The Pendulum Swings Both Ways
The first quarter of 2001 has been a shocker for many, if not most, online businesses, particularly those that rely heavily on third party paid advertising on their websites and in their ezines. It doesn't seem to matter who you are - the Wall Street Journal or one-person webfront operation.
Hot on the heels of spiralling stock indexes and dot-com failures, many people are just plain leery of anything that has an "Internet" label. As a result, many online business owners are shutting up shop, figuring that the returns just aren't worth the investment of time and money.
But wait. Let's take a deep breath and look at what's really going on here. You should be encouraged.
THE GOLDRUSH
In the beginning the Internet was the new frontier. With all those metaphors being bandied about all over the place - talk of gold rushes, pioneers, gold nuggets just lying there for the taking - "go west young man (or woman)", echoed in our ears, "stake your claim to your share of the Internet riches".
And so every man and his dog and every woman and her cat slapped up a website and started publishing an ezine. After a while, our pioneer started making actual money charging for advertising on her website and in her ezine and selling the latest information product and business was plentiful.
THE PLATEAU
After a while, things started to level off. No longer experiencing the heady rush of exponential growth on a weekly basis, things started to level out. Business remained solid, however, and our pioneer, now thinking of himself as a capital E "Entrepreneur" figured, OK, this is the end of the first big growth phase. It's time to start consolidating. And so our entrepreneur started investing in already-formed relationships, concentrating on existing customers, developing his "List" of contacts and joint venturing like crazy to try and sustain momentum.
THE SHAKE-OUT
But then things started to go wrong in the promised land. All of a sudden the most promising, courageous and innovative Internet businesses started to, well, bomb. All of a sudden, venture capitalists were demanding business plans that actually required the business to turn a profit. No longer was it enough to be on the cutting edge of an emerging new economy. Now all of a sudden the bankers started talking about "returns on investment", "time value of money", and (shudder), "profit"!
Now Internet businesses were expected to come up with business plans that looked like those from the real world and which included real numbers, real timelines and real results. No longer were bankers looking through rose-colored glasses. That pink ink really WAS pink (or, more precisely, now that we look at it a little closer, more red than pink, actually).
Suddenly money wasn't being thrown at Internet entrepreneurs' feet. Suddenly loans were being called up and businesses shut down. Suddenly investors were watching stock prices dwindle ever so inexorably, day by day. Suddenly investors were losing life savings and vowing to never again invest in the new economy.
REALIGNMENT
After the big bang, the landscape was strewn with the carcasses of one-time high-flyers, brought down to earth by nothing more earth-shattering than simple gravity.
But like blades of grass emerging from the scorched earth following a bushfire, the small, conservative, money- parched, lower case e entrepreneurs got to their feet.
Unburdened by crippling debt and understanding all along that an Internet business is no different from any other business - revenues must always exceed expenses after all - their businesses survived the great Internet shake-out.
For so long bemoaning to themselves, "How are we supposed to compete with the big guys?", suddenly a new realization ... "How are they supposed to compete with us?". How are the "big guys" able to target niche markets the way we can so effectively and yet generate the kinds of bucks necessary to fund their infrastructures; how can they possibly provide true customer service on a genuinely personal level, as opposed to employing an army of autobots? How can they possibly be nimble enough to turn on a dime in response to changing dynamics that occur on a seemingly daily basis? What their failure tells us is, quite simply, they can't.
So, although we're all paying the price of the Internet backlash, over time new norms will be established. The pendulum has now swung to both extremes - the goldrush arc and the backlash arc. A pendulum, though, finally comes to rest dead center.
So, hold your nerve, position yourself and your business in that center, where you've been all along, and you'll be ready to take your place in the NEW new economy which will soon emerge.
About the author: Elena Fawkner is editor of A Home-Based Business Online ... practical home business ideas, resources and strategies for the work-from-home entrepreneur. http://www.ahbbo.com