Big Help for Small Businesses
Max Hill's image of a perfect retirement was his favorite pastime. The 66-year-old Texan pictured himself standing on a vast green, holding a shiny old hickory club, and watching a small white ball sail far away into a clear blue sky.
Initially, Hill did not imagine his dual hobbies of golf and collecting antique clubs would become a business. Yet, thanks to the ease of e-commerce technologies for small businesses, retirement from the corporate world was the start of Hill's new career as the owner of HickorySticks.net, an online antique golf store.
How Hill transformed his hobby into a business is illustrative of what many small business owners can do with relatively little money and Internet experience. Hill got his site up and running four years ago with the help of a Web design firm that charged $3,000 to develop the site and a Web host company that stores Hill's data and connects him to customers for roughly $10 a month. Hill now fills several orders a week. "I am not a computer guy at all and the site works very nicely," he says.
We looked into some of the Web offerings for small businesses and determined which ones are easy enough for Web novices like Hill and cheap enough for the smallest small-business owner. Here are some of our favorites.
When first starting a site, many small businesses opt to rent space with Web hosting companies. The reasons are ease and price. For between $10 and $300 a month, depending on the company and site capabilities, Web host services provide domain names, IP addresses, e-mail, and space for the site on their massive, secure servers. They also typically throw in 24-hour customer service and downloadable software to help beginners design simple Web pages.
Netfirms, a Web host service with more than a million customers, including Hill, provides one of the best values on the Web for small businesses, with plans ranging from $4.95 to $14.95 a month. The company's most popular business option, the "Advantage" plan, costs $9.95 a month and includes domain names, a Web page design kit, and a 40-page step-by-step reference guide explaining how to set up the site. It also includes 24-hour customer support seven days a week.
Christopher Hebert, a marketing manager at the company, says Netfirms built its software to ensure that novices can use it. "With any of this, there is a bit of a learning curve, but we have a bunch of businesses that have gone from zero to 60 in a couple of days," says Hebert. "It's not out of the realm for a grandmother who knows nothing about computers and wants to start a small Internet business to be up and running on the same day."
Most impressively, Netfirms' Advantage plan includes 20 gigabytes of space on its server, enough to run sites laden with pictures and multimedia files, and 750 GB per month of bandwidth. Bandwidth, also known as data transfer, is particularly important for e-commerce sites because it is used every time a visitor views the images and text on Web pages. With 750 GB a month, a business whose site is laden with images and videos could serve more than a million visitors a month. A text-only site could serve billions of customers.
Jeannine Ranni upgraded to Netfirms' CommercePro after paying a Web designer to host and run her site, embellishedbean.com, which sells gourmet coffee beans. The stay-at-home mom says the site, which was designed using Netfirms' templates, makes it easy for her to fill daily orders. "I have a control panel that I log onto daily that gives me all my Web stats, my visitors, and any orders. And once I click on the pending orders, it gives me an option to make labels and invoices," she says. "It links with the postal service, or whoever you want, to ship, and then it notifies the customer that the order has been shipped."
The major drawback to Netfirms is that it takes time and activity for a user's site to begin showing up in the results of related searches on Google (GOOG), Yahoo! (YHOO), MSN (MSFT), and others. The result is less initial traffic. For smaller sellers, this is not always a problem. "Most of the time people hear about me through word of mouth or the search engines. I've never paid to advertise the site or have it listed," says Hill. However, sites relying on e-commerce as their primary source of income may want to see more immediate results (see BusinessWeek.com, 7/6/06, "How SEO Upped the Revenues").
Netfirms tries to counteract the anonymity problem by including a $25 coupon to advertise through Google's AdWords program, a pay-per-click advertising site that allows users to bid on keywords and then places bidders' text ads on its pages (see BusinessWeek.com, 3/6/06, "The Secret to Google's Success").
For a bit more money than Netfirms, Yahoo Small Business offers more marketing help and capabilities. The search engine's hosting arm is a popular option for e-commerce companies, serving more than a million customers that do more than $3 billion in transactions each year.
Yahoo's business plans typically range from $39.95 to $299 a month, not including a $50 setup fee. However, Yahoo periodically waives fees and reduces prices as part of promotions. Its lowest-priced small business option—the "Merchant Starter"—was discounted to $29.96 a month recently.
For businesses just starting out, the Merchant Starter package provides all the needed capability and then some. It includes a domain name, 1,000 business e-mail accounts, Web design tools with hundreds of templates and sample pages, checkout and shopping pages, order management and product catalog systems, and round-the-clock telephone support. It also includes 20 GB of space and 500 GB of bandwidth.
Jimmy Duvall, Yahoo's director of e-commerce products, says the Merchant Starter is very similar to the more expensive plans, without some of the complex features such as gift certificate printing and issuing capabilities. "[The Merchant Starter] is geared to be a really inexpensive world-class e-commerce system that can scale to a very high level," Duvall says. "We are really focused on new merchants coming in and getting started as soon as possible."
To that end, Yahoo also has a partnership with UPS (UPS) that enables customers to seamlessly ship merchandise, print labels, and request pickup and delivery. It also automatically enters the site in Yahoo's index of possible search results and includes discounts on its marketing services such as sponsored search advertising and Fast Track, a service that assists businesses in bidding on and selecting the right keywords to associate with their Web site. Best of all, it includes 30 days of free consulting to help small businesses organize and develop the site.
There are dozens of options for sellers to receive payments for merchandise sold on their sites, and Web hosts are compatible with most. Traditional credit card merchants such as Visa, for example, offer accounts enabling sellers to receive and transfer funds.
The specter of identify theft, however, has made some computer users wary of giving their credit card number to all but the most established businesses. VeriSign (VRSN), a company that establishes the legitimacy of e-commerce sites, has eased this tension somewhat by providing a service that notes that a site has been verified (see BusinessWeek.com, 7/13/05, "VeriSign's New Target: Consumers").
Still, some users remain reluctant to part with their credit card numbers. As a result, sellers are increasingly opting to use digital wallet services, which work by allowing users to deposit money into an e-wallet via credit card or their bank. The wallet company then can move the money around for its clients—from buyers' e-wallets to sellers' e-wallets, for example (see BusinessWeek.com, 7/28/06, "Google's eBay Challenge").
The trouble with using any old e-wallet is that there is a sign-up process for each one, and customers may not want the hassle of registering. That's why it pays to go with the popular ones.
Luckily for merchants, the most popular service, eBay's PayPal (PAYPAL) is free to download and incorporate into a site. PayPal has 100 million account members worldwide and is available in 55 countries. It makes its money by charging fees of 1.9% to 2.9% per transaction. For Internet novices unsure of how to handle transactions, the ease and ubiquity of the service makes it a small price to pay. (For an expert checklist on setting up a business on the Internet, see BusinessWeek.com, 9/1/06, "An Online Business for $3,000".)