (if you did your research right) hungry niche. You have a few choices. You can either:

A - Find products you can market as an affiliate. Affiliate marketing for those of you that are just looking into the whole Internet business thing, is when a company will pay you money when someone takes a specific action based upon your referral. They can buy a company’s product or sign up for their service by going through a link in your ad or from your website. You can also generate affiliate revenue by referring qualified leads to a company. How you make affiliate revenue is determined by what the company that pays you is looking for; sales or leads.

B -Develop your own product. For most people in the beginning that means writing software, a script, or an e-book that you can sell via download. As you progress you can also create info products that also incorporate physical media, such as books, pamphlets, CDs, or DVDs. In most cases you’ll be rewarded for the extra effort and expense it takes to create, package and distribute the physical products by being able to command much higher prices for them. The hard costs are not that high, so you will make much higher profits. Be advised that if you create crap, you will quickly get a (well deserved) reputation for creating crap and your customer list will dry up.

C - A 3rd option to profit from your niche is selling products that are drop shipped. If your research indicates that products in your niche are able to be sold for a nice profit, you may want to fid what’s known as a drop shipper. A drop shipper will take an order from you and ship the product directly to your customer. Many drop shippers will even include a packing list from your company, complete with your logo and address, so as far as your customer’s concerned, their order came from you. The obvious benefit is that you’ll not need to stock or fulfill any product. Keep in mind that you will still need to handle returns.
 
One way you can mitigate that risk is to choose products that are unlikely to break and come in few varieties. This will minimize the chance that a customer gets the wrong item. Items such as consumer electronics definitely break or cause customer confusion. I was in a warehouse a few years back and one of my vendors had taken back pallets of TiVOs because the customers either couldn’t hook them up correctly or weren’t properly informed that the device required a monthly service fee. Trust me, you don’t want to be in this position, it gets expensive in a hurry.

D - A 4th way you can market to your niche is to just create your website, make it full of good, quality content, and put Adsense or some other contextual ads on it. When people click on these ads you’ll be paid a small amount. Typically this is used as more of an icing on the cake than primary revenue stream, though. You’ll have to generate substantial traffic in the right niche before you can make very much money from this business model. If you are getting that much traffic, you can usually more effectively monetize it through other means, such as affiliate marketing or selling visitors you own product(s).
 

No matter what you determine will be your marketing method of choice for your online business, or if you do as many marketers do and sue a combination of methods, you’ll eventually have to move on to:

Steps to Starting an Internet Business # 6 - Driving traffic
This is obviously a supremely important step, because nothing else matters if no one shows up. You’ve got 2 main choices, pay for your traffic or get it free. Most marketers try to excel in both choices.

Getting traffic free is a combination of getting good search engine results and getting linked to by other sites, e-zines and blogs. The links to your site, known as backlinks, are doubly important because not only do the links drive traffic to your site, but they are one of the most important factors used by search engines (especially Google) when ranking your pages. You can get links through a number of strategies including article marketing, asking, joint ventures (JVs) with other marketers, guest posting on other blogs, blog carnivals, commenting on blogs, forum post signature links (these are “nofollow”ed so they give you traffic, but are not used in calculating your search engine rankings), and of course ‘Web 2.0’. The web 2.0 methods are using social sites such as YouTube, Facebook, Digg, del.icious, propeller, Mixx, Yahoo answers, StumbleUpon, reddit, and flikr.

I’m sure I missed some, but you get the point. These are extremely effective at getting you brand exposure and driving traffic. In some niches, the traffic from site as Stumble Upon and Digg doesn’t convert as well into sales as with other sources of traffic, but in some cases there’s so much of it, it doesn’t matter.

The other way of getting free traffic is to get good results in the search engines when people search for words or terms relevant to what you’re selling or offering. As I mentioned you’ll need links in to your site to help get good rankings. The more authoritative the site the link comes from and the farther up the page the link is placed (all else being equal) the more it is worth in terms of search engine ranking. You also want to carefully optimize your keywords and their use throughout your web pages and blog posts, especially the titles, title tags, meta tags and page / post content. I’ve done several posts on getting targeted traffic.

Your other traffic generation strategy is to pay for your traffic. You can do this in several ways, but the most common are to use pay per click advertising (PPC) such as Yahoo Search Marketing (formerly Overture) or Google Adwords, or to pay for your links to be placed on sites that would drive the kind of targeted traffic you’re looking for. You can use either paid text links or banner ads.

A few years ago paid text links were all the rage because of their positive effect on search engine rankings in addition to the traffic they generated, but they don’t seem to be as popular for this purpose now, as the search engines seem to have revised their algorithms. In any case, paid text links are definitely not my area of expertise.

If you choose to do PPC advertising I strongly advise you to learn as much as possible about what you’re doing because while this can be one of the most powerful wealth generating strategies on the Internet, and you can turn it on and off at will, you can also lose more money that you can possibly imagine, in record time, if you’re not careful. Get some good books on the subject, such as Perry Marshal’s Google Adwords, and definitely go to the AdWordsExcellence site.

One of the most important changes to have come down the pike with regard to Adwords in recent years is that Google looks at the quality of your landing page. It need to give a good user experience and relate exactly to the keyword in your ad otherwise your quality score will suffer, and your cost per click will go through the roof. The other thing is make sure your ad is relevant and your headline is extremely compelling because one of the other key things that Google uses to determine how much you’ll be charges is the click through rate. The better the click through rate the less you’ll pay per click.

Stay tuned for part 3 of this series on the steps to starting an Internet business.

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