INTERNET COMPANIES, HELP WITH LAUNCHING A NEW WEBSITE

Internet companies, help with launching a new website, why a good business idea is never guaranteed to succeed and the reasons most internet companies fail to make money

I had a couple of internet companies at the time and in the height of the frenzied dealing was kicking myself with frustration because I couldn't see why and how these other internet companies were raising so much money on the stock exchange. Some of the ideas that were the basis of these new internet companies weren't as good as mine and I couldn't grasp what I was missing because I couldn't see why these companies were being sold off for millions. I had a great business model but there was no way that I could see the business potential being worth tens of millions at the time. To be frank, I thought I was stupid because I didn't understand what all the fuss was about.

REASONS MOST INTERNET COMPANIES FAIL TO MAKE MONEY

In the subsequent crash that happened most of the internet companies that went public were put into liquidation; folded and were sold on for peanuts or didn't make the profits they promised. Most of the few companies that remain have yet to achieve a profit or return their investors a penny.

Hindsight is a wonderful thing and looking back I realise I wasn't so stupid after all. The reason I couldn't work out why those companies were worth so much was because they weren't worth anything. People were selling a dream and investors were jumping in with both feet on the basis of the perceived potential; believing the hype albeit that it was unproven, untested and eventually turned out to have no foundation.

Fortunes were made by the directors who sold off those companies and lost by companies, investment funds and individuals who bought into the dream. I would not have liked to be any of those directors facing down investors at share meetings, although I think they may have felt cushioned by the fact that despite the fact that they had succeeded in losing their shareholders tens and sometimes hundreds of millions, they were sitting on much of that money in their personal bank accounts. What Ted Heath might have called the ugly face of capitalism.

HELP WITH LAUNCHING A NEW WEBSITE

Despite the dotcom crash, the internet didn't fold, hasn't gone away and is growing at an unprecedented rate. What I like to call The Golden Web appears to offer entrepreneurs a fantastic business opportunity and can just as easily entangle and consume them; it is a medium to make money and get rich for the few who are able to navigate around its web of opportunities.

Why have I mentioned all of this? Mainly because you may have a business idea for the internet with high hopes and aspirations but your idea, as fantastic as you may think it is, is only an idea and when you start to put your business plan together, keep the numbers sensible. This means keeping the overheads to a minimum and basing them on the worst possible scenarios. (Read the chapter about Boogami).

WHY A GOOD BUSINESS IDEA IS NEVER GUARANTEED TO SUCCEED

David and I buy failing internet companies; we help struggling and ambitious internet companies; some companies pay us; others give us shares in their companies if they cannot afford us and we can see future potential; and from time to time we back and provide support for new internet companies. In every instance, whenever we look at the business plan, (if they have one, because many don't) the directors have been over ambitious with their financial projections, taken on overheads based on their projections and often spent money they didn't have. I have yet to see a business plan that I believed to be workable or achievable....

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You are reading an extract from

The Golden Web - The Internet Entrepreneur's Definitive Guide to Making Money Online

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Internet companies, help with launching a new website, why a good business idea is never guaranteed to succeed and the reasons most internet companies fail to make money