Starting an Online Business All-in-One For Dummies®, 2nd Edition

Table of Contents


About This Book

What You Need Not Read

Foolish Assumptions

How This Book Is Organized

Book I: Online Business Basics

Book II: Legal and Accounting

Book III: Web Site Design

Book IV: Online and Operating

Book V: Internet Security

Book VI: Boosting Sales

Book VII: Retail to E-Tail

Book VIII: Storefront Selling

Book IX: Fundraising Sites

Book X: Niche E-Commerce

Book XI: E-Commerce Advanced

Icons Used in This Book

Book I: Online Business Basics

Book I: Chapter 1: Starting from Scratch

What Are You Waiting For? Start Your Business Now!

Choosing Just the Right Business

Creating online businesses for today and tomorrow

Finding a business that’s your type

Getting Started

Book I: Chapter 2: Turning Internet Dreams into Reality

Thinking Like a Netrepreneur

Putting Your Business Idea under the Microscope

Using informal research to verify your idea

Applying a SWOT analysis to your idea

Creating a feasibility study to validate an idea

Identifying Your Market and Target Customer

Classifying your customer

Going to the source

Competing to Win: Analyzing Your Competition

Book I: Chapter 3: Getting Real: Creating a Usable Business Plan

Understanding the Value of a Plan

Recognizing That the Parts of the Plan Make a Whole

Getting Help to Write the Plan

Determining when to hire a professional

Knowing what to expect from a business plan consultant

Using a Business Plan Today, Tomorrow, and Always

Book I: Chapter 4: Finding Money to Fund Your Online Start-Up

Bootstrapping the Low-Cost, No-Cost Site

Making the leap to the bootstrapping lifestyle

Saving money to make money

Getting resourceful

Looking at the pros and cons of bootstrapping

Finding the Perfect Investor

Turning to your friends and family network

Finding angels

Venturing into the world of venture capital

Checking Out Alternative Financing

Taking a Shortcut: Purchasing an Existing Site

Book I: Chapter 5: Creating Policies to Protect Your Web Site

Taking Care of Customers

I pledge to you

Put it in writing

Putting Policies in Place

Privacy policy

User agreement or terms and conditions

Shipping policy

Return policy

Safety for young users

Other online policies

Delivering On Your Promises

Book I: Chapter 6: Setting Up Shop: Everything You Need for Online Efficiency

A Floor Plan for Success

Must-Have Equipment

Make form follow function

Revving up with a powerful PC

Let somebody else do the hard stuff

Tools for Your Desktop

Searching for a Web browser

Sending and receiving messages with e-mail

Using document-viewing software and other useful applications

Your Essential Software Toolkit

Connectivity: Today’s Internet Options and More

Book II: Legal and Accounting

Book II: Chapter 1: Minding the Law

Keeping Your Business Legal

Federal tax identification number

Resale certificate

Business bank account

Employee forms

Zoning for Business (at Home)

Obtaining Business Licenses

Book II: Chapter 2: Choosing the Right Foundation: From Partnerships to Corporations

Strategizing for the Best Organization

Operating Alone as a Sole Proprietor

Fictitious name registration

Husband/wife sole proprietorship

Sharing the Load with a Partnership

Limited Liability Company (LLC)

Making It Official with Incorporation

Different flavors of corporations

The choice to incorporate

Changing Your Organization as It Grows

Book II: Chapter 3: The Trademark-and-Copyright Two-Step

Understanding Why Trademarks and Copyrights Matter

Making Your (Trade)Mark

Protecting Your Investment with Copyrights

Establishing Registration Yourself

Getting your trademark

Filing for copyright

Retaining Professional Assistance

Book II: Chapter 4: Accounting for Taxes (And Then Some)

The Tax Man Cometh — Again and Again

Income tax

Employment tax

Sales tax

By the Numbers: Accounting Basics

Determining periods and methods

And now, your balance sheet

A quick glimpse: The P&L

Choosing Software to Make Your Tasks Easy

Going online?

What size are you?

How much do you want to pay?

Do you need support?

Hiring a Professional

Recognizing that it takes all types

Knowing what to expect from your tax professional

Finding likely candidates

Choosing the best person for you

Following the Rules of Recordkeeping

Dealing with all the paper

Storing records: How long is long enough?

Book III: Web Site Design

Book III: Chapter 1: What’s in a (Domain) Name?

Picking Your Online Identity

Approaching your domain name carefully

Understanding what a domain name should be

Registering the Perfect Name

Who you gonna call?

Let’s make it official

Finding Out What to Do When Somebody Gets There First

Exploring your domain name options

Getting what you want — at a price

All the Good Ones Are (Not!) Taken

Varying the extension

Getting creative

Book III: Chapter 2: Designing Customer-Friendly Sites

Maximizing Performance for Profitability

Looking Your Best

Following basic design principles

Making design choices

Choosing Substance Over Style

Counting on Function to Win Customers

Understanding the customer experience

Building function into your site

Book III: Chapter 3: Building a Site without Spending a Fortune

Mapping Your Route to a Successful Site

Setting reasonable expectations

Avoiding common holdups in developing a site

You Can Do It! Make a Build-It-Yourself Site

Using HTML: The old-fashioned way to build a page

Going modern with Adobe Dreamweaver and more

The pros and cons of using automated site builders

Creating Your Site with the Pros

Seeking experience: Choosing the right Web site designer

Comparing apples to apples

Speeding up the process

Keeping an eye on your business interests

Book III: Chapter 4: Finding the Host with the Most

Differentiating between an ISP and a Host

Determining What Makes the Difference for High-Performance Hosting

Sorting Out Your Web Site Host Options

Putting the Long-Term Contract in the Past

Serving Yourself: Don’t Overlook Other Server Options

Book III: Chapter 5: Writing Content that Search Engines Want to See

Words Are Words — Right? Wrong!

Getting Ready to Write for the Web

Understanding who and why

Understanding that packaging is everything

Getting organized

Making a list and checking it twice

Moved to Purchase: Turning Words into Action

Choosing Words that Search Engines Notice

Book III: Chapter 6: Lights, Camera, Action! Taking Your Site Live

Some Things to Know Before You Start Uploading

Taking the Compatibility Test: Testing Screen Resolutions, Browsers, and Platforms

Checking it out

Testing on Mac, Windows, or whatever

Keeping people in mind

Taking a Trial Run

Three, Two, One — Take Off!

Book IV: Online and Operating

Book IV: Chapter 1: Determining Your Revenue Model

Selling Tangible Products

Projecting how you’ll make a profit

Manufacturing and selling your own goods

Buying tangible goods and selling them online

Selling Your Professional Services

Understanding the pros and cons

Building credibility

Selling Information

Placing Ads for Profit

Looking at sites that sell

Analyzing traffic patterns

Choosing ad formats

Estimating your revenue potential

Getting it from Google

Managing ad space inventory

Selling the space

Establishing an Affiliate Advertising Program

Putting It All Together: Multiple Revenue Streams

Book IV: Chapter 2: Making Money with Affiliate Programs

Looking at How Affiliate Programs Work

Understanding some affiliate terms

Finding an affiliate program

Signing Up for an Affiliate Network

Avoiding Scams and Questionable Content

Illegal affiliations

Questionable affiliations

Book IV: Chapter 3: Turning Information into Profit, from e-Books to Webinars

Creating Your Own Information Product

Finding hot topics

Researching the information

Organizing your thoughts

Providing E-Books

Creating the document

Distributing your e-book on e-shelves

Putting Together a Webinar

Your recording session

Finding your audience

Book IV: Chapter 4: Paying Up with the Right Payment Options

Accepting Credit Card Payments

Securing a merchant account

Choosing a payment gateway

Reading the fine print: Fees

Offering Alternative Payment Options

Managing the Payment Process to Protect Your Income

Book IV: Chapter 5: Putting the (Shopping) Cart before the Horse

Not All Carts Are Created Equal

Back-end management


Integration and maintenance

Promotion and marketing

Shopping Around for the Best Hosted Solution



Finding Off-the-Shelf Software

Designing a Cart for You

Book IV: Chapter 6: Taking Inventory

Finding Out What’s Popular By Using eBay

Putting Together All Your Research

Pricing Your Products

Building Your Inventory

Stocking up as a low-price leader

Becoming all things to all people with trial-and-error inventory

Specializing with limited inventory

Book IV: Chapter 7: Fulfilling Expectations and Orders

Figuring Out the Logistics of Shipping

Developing an In-House Fulfillment Model

Deciding to Outsource Fulfillment

Finding an outsourcing partner

Establishing your outsourcing relationship

Operating with an outsourced fulfillment house

Assessing the quality of the fulfillment work

Shaping Up and Shipping Out

Giving shipping options to your customers

Setting up accounts with carriers

Creating online postage and labels

Having items picked up for delivery

Shipping international orders

Maintaining the Back End

Deciding on a database

Using handheld scanners and bar codes

Developing a shelving inventory system

Feeding orders into the shipping department

Book V: Internet Security

Book V: Chapter 1: Understanding Security and Your Risks

Legal Responsibility: The Merchant and the Customer

Avoiding charge-backs

Keeping your customer information secure

Defining Your Privacy Policy

Keeping Your Web Site Secure

Displaying Seals of Approval

Book V: Chapter 2: Developing a Security Plan

Making a Plan

Policies and procedures

Inventory and skills assessments

Risk analysis

Existing security measures

Action plan

Resources and follow up

Creating a Budget for Your Plan

Finding Security Resources

Book V: Chapter 3: Attacked! What to Expect from the Net-Thief

Fending Off Denial-of-Service Attacks

Deterring Hackers

Avoiding Viruses and Other Malware

Keeping Your Domain Name Safe

Staying Away from E-Mail Scams



Book V: Chapter 4: Securing Your Site and Your Business

Protecting against Credit Card Fraud

Minimizing your own financial losses

Protecting customers’ privacy and financial data

Backing Up Your Data

Adding Firewalls

Book V: Chapter 5: Overcoming Security Concerns in the Wireless World

Understanding How a Wireless LAN Works

Establishing Barriers

Following your common sense

Setting up a virtual private network

Keeping an eye on your connection

Book VI: Boosting Sales

Book VI: Chapter 1: Driving Traffic, Driving Sales

Calculating Your Site’s Conversion Rate

Figuring Out When You Get the Most Traffic

Getting Customers to Notice Your Web Site

Book VI: Chapter 2: Special-Edition Public Relations for the Web

Writing Reviews

Finding the best places to post reviews

Writing the review, section by section

Becoming a Community Leader

Speaking out with Webinars

Billing yourself as an expert

Writing Articles

Tailoring your article topics

Putting together your article

Handing out your articles

Book VI: Chapter 3: Web Marketing at Work

Developing a Marketing Strategy

Devising your brand

Working the brand

Reeling In Customers with Newsletters

Decide who will write your newsletter

Decide what your newsletter will cover

Decide when to issue your newsletter

Decide on a format for your newsletter

Decide how to distribute your newsletter

Automating Your Routine Tasks

Searching for Traffic with Search Engine Advertising

Signing up for Google AdWords

Deciding when to use pay-per-click

Marketing Your Company Offline

Book VI: Chapter 4: Converting Browsers to Buyers

Giving Customers a Reason to Stay on Your Site

Providing your own content on your site

Getting other people to provide your content

Anticipating Customer Needs

Watching customer logs

Predicting future purchases

Organizing a Buyer-Friendly Site

Streamlining the shopping process

Toning down the bells and whistles

Keeping Your Shopping Cart Simple

Avoiding Assumptions about Your Customers

Asking customers for feedback

Remembering your customers

Encouraging Viewers to Buy

Offering deals and promotions

Sending one last reminder

Book VI: Chapter 5: Analyzing and Monitoring Your Customers

Tracking Trends

Measuring Web Site Traffic

Defining the terms of traffic analysis

Looking at your log file

Referring to your referrer file

Examining error logs

Checking abandoned shopping-cart logs

Scrutinizing the most common entry- or exit-page logs

Measuring Traffic against Activity

Jam Packed: Traffic-Analysis Software

Basic analysis software

Detailed analysis software

Enterprise or big business

Collecting the Correct Information

Storing data using cookies

Adding information to your links

Studying the path analysis

Getting to Know Your Customer Really Well

Using Your Data to Understand Your Business

Watching trends to find out average behavior

Identifying areas of improvement

Deciding on a change

Following up

Book VI: Chapter 6: Mastering Search Engines, Optimization, and Rankings

Navigating the Ins and Outs of Major Search Engines

Getting Your Web Site Noticed by Search Engines

Submitting Your Site to Search Engines

Signing up with Google

Signing up with Yahoo!

Submitting to other search engines

Placing Keywords in Key Spots on Your Web Site

Keywords that are invisible

Keywords that are visible

Arranging Your Pages Strategically

Watching Your Rankings

Moving Up in the Rankings

Knowing where you stand

Seeing what your competition is doing

Creating your own referrals

Discovering Editorial Opportunities with Engines

Book VII: Retail to E-Tail

Book VII: Chapter 1: Knowing When to Put Your Store Online

Making the Decision to Move Your Store Online

Finding the Right Time

Taking into account seasonal latitude

Timing your launch around an event

Dedicating manpower

Bridging Your Offline Store with Your Online Store

Finding your identity

Creating an image

Integrating your shopping cart

Making a Flawless Transition

Stage 1: Orientation

Stage 2: Implementation

Stage 3: Evaluation

Building an Inventory

Book VII: Chapter 2: Understanding the Differences between Real and Virtual Customers

Comparing Online and Offline Customers

What Your Online Customers Expect from You

Round-the-clock hours

A variety of payment methods

Everything a customer could want, plus the kitchen sink

Details, details, details

Methods for coping with the holiday rush


Superior customer service

Establishing Patterns

Book VII: Chapter 3: Window Dressing for the Online Display

Creating the Right Look for Your Online Store

Creating the Perfect Shopping Experience

Organizing your products in categories

Offering a search function

Beyond Window Shopping: Designs that Lure Traffic

Book VII: Chapter 4: Making In-Store Customers Loyal Online Shoppers

Benefiting Customers (And Your Business) with In-Store and Online Synergy

Enticing Customers to Your Online Offering

Publicizing your Web presence

Displaying your online goods in-store

Showing shoppers the money

Providing a Positive Shopping Experience

Keeping friendly, flexible policies

Offering impeccable customer support

Enlightening your shoppers

Making Your Customer the Star

Book VII: Chapter 5: Staying Local, Getting Mobile with M-Commerce

Distinguishing Between Different Types of Mobile Commerce

Sending SMS alerts

Advertising with text-to-buy

Distributing mobile coupons

Localizing with Ads

Google AdWords

Yahoo! Search Marketing

Book VII: Chapter 6: Troubleshooting the Transition to E-Tail

Handling Returns in the Store from Online Sales

Merging Existing Back-End Systems with Online Requirements

Managing inventory

Fulfilling and shipping your orders

Tracking your orders

Maintaining site performance

Deciding How to Handle Integration

Extending Payment Options to Virtual Customers

Buy now, pay later

Check alternatives

Book VIII: Storefront Selling

Book VIII: Chapter 1: Instant E-Commerce with Storefronts

Knowing What You Want: Features


Product merchandizing and marketing

Administration features

Realizing What You Can Have: Cost

Shopping for Storefronts

Book VIII: Chapter 2: Mastering the Amazon

Joining the Marketplace

Achieving Pro Merchant Status

Taking Advantage of Other Selling Opportunities with Amazon Web Stores

Book VIII: Chapter 3: Let’s Hear It for Yahoo!

Why Open a Yahoo! Store?

Setting Up Shop

Managing Your Yahoo! Services

Opening Your Yahoo! Store for Business

Constructing your catalog

Opening the doors

Selecting a Yahoo! Plan

Starter package: Starting out

Standard package: Moving up

Professional package: Building on solid ground

Breaking Down the Fees

Growing with Your New Business Partner

Marketing programs

Customer relationship management

Report results

Book VIII: Chapter 4: Making eBay THE Way

Understanding How eBay Works

Getting Started on eBay

Setting Up an Auction

Maintaining your auctions

Leaving feedback for your buyer

Opening an eBay Store

Setting up shop

Managing your store

Becoming a PowerSeller

Joining the Reseller Marketplace

Book VIII: Chapter 5: New Storefronts, New Opportunities

Highest Bidder Takes All with Auction Sites

Localizing Storefronts with LiveDeal

Creating Instant Products with CafePress

Discovering the benefits

Registering with CafePress

Setting up your store

Adding images and products

Comparing Features to Find the Best Deal in Storefronts



Book IX: Fundraising Sites

Book IX: Chapter 1: Raining Donations: Why Not-for-Profit Is Big Business Online

Determining How Your Organization Can Benefit

Convincing Your Board of Directors

Tying the Internet strategy into your mission

Developing an online strategy

Providing a budget-friendly proposal

Offering case studies

Recruiting an expert

Garnering positive peer pressure

Getting specific

Book IX: Chapter 2: Adding Online Moneymakers to an Existing Site

Determining Which Features Your Site Can Support

Testing your backbone (connections)

Deciding on your computer needs

Locating your server

Processing payments

Tracking back-end modules

Mapping your site structure

Determining staffing capabilities

Paying the piper: Your budget

Adding an Auction to Your Site

Third-party auctions

Direct auctions without the middleman — almost

Soliciting Donations on Your Site

Connecting with online giving sites

Adding Donate Now buttons

Shopping for a good cause

Book IX: Chapter 3: Getting the Donor Base to Come to You

Building an Online Donor Base from Scratch

Get your site noticed

Engage passersby

Establish a relationship

Putting Together a Plan to Reach Donors

Converting the Faithful

Reaching Out to People Surfing for Charities

Book IX: Chapter 4: More Online Marketing Strategies for Nonprofits

Asking for Donations

Multiplying donation buttons on your site

Passing the hat (pass-alongs)

Building personalized pages

Circulating donation links offline


Making Donating Easy

Book IX: Chapter 5: Legal Considerations for Nonprofit Organizations

Designating Responsibility

Creating Online Policies

Registering Your Charity

Gaining Seals of Approval

Better Business Bureau

Charity Navigator

Book X: Niche E-Commerce

Book X: Chapter 1: Discovering Niche Markets

Deciding to Sell a Niche Product

Finding Your Niche

Book X: Chapter 2: Discovering Niche Trends That Pay: Children and Boomers

Marketing to Children

Attracting a fickle customer

Keeping ’em coming back for more

Reeling in the parents

Reading the small print: Important policies to consider

Understanding the Baby Boomer Market

Designing your site to attract aging customers

Keeping baby boomers buying from you

Finding a niche within the baby boomer market

Book X: Chapter 3: Blogging for Profit

Creating Value

Finding your voice

Content, content, content

Earning Money with Google AdSense

Choosing a Blog Platform

Signing up with

Getting started with WordPress

Book X: Chapter 4: Socializing (And Profiting) in Second Life

Introducing Other Worlds

Social networks

Massively Multiplayer Online Role-Playing Games (MMORPG)

Virtual communities

Navigating the Basics of Second Life

Signing up with Second Life

Modifying your avatar

Getting your hands on Linden Dollars

Earning a Living in Second Life

Unskilled labor

Skilled labor


Selling your wares in the Marketplace

Other income opportunities

Book XI: E-Commerce Advanced

Book XI: Chapter 1: Overhauling the Business

Paying Attention to the Signs

Qualifying for a Makeover from Lagging Sales

Increasing the number of visitors to your site

Converting more visitors to buyers

Knowing Where to Start

Book XI: Chapter 2: Redesigning to Win New Customers

Updating an Outdated Look

Giving your designs a purpose

Changing for the sake of change

Telling customers about the change

Deciding what to update

Increasing Appeal

Giving your customers search capability

Adding content

Creating a user community

Running a poll

Making Your Web Site Functional

Updating your Web site in a timely manner

Building smart navigation tools

Building your customer history

Book XI: Chapter 3: Expanding Products to Increase Stagnant Sales

Figuring Out When to Expand Your Product Line

Limited-appeal products

Limited-use products

Technology-based products

Product marketing

Product positioning

Price points

Conversion rates

Replacement or Expansion: The Art of Culling Your Inventory

Replacing one product with another

Expanding your product line

Finding New Products

Book XI: Chapter 4: Bringing Former Customers (Back) Home

Figuring Out Why a Customer Left

Instituting countermeasures

Asking for reasons that customers leave

Offering Customers Incentives to Return

A tailor-made offer

A targeted offer

Enticing Customers to Stay

Giving them blow-your-socks-off service!

Rewarding loyalty

Saying “Thank You”

Book XI: Chapter 5: Revisiting Marketing Strategies

Reviewing the Progress Report: An Annual Tradition

Getting the right reports

Sharing your progress report with your team

Figuring Out What Worked and What Didn’t

Analyzing a failure

Examining a success

Changing Plans for a Growing Company

Focusing on specific elements of your strategy

Testing your ideas

Automating your campaign

Finding Your Place in the Market

Focusing on your strengths

Emphasizing quality, not quantity

Increasing your profit, not buzz

Borrowing Strategies from Others

Stealing a page from your competitor’s playbook

Updating your strategy for survival

Partnering with other companies

Book XI: Chapter 6: Hiring Experts to Get Business Rolling Again

Bringing In the Pros

Looking at the age of your business

Looking at the severity of the problem and attempts to solve it

Looking at your skill level

Looking at the timing

Matching the Right Advisors to Your Business Needs

Choosing the Right Consultant

Defining the Relationship

Overcoming Great Expectations and Still Getting Results

Book XI: Chapter 7: Transitioning a Small Site into Big Business

Seeking Out the Next Level of Your Business

Expanding the business

Acquiring other sites

Becoming an affiliate or a partner

Going international

Bringing in financial partners

Going public

Passing on your company and retiring

Selling your site

Selling your domain

Dealing with Accidental Success

Purposefully Making the Next Move

Starting an Online Business All-in-One For Dummies®, 2nd Edition

by Shannon Belew and Joel Elad


About the Authors

Shannon Belew is the co-owner of several online businesses:,,,,,, and is a nationally recognized, award-winning global provider of resources for small and home businesses. Shannon writes the Huntsville Times column “Today’s Home Office”; has written magazine and newspaper articles; and founded the public relations firm aVespa Media, Inc. Her clients have appeared in such venues as Inc. magazine. She has also consulted for an Internet provider, advising companies on developing and reengineering their online presence.

Joel Elad was a fan of the Internet before most people had ever heard of the World Wide Web. He sells online as a PowerSeller on eBay with an impeccable customer satisfaction rating. He also runs his own e-commerce businesses: focuses on selling educational products such as books and DVDs about selling online, and NewComix.Com, which he co-founded in 1998, focuses on selling new comic books, Japanese manga, DVDs, and action figures. He was the lead instructor for the Learning Annex in New York and California for classes about eBay and advanced Internet sales, and he’s an educational specialist trained by eBay. He also contributes to Entrepreneur magazine,, and

After earning his MBA from the University of California–Irvine with an emphasis on entrepreneurship and information technology, Joel co-authored five bestselling books focusing on online activities, including Web Stores Do-It-Yourself For Dummies and LinkedIn For Dummies (both from Wiley Publishing). He’s now a consultant to e-commerce companies, a trainer to thousands of eager students at seminars and workshops, and a guide for helping people attain the freedom of growing their sales and establishing their own online presence.


Shannon: This book is dedicated to my family: my son, Holden; my daughter, Wiley; and my husband, Tom. Thanks for your relentless encouragement, love, and patience — and for always reminding me what is most important in life.

Joel: This book is dedicated to the hardest-working man I will ever have the privilege of knowing — my dad. Thanks for showing me the value of planning and discipline, as well as love. You will always be my inspiration.

Authors' Acknowledgments

Shannon: Since becoming a published author, I have realized that two groups of people deserve the most thanks once a book like this one is published: the team of people that helped produce it and the great people who are kind enough to buy the finished product!

That said, my sincere thanks to the entire team at Wiley Publishing that made this book a reality, not once, but twice. This includes Rebecca Whitney, Jim Kelly, Rebecca Senninger, Kyle Looper, and my co-author, Joel Elad. I am convinced that this is one of, if not the, most talented and caring group of people I could ever have the privilege of working with, or knowing. A special thanks to Rebecca Senninger and Kyle Looper for their continued guidance.

Thanks also to all of those who choose to read this book and who are inspired to become entrepreneurs. It is your ingenuity, creativity, and passion to follow a dream that not only makes this world go ’round but also inspires the rest of us to follow in your footsteps.

Of course, I can’t leave out another important group of people. Thanks to my in-laws, Jim and Freida Belew, for their support and love. Most importantly, thanks to my parents, Ron and Janice Sanders, for inspiring me. You have always encouraged me to stay on track with my dreams, even through the many ups and downs of this crazy life. Every entrepreneur should be so lucky to have parents like you in her corner.

Joel: I’d like to give a big thank you to Anthony and Yvonne Choi, James Marchetti, Anita Cohen-Williams, and Hans Park for the contacts, information, and support I needed along the way to fill in the gaps.

A special acknowledgement goes to my usual co-conspirator, Michael Bellomo, who put me on the path of being an author and keeps me going with a bizarre sense of humor mixed with a powerful dose of inspiration.

Most of all, I have to thank the Wiley team, which has been truly inspirational: Kyle Looper and especially Rebecca Senninger, whose patience and guidance helped make this book possible.

Publisher’s Acknowledgments

We’re proud of this book; please send us your comments through our online registration form located at

Some of the people who helped bring this book to market include the following:

Acquisitions and Editorial

Project Editor: Rebecca Senninger

Acquisitions Editor: Kyle Looper

Copy Editor: Rebecca Whitney

Technical Editor: Jim Kelly

Editorial Manager: Leah Cameron

Editorial Assistant: Amanda Foxworth

Sr. Editorial Assistant: Cherie Case

Cartoons: Rich Tennant (

Composition Services

Project Coordinator: Patrick Redmond

Layout and Graphics: Samantha K. Allen, Reuben W. Davis, Andrea Hornberger, Melissa K. Jester, Sarah Phillipart, Christin Swinford, Christine Williams

Proofreaders: Caitie Copple, Christopher M. Jones

Indexer: Sharon Shock

Publishing and Editorial for Technology Dummies

Richard Swadley, Vice President and Executive Group Publisher

Andy Cummings, Vice President and Publisher

Mary Bednarek, Executive Acquisitions Director

Mary C. Corder, Editorial Director

Publishing for Consumer Dummies

Diane Graves Steele, Vice President and Publisher

Composition Services

Gerry Fahey, Vice President of Production Services

Debbie Stailey, Director of Composition Services


For two decades, the Internet has continued to prove itself a viable tool for building, managing, and growing a business. Little doubt remains that you can make money online and find success in doing so. In fact, since beginning our own online endeavors, we have had the privilege of meeting and working with a variety of entrepreneurs — people who, much like you, share a dream of finding economic independence by running their own businesses. As you might have guessed, many of them found success on the Internet.

The Internet provides not only a legitimate resource for starting your own business that offers a steady source of income for your family but also a nearly endless source of ideas and opportunities to market and grow your company. It can even give you the flexibility to work from home, the freedom to work part-time, or the ability to earn an additional source of income to help make your life more enjoyable.

Now we want to share with you the knowledge and tools we picked up along the way and provide you with a few shortcuts to help further your own online endeavors.

About This Book

We first wrote this book in 2006 to cover the many different ways you can start or expand a business by using the Internet. For this second edition, we took great care to update all the key information that has remained valid in the past couple of years. We also searched out many of the new opportunities that have evolved since then, such as mobile commerce, social networking, and blogging as a legitimate revenue maker. For that reason, among others, we encourage you to use this book as a resource and return to it whenever you need it most.

In addition to providing you with details regarding specific online business strategies and moneymaking opportunities, the book covers basic offline information. It’s the stuff that every small-business owner needs to understand, such as how to apply standard accounting principles and keep up with the legal side of running a business.

Remember.eps Of course, using this book doesn’t guarantee that you will make a lot of money — or any money, for that matter. The book provides you with just enough knowledge and inspiration to keep your online business dreams on track. Running a business is hard work. It takes persistence, dedication, and perhaps an equal mix of patience and luck.

What You Need Not Read

You should at least browse through every section of this book. Even if your e-commerce skills are more advanced, it never hurts to have a refresher course on some of the business basics. Considering that the Internet touches many different aspects of people’s lives, you never know what unexpected tidbits of information you might discover.

Nonetheless, some parts of this book certainly aren’t required reading — you know, the extra stuff. Typically, these sidebars and paragraphs are marked with Technical Stuff icons. They provide a little more detail because sometimes you need just the meat of an issue.

If you don’t think that this “extra stuff” is necessary information, you have our permission to skip it. We know — you don’t need our permission. This is your book now. Use it in the manner that’s most helpful to you and your online business.

Foolish Assumptions

While we wrote this book, we assumed a few things about you:

You’re a smart, inquisitive person who is seeking information about running a business on the Internet.

You have an entrepreneurial spirit and are a bit of a risk taker — at least in the area of starting a business.

You may be looking for ways to use the Internet to build an existing brick-and-mortar business or to increase online donations for a nonprofit organization.

You’re comfortable using computers and browsing the Internet.

You use e-mail regularly.

You’re willing to find out about new technologies.

You want to use Web sites and online technologies to build a brand.

You want to use the Internet to make money.

You have bought items online and maybe even sold a few things.

How This Book Is Organized

To ensure that you can access the right information, when you need it most, this book has 11 minibooks. Each one addresses a general business topic (such as marketing) or a specific area of online business (such as selling on eBay).

Because this book is a reference tool, it works best if you can quickly flip to the sections that most apply to you — regardless of whether you’re starting, growing, or expanding a business online. This section provides a glimpse of the material you find inside.

Book I: Online Business Basics

From the best way to finance your venture to fine-tuning your business plan, Book I touches on everything. You might already know some things but need a review of other issues. Or, you might simply want reassurance that your idea is viable. Book I explains how to validate your online business concept, and even provides inspiration to nudge you forward in the right direction.

Book II: Legal and Accounting

Book II is all about protecting your assets. Find out whether you should operate as a sole proprietor or incorporate, and then set up a good recordkeeping system to keep your online business on track. Don’t forget to review what the IRS expects of you, now that you’re a business owner. You find this information, and more, to ensure that your i’s are dotted and your t’s are crossed.

Book III: Web Site Design

Your Web site is a key factor in creating a viable online business, and design and functionality rules are continually evolving for the Web. Book III shows you how to enhance functionality and incorporate good Web design principles to build a truly inviting and user-friendly site. An important part of attracting your audience and knowing how to keep them is the wording you use throughout your site. It’s time to write online content with zing, and this book shows you how to do it.

Book IV: Online and Operating

Maybe you’re not sure which shopping cart software is best for your online store or you want to know whether affiliate programs can earn you more money than selling e-books on your own. In Book IV, you explore the best profit structure for your site and choose products that sell. Merchant payment solutions, back-end inventory management systems, and other e-commerce necessities are covered in this book.

Book V: Internet Security

You know about spam and you’ve been warned about identity theft, but there’s much more to understand about online security. If your Web site isn’t locked up tight, a few unwanted visitors will sneak in and take over. Book V shows you how to implement basic security measures, such as firewalls, spam filters, and adware blockers. Then it talks about denial-of-service (DoS) attacks, spoofing, and credit card fraud. We also help you develop a security plan to protect yourself — and your customers — from the most recent security threats.

Book VI: Boosting Sales

Are you ready to rev up your e-commerce engine? Book VI shows you how to implement online public relations to increase exposure to your site and gives marketing tips that help convert visitors to buyers. You find detailed information about using search engine optimization (SEO) and paid search advertising to increase sales and about using traffic analysis software effectively to reveal important patterns about your customers’ shopping habits.

Book VII: Retail to E-Tail

You’re an experienced brick-and-mortar retailer ready to expand your business to the Internet. Before rolling out the welcome mat to your online customers, you need to check off a few items on your to-do list. Book VII explains why you should develop separate online store policies, how to convince your regular customers to shop with you online, and how to maximize online sales without cannibalizing your in-store profit. You also find out how to incorporate some of the most recent online trends, such as mobile commerce, to help market your business and build sales.

Book VIII: Storefront Selling

Can you say “eBay?” It stands to reason that a book about online businesses isn’t complete without a section on eBay. It also makes sense that many viable eBay alternatives are also included so that you understand how to maximize your online auction opportunities. In Book VIII, you find all the basic information you need in order to start selling on eBay and other online auction sites and storefronts (such as Amazon). All of them are worth checking out. This minibook also highlights sites such as CafePress and that help you sell custom products from online stores that are easy to set up.

Book IX: Fundraising Sites

E-philanthropy is a popular buzzword among nonprofits of all sizes. The idea of attracting an online donor base to increase funding is also practical and cost efficient. Getting your organization started in fundraising by way of the Internet is the goal of Book IX. Find out how simple additions to an existing Web site can increase donations or determine whether a full-fledged online campaign is warranted.

Book X: Niche E-Commerce

One of the best ways to grow a business online is to stumble across a trendy idea that’s just beginning to take off. It’s the type of idea that makes others say, “I wish I had thought of that!” This type of specialized product or service is often popular because it’s targeted to a specific customer base, or niche market. The Internet enables online businesses to market to niche audiences inexpensively. Although Book X doesn’t provide a list of guaranteed bestsellers, it gives you a glimpse of some lucrative niche markets. Tweens, blogging, and social networking (like Second Life) are just a few of the areas covered in this book to help you discover how to capitalize on hot new niche markets.

Book XI: E-Commerce Advanced

Book XI is for online business owners who have been around for a while and are facing the decision of where to take their business next. Your site might have celebrated a ten-year anniversary or passed a significant revenue milestone, or maybe potential buyers want to it. For you, Book XI discusses everything from taking your business to the next stage of growth to handling an occasional dip in sales. It also shows you the best approach for a site redesign, reveals marketing strategies to increase your customer base, and reviews strategies for taking on a financial partner to expand the site.

Icons Used in This Book

These icons call attention to important details:

Tip.eps Check out this helpful hint. We picked up this information somewhere along the way.

Remember.eps This friendly reminder serves up important information. Whenever you see this icon, know that this information is something worthwhile to keep in mind as you move forward.

Warning(bomb).eps Pay special attention when this icon appears. It could save you from making a fatal error — at least in your online business!

TechnicalStuff.eps You can usually understand an idea without having to know its behind-the-scenes details. Even when we point them out with this icon, feel free to skip them and move on.

Book I

Online Business Basics


Contents at a Glance

Chapter 1: Starting from Scratch

What Are You Waiting For? Start Your Business Now!

Choosing Just the Right Business

Getting Started

Chapter 2: Turning Internet Dreams into Reality

Thinking Like a Netrepreneur

Putting Your Business Idea under the Microscope

Identifying Your Market and Target Customer

Competing to Win: Analyzing Your Competition

Chapter 3: Getting Real: Creating a Usable Business Plan

Understanding the Value of a Plan

Recognizing That the Parts of the Plan Make a Whole

Getting Help to Write the Plan

Using a Business Plan Today, Tomorrow, and Always

Chapter 4: Finding Money to Fund Your Online Start-Up

Bootstrapping the Low-Cost, No-Cost Site

Finding the Perfect Investor

Checking Out Alternative Financing

Taking a Shortcut: Purchasing an Existing Site

Chapter 5: Creating Policies to Protect Your Web Site

Taking Care of Customers

Putting Policies in Place

Delivering On Your Promises

Chapter 6: Setting Up Shop: Everything You Need for Online Efficiency

A Floor Plan for Success

Must-Have Equipment

Tools for Your Desktop

Your Essential Software Toolkit

Connectivity: Today’s Internet Options and More