Can you start a website and make money?

Filed in Thoughts on February 28, 2009



I have noticed a lot of advertising lately claiming that anyone can start a website and make money.  The idea is that you just set up a website selling products and wait for orders.  Under their scenario, you do not have to purchase inventory.  As orders come in, you purchase the needed products from a distributor and ask them to ship the order directly to your customer.  This practice is known in the industry as drop shipping.

I hate to burst bubbles but this kind of advertising is extremely deceptive and if you buy those companies' services, you are almost certainly going to gain nothing more than a very expensive education.  I suppose it is possible that it might work for you, but I guess it is possible to win the lottery too.

If you do decide to start an online business and you need a full time income, forget about drop shipping and the other "easy" ways to do it.   Those methods may generate a very modest amount of money (a few hundred dollars a month), but are not legitimate ways to build a business. 

Here is why.  Because there is no barrier of entry, the web is a wasteland of people doing drop shipping and such things.  They compete against each other on price and drive down margins to an unacceptable level.  The only winners are the consumers.

If you want to start a profitable website, it is certainly still possible.  I use the word still because it used to be much easier.  When I started my first website in 1999, it was extremely easy.  If it had not been easy, I certainly would not have been able to do it because I knew very little about business.

The reason it was simple was because it was uncrowded and uncompetitive.  Imagine having the luxury of owning the only ice cream shop on a crowded beach.  That is how it was.  Today, it is more like owning one out of 10,000 ice cream shops on a crowded beach.

Some would say that you just have to find a niche that is uncrowded.  Again, that was easy ten years ago.  Today, good luck.  You will look long and hard to find any profitable niche.  If you want to focus on the niche of something like fountain pens, you are going to have a lot of competition.  If you decide to focus on too narrow of a niche (like green fountain pens), you may not have much competition but there will not be enough consumer demand to be profitable.

Running a successful website today is serious business.  To do it successfully, you will need money, a serious investment of sweat equity, and business smarts.  I really think that offline businesses are much easier.  And I also think that online business is getting harder every year.

Many have lost their jobs in this economy and are kicking around the idea of starting their own business online.  I really would encourage you to consider an offline business instead and supplement it with a well executed website.  For example, if you start a service business, use the web to attract more customers and provide value to your customers.

So, ignore the ads you are hearing on the radio and seeing on the web.  If you want to start a business, go for it.  But be realistic about what it is going to take.

 

 

 



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