Do you know the secret to building a real business online? If you know it … then you are one of the top one percent of entrepreneurs building and growing profitable businesses online.
I had been in the trenches as a newbie internet entrepreneur for the past couple of years … when it dawned on me that the key to growing a real business was no different than what makes a brick and mortar business successful.
Before I go on to tell you this secret … I think I should tell you this story to drive home my point …
How a start-up company survived the dotcom crash to become an $ 81 billion behemoth
In the mid 90's at the start of the Internet boom, a young man and his wife quit their prestigious Wall Street job to start an internet based mail order business. The young man felt the internet would be a more efficient platform for doing business and he could offer his customers more products without the limitations of inventory, the traditional brick and mortar business faced.
This type of business model was a pioneer one. However, after careful consideration, the founders modeled the systems of the traditional book publishers and located their company close to where they could hire talented software programs to build the systems that will make the business succeed. They also registered beta testers to use the system. This start-up company ran out of money quickly and had to raise money from family, investors and Wall Street.
The story of Jeff Bezos and the founding of Amazon.com is part of the clearing history of the internet and business. Amazon.com is now the world's largest online retailer and as at the end of 2010 had sales revenue of over $ 10 billion dollars and market capitalization of $ 81 billion.
The start up phase of Amazon.com was not always smooth sailing. In fact, Amazon.com would have become a history during the dotcom crash in the stock market if not because they had this key element in their business.
In her book, Jeff Bezos: The Founder of Amazon.com (Rosen Publishing 2007 ), Ann Byers tells of the initial struggles of the start-up company. Amazon did not make profits in the first 2 years of its operation. Bezos sent all his personal saving, his parent's saving and over $ 1 million of investors money. In addition Amazon.com lost $ 9 million. However Bezos was able to keep the company going and tap more money from Wall Street for several reasons:
- It generated traffic. The daily website traffic was over eighty thousand people
- Rising sales: In the first 3 months of 1997 Amazon had sales of $ 16 million, more than half for all twelve months of the year before
- A growing customer list. Amazon had 340,000 customers on its database
- Brand recognition: The name Amazon became a recognized brand in over one hundred countries
The main reason Amazon was able to survive was that it had a system to build a list of customers . Here is why this is important
Customers + Sales = Revenues
Amazon.com had a revenue model. The company was making sales from real people who wanted its product. In addition, because it was able to get money out of people's pocket it was able to generate enough income to cover its cost before it could find the proven model for its business.
Let me now ask you this question …
How focused are you on list building?
Mary Ellen Tribe, bestselling author Changing Channels: 12 easy ways to make millions for your business , and former CEO of Earlytorise newsletter division of Agora Inc, says
" If you are not building a list of customers then you are running a garage sale"
Lets turn this statement into a question for you to answer …
Are you running a Garage Sale or building a real business?
The primary aim of business is to acquire a customer says Brian Tracy. This statement holds true with internet marketing. You can only grow a business when you have customers that have a relationship with your business. This is the very foundation for growing your business. If you grasp this key principle, you win big time. Ignore list building and you will wind up failing online. There are three critical steps to list building:
- Lead generation – getting traffic and prospects to your website.
- Lead capture – getting your prospects to give you their contact details.
- Lead conversion – getting to make your prospects or visitors become your customers.
These three steps are very important for you to grow any business. I made the mistake of ignoring listing building in the past. My first website was just a site, there was no thought given to what I was offering my customers. In fact, the website was so badly done, that in hindsight, it had no chance of ever surviving.
Now your ability to understand and use these three steps depends on your primary focus for your business. My primary reason for having an Internet business is to serve my customers and to build a profitable business that will grow as it provides value to my customers. I always look at building my business with a proven model. This means a business I can grow and sell.
Formula for success
I think you should do the same for your business. In doing so keep, the following points in perspective:
Traffic + Sales = Income
Traffic + List building + Sales = Stable Business
Let me explain further.
Traffic plus conversion to sales will give you income on a one-off basis. However, there are no guarantees you'll generate income after because you only had a transactional relationship with your prospects. However, when you get traffic, build a list of customers, and develop a relationship with them, you get income and a list of customers.This is better because you can build relationship with your customers and sell more products to them.
The secret to making money online is in the backend. You make profit when you make backend sales to your customers. Your customers are your greatest asset, because they are keep your business going as long as they buy from you. No business can survive without sales.
This is why having a list of customers is important for the growth of your business. I believe Amazon.com was able to survive the dotcom crash and grow because it had a huge list of customers. As at 2001, amazon.com had over 6.5 million customers. In addition, because he had a huge list of customers, Wall Street gave Jeff Bezos funding he needed to steer Amazon.com to profitability.
Since I understand this key concept, I have stopped buying into the next hot product to generate massive traffic. I have instead, focused on building a list of customer, providing value for them. I am still not making enough money in my business but I have a list of clients.This is good news because I know I am growing a sustainable business.
Let me ask, How about you? Do you have a list of customers? If not, what's stopping you?
The good news is you can start immediately. You can start to build a list of customers that will help your business grow.
All you need is to start a list building campaign for your business. It may be in form of a free newsletter, free report or white paper. Start now to build a list of clients, that you provide valuable service. Your clients, will in turn help your business grow and make you rich like Jeff Bezos. Who knows? You may be the next success story of the internet.
To your success