I have this unrelenting suspicion that people deeply, innately, in every fiber of ourselves need to be connected. Radical, I know.

I recently went back to Princeton for my college reunion and spent 48 hours either with people I hadn’t seen or spoken to in many years and yet because of Facebook and LinkedIn still felt oddly knowledgeable about, or with people I had actually never met but again felt oddly knowledgeable about through the sheer quantity and intensity of the virtual communications we shared. As inevitably strange situations and new sensations came and went at my reunion (because reunions are kind of wonderfully odd), I couldn’t escape constant little reminders of how the new technologies we’ve so quickly become immersed in, are playing a role not only in our need but also our ability to be connected.

While I was on campus, I gave a lecture on social media marketing (and giving a “lecture” at my alma mater was certainly odd for me in so many ways). We looked at the Susan Boyle phenomenon. Note that according to The Telegraph the episode of “Britain’s Got Talent” in which Susan Boyle debuted (it was the show’s season premiere) had was viewed on television by 11.8 million people. But in just a few days, the video of that same show on YouTube had generated more than 80 million views. That’s TV 11.8 million, YouTube 80 million. Anyone who grew up with television as the quintessential mass medium may need to take a moment just to absorb that fundamental shift.

And more and more people have a nagging suspicion that things like Susan’s YouTube video are stark examples that social media tools really are changing the way that we communicate, and wondering what to do about it.

I agree with this suspicion because I think such change is inevitable.

What we now call “social media” are just the latest in a long and continuing evolution of communication tools. From smoke signals to Morse code to radio to television, each new tool we invent changes the way we communicate.

If you imagine with me for a moment, communication tools shifting over time in four respects:

1. who sends the communication
2. who receives the communication
3. the ease of communication
4. what’s in the communication

we seemed to have had a long progression toward an ever increasing number of recipients from tools like Morse code (only a few people can send complex messages to a few other people, so presumably senders and recipients are chosen carefully as are the messages they send) to tools like television (once the infrastructure is built, a few people can send messages to massive quantities of people relatively easily and so senders are chosen carefully while the recipients not so much & the messages can be drivel or not).

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But Social Media seems to have taken this progress on a new path where we are growing not just in the numbers of recipients but also of senders. Large numbers of people can now relatively easily reach large numbers of people, as if we are each our own publishing house.

But the tools go beyond that too. In the past large numbers of recipients meant one-directional messages — you could reach lots of people but they were passive recipients of your information. Now, these large numbers are also interactive. You can reach out to lots of people and every single one of them can immediately reach back. Instead of controlled, one-directional messaging, these tools enable a constantly evolving, living dialogue on a huge scale.

In it’s novelty, just the fact that the power to create large scale dialogue is in the hands of individual people is kind of amazing. As a business owner though, the fact that you can now communicate interactively and regularly with 10 or 1,000 times more people can seem overwhelming.

There is a middle ground.

In the 1970’s a sociologist named Mark Granovetter introduced a concept called “the strength of weak ties.” It is the idea that as we reach beyond our closest friends and families, we have “weak” but vitally important ties that connect us to other people and their networks and the important information and opportunities that those networks hold. It is far more often through the networks of our “weak ties” for example, that we get referrals for business and find opportunities for new jobs.

What’s amazing for small business owners about these new social media tools is that they are incredibly good at empowering individual people to efficiently and inexpensively maintain a far larger number of “weak ties”.

Half the battle of being a successful business is just making sure people remember your business and what you offer when it’s time to make a purchase or a referral. Through social media tools, a business can stay connected to a larger number of “weak ties” and the networks they belong to, have access to the information and opportunities in those networks, and do it better and faster.

By helping you maximize those weak ties Social Media Marketing provides small businesses with a powerful tool that doesn’t need an overwhelming amount of complexity to be useful. Its power is based on the simple human desire to be connected and the tools that now exist to enable you, as an individual to fill that desire.

Here are a few steps for how to maintain your sanity while using social media tools effectively.

1. Learn the differences, know what each tool is good for
   Each social media tool has its own personality, its own community of enthusiasts, its own speed and frequency. Take the time to learn them. Log on, create a personal profile and “lurk” for a while. Invite a few close friends and start to interact. Join groups that are of personal interest to you and watch how people share information. Learn first-hand how the tool is used by others before using it for your business.
2. Stay focused on your goals and know your audience
   While social media tools can reach millions of people as they did with the Susan Boyle video and for the Obama campaign, for most small businesses, reaching millions of people is just not the point. Don’t get sucked into the hype and forget that. Perhaps you need to find and build a few key relationships, or reach a few tens of thousands depending on the scale of your business. Figure out who & what you’re looking for and stay focused.
3. Don’t reinvent the wheel (yet)
   What’s already working for you? You don’t necessarily need to use social media in a completely different way if you’re not trying to reach a completely different audience. If you know what works with your audience now, start by figuring out how to achieve similar results but within the context of these new tools.
4. Don’t spread yourself too thin
   You don’t necessarily need to be active in all places at once. While Facebook, LinkedIn and Twitter are the hot spots of the moment, spend some time figuring out which ones will give you the greatest access to your audience and start there.
5. Don’t sweat it and don’t rush it
   Honestly everyone is still figuring out the best way to use social media tools. Heck, the sudden explosion of these tools themselves shows that people are still figuring out how best to use the Internet! Don’t give in to the feeling that you’ve missed the boat and rush into something that you’ll have to back pedal on later. Take the time to learn and do what’s right for you and your business.

Maisha Walker is the Founder & President of message medium, a 10-year old New York City Internet Strategy firm that focuses exclusively on Small Businesses. You can follow Maisha on Twitter or learn about her upcoming Web site and Internet Marketing Classes.

I was fascinated by the analysis of the Obama campaign. In many ways, Obama’s campaign and its success is a big, bright, “LCD sign” of the times. New media has come of age in a very public way.

Most people seem to agree that the campaign used a number of techniques to capture an audience and even inspire those traditionally lacking enthusiasm for politics. Some of my favorite attributes are:

Audacity – the fact that Obama wasn’t afraid to “redefine his target audience” and go after states like Indiana who this November voted for a Democrat for the first time in 44 years.

Mobilizing Large Numbers and doing it “Grass Roots” – unprecedented fundraising success by generating large numbers of small donations rather than small numbers of large donations to raise more than an estimated $600 million (McCain raised an estimated $250 million).

The Message Consistency – the message never wavered from the idea of being an “antidote” to the status quo.

But perhaps the most obvious and (to a techie like me) inspiring elements of witnessing this campaign was its focus on social technology to support and propel all of the other techniques.

The use of “new media”, from friend building on Friendster to the seemingly simple text message, proved to be a powerhouse for the campaign, as it extended the concept of “Team Obama” far beyond campaign headquarters literally into the hands of millions of Americans who voted and vocalized with their typing fingers.

For all the small business owners who couldn’t help wondering, wow – can I do that? My answer is Yes you can! (Sorry couldn’t help myself).

In taking a closer look, the technologies used form a rather familiar list:

• Official Web site: http://www.barakobama.com and http://my.barakobama.com
• Text messaging strategy – enabled via collecting phone numbers on a mass scale
• LinkedIn: http://www.linkedin.com/in/barackobama
• Flickr: http://www.flickr.com/photos/barackobamadotcom/
• Facebook: http://www.facebook.com/barackobama
• Twitter: http://twitter.com/BarackObama
• YouTube: http://www.youtube.com/user/BarackObamadotcom
• Meetup.com: http://barackobama.meetup.com/

The list reads like a “who’s who” of social media marketing.

But the real power in these technologies is understanding that the goal is not just to “set up” one tool or another, but to understand each tool’s potential. That potential in the Obama campaign was brought to fruition by:

• Having a consistent message
• Providing free and open access to “making a connection”
• *Always* keeping the tool up to date
• Providing pertinent digestible bytes of information that could be read, downloaded, passed on
• Leveraging the sheer quantity of enthusiasts and supporters on each tool to disperse messages almost instantly across an unbelievably wide, new network of venues and communities that hasn’t been seen since the invention of television.

Think about the leverage that a database of 948,000 people on MySpace and 3.1 million people on Facebook provides when you have a message to communicate (and consider that vs. McCain’s 221,000 on MySpace and 600,000 on Facebook).

As you think about your business and consider the challenge to build brand, generate buzz and stay on the radar as a small business owner with limited time and a limited budget, there are some very simple lessons to learn here:

1. Everybody needs a team. Whether you’re trying to build a team of millions of voters or a few thousand supporters of your business, build a team by building a venue for them to get involved. Even the simplest involvement can be powerful.
2. Email, the Web, and cellular technology have created an unprecedented venue for that involvement. Know who should be on your team and know the different ways they like to be involved.
3. Use wisely. Learn how these technologies work and learn by example how they can be leveraged to build a community of supporters for you.

This is an advantage that won’t last forever. As businesses gain competency in these techniques and learn to invest wisely, these techniques will slowly become standards rather than competitive advantages.

But it is possible for a growing small business to build a strategic, cost-effective and impactful social media campaign. As “Team Obama” has shown – yes, you can.

Maisha Walker is the Founder & President of message medium, a 10-year old New York City Internet Strategy firm that focuses exclusively on Small Businesses.  You can follow Maisha on Twitter or learn about her upcoming Web site and Internet Marketing Classes.

Last night we were talking about getting angel investment, and valuation, which is one of if not the most important points in the discussion. Valuation is essentially price.

Say you want to bring in $150,000 from an angel investor. The immediate question from the investor will be something like: “at what valuation?” Sometimes that’s called “pre-money valuation,” because the instant the deal happens the valuation will change into post-money valuation, which is always higher — because your company just got some new cash.

Your answer sets your deal equivalent of an asking price. If you say $500,000, then you’re offering the investor 30% of your company for $150,000. If you say $300,000, you’re offering 50%. If you say $1 million, then you’re only offering 15%.

Which leads to the question:

So how do I know? How do I set valuation appropriately? What is that based on? Is it some multiple of sales, or intellectual property, or what?

And that’s a good question, and very hard to answer. Sure, you want some compromise between what you want to give, as a percent of ownership in your company, and what investors would want to buy. Investors will simply say no if it’s not an attractive offer. But that’s still very vague.

• In the case of an existing business, with some history, you do have some formulas you can use. For a great site on that business interpretation of valuation, for existing busineses, I suggest bizequity.com, the zillo of small business.
• When we’re talking about startups, however, you don’t have history and you can’t really apply formulas based on sales, or revenue, or even intellectual property (although that could be more relevant).

So here’s my concrete suggestion:

1. Calculate starting costs. That’s two lists, the expenses you have to incur and the assets you have to have at the starting point — except cash. Leave that blank for a bit.  Add those all-except for cash assets to the starting costs, to get an amount, a number in dollars.  Click here for a lot more on that.  

   So, for example, in the illustration here, that would be about $40,000. Yes, I know it says $38,750, but this is just an estimated guess; always round up. You never guess just right.  

2. Calculate cash flow through the lean period at the beginning, before your sales cover your costs.  Make a good guess at how much money you need to cover the deficit spending to get you to an operational month-by-month break even level of cash. That’s where the cash requirement number in the illustration came from: it seemed like this company would need about $400,000 to survive from startup to break-even.  You can’t see much in the chart below, because it’s small, but it shows a projected 12 months of cash flow (in blue) with a minimum balance, a deficit (in red), of about $400,000.

   

3. That gives you a number. In this case, it’s $400,000. That’s what your cash flow shows you you’ll need to get to cash-flow break-even. In the last two months, the cash flow is positive, so the negative balance starts shrinking. With that estimate as a best guess, you go back into your startup costs calculation, and add in the cash required. It’s $400,000. You can see what that does to the startup costs worksheet in the next illustration here.
4. Having done that, you now know that you need about $500,000 from investors (again, technically it’s $458,750, but you’re using best-guess estimates, so round up.) Set that as the amount of investment you’re seeking. Then — and here it gets hard, to be sure — you need to decide how much of your company you’re going to offer to an investor in exchange for that $500,000.

5. Get some help here if you can. Ask somebody with experience in startups, or dealing with angel investors, or both. Ask an attorney you can trust, who should also be somebody with experience. The thing is, how much of your company you offer to investors is about a compromise between what you’d like — none, free money — and what will entice the investors to write checks.

   At this point a lot depends on your overall business offering, the cards your company brings to the table. Investors want as high return as possible, with as little risk, but in relation to return. How experienced is your team? How defensible is your product? How rich is the market? All these factors determine what kind of a deal will be acceptable to investors.

   • Let’s say, in this case, you’re new at startups, you have very little track record, and you want to attract an active angel investor as a partner. So maybe you set your initial valuation at $750K, meaning you’re offering to give away 2/3 of your ownership to get the money you need. You’re being realistic about what will attract an investor. You better really, really, like that investor, because he or she will essentially own your company. But this is a hypothetical case, and without a lot of experience and defensibility, that may be the best you can do.
   • Or maybe you’ve got better cards to play: you’ve got a team with startup experience, and a defensible new product, with some intellectual property, and it looks like an attractive market. That makes you able to set a stronger valuation, and maybe — we hope — still make it an attractive offer to investors. So maybe you say you’re valuing it at $1.5 million. You’re offering investors one third of your company for $500K.

So there’s a quick and (I hope) simple summary of how you set the initial (pre-money) valuation when you want to attract investment.

At the very least your Web plan ought to have a market forecast, traffic forecast, sales (or business benefits) forecast, expense budget, and specific milestones. Be sure to include these essential tables as part of your plan.

Even though we agree that Web plans will vary depending on the exact nature of your plan, it is hard to imagine a plan that doesn’t contain, at the very least, these five essential tables. Usually you’ll have these plus several others.

Market Forecast

Analyze your market by segments and project market growth for five years. Look for the details in the chapter on Market Forecast.

Traffic Forecast

A Web plan should include a reasonable estimate of future traffic. There are several measures of traffic that might be used, such as page views, sessions, etc. The important point is not what measure is used, but whether it can be applied consistently and tracked for achievement. Look for the details in the chapter on Traffic Forecast.

Sales (or Business Benefits) Forecast

Forecast your sales by product or service. The mathematics are simple, but important. You can’t do a Web plan without a sales forecast. The details are discussed in the chapter on Sales Forecast.

Expense Budget

The budget is another absolute essential. How much are you going to spend? On what? How does your spending relate to strategy? Look for more on budgeting in the chapter on Expense Budget.

Milestones

This is perhaps the most important table in the whole plan: concrete milestones to make it real, with managers, deadlines, and budgets. More on this will be presented in the chapter titled Keep it Alive.

Breaking News for Email Newsletter Publishers: You can do more with your online newsletter!

Ask not what your readers can do for you; ask what you can do for readers. That’s right, every single time you publish a newsletter and send it you’re your subscribers, you should be asking yourself one question; “Is this newsletter informative AND engaging?” Basically, the point is your newsletter could be the best, most well written, Pulitzer Prize contending piece of writing anyone has ever seen, but what if no one reads it? What if they read it, but they still don’t feel like they’ve gotten anything out of it? Compare it to text books and college. Sitting in a loft bed in a tiny dorm room reading text books on Western Civilization to me, was the most mind numbing experience I’ve ever felt. Once we brought it to the classroom however, was different, there were discussions, videos, questions and answers—we became engaged in the content, instead of just reading it. It was the combination of taking in the material and then acting upon it that made it the most valuable. Your newsletter can function the same way.

Surveys

The most original and common form of interacting with your customers through email newsletters is probably the survey. Including a survey is an easy way to get your readers engaged in your newsletter and sometimes even a sly way to get some marketing research out of your newsletter (especially if you can give something away for free to entice them to take the survey)

Your surveys could be about numerous things including customer satisfaction, industry related surveys, who will win the Stanley Cup, anything to get your readers active in your email.

Pictures

Adding images is the original way to peak interest in a newsletter and break-up all the words. Take a cue from newspapers and magazines; if you use a picture add a caption. This way, the reader can get a quick glimpse about what they’re about to read and have a nice visual reference to go along with it. Images related to your story can do a great job of breaking up the monotony of words, enticing readers to do more than just read your newsletter (which is ok!).

Videos

Got something funny, interesting, or relevant to share with your audience? If you have a bowling newsletter, maybe you can point your readers to a YouTube link of the charity bowling event and show highlights of the woman who bowled a perfect 300. Can you show readers in a video how to do something? Upload it and share. With the Internet and websites like YouTube at your disposal, you can be taking advantage of any avenue possible. The glamour of video can bring your newsletters to life, make them more than just still images and words—emphasize them with online video!

Blog Post

Do you maintain a blog? Incorporate it into your email marketing efforts. Your blog is an interactive piece of your company; it’s easy to bring part of your newsletter into your blog. Ask your readers if they have anything to share for your blog. In your blog, you can ask your readers if there is anything they’d like to see in your next newsletter. If you’re having a contest (we’ll talk about this later) announce your winner in a blog post (as well as the following newsletter.) Doing this will not only create interaction between your newsletter and your readers, but promote your blog a little more.

Contests & Giveaways

WIN FREE STUFF! No three words could ever offer more incentive than these three. The thing about a contest is, even if the readers are REALLY only interested in winning free stuff, it still keeps them around longer than they might have. This means more perusing of topics, headlines, or other offers in your newsletter—increasing over all awareness of your newsletter. While they’re scrolling your newsletter for the giveaway offer, they’re reading other items that may be of interest to them. Everybody…. ahem…wins!

Questions and Answers

They’ve got questions, you’ve got answers. You’re the professional; they come to you for products, services, or information—let them ask some of the hard hitting questions and prove your worth to them by answering them. It gives you interaction for your current newsletter and content in the next issue.

Conclusion and What do you do? Share with us

So there you have it. Put some life into your newsletters—engage your readers. Pull them into your email marketing and interact. We can’t sound hypocritical so, in an ongoing effort to keep our own newsletter interactive…write us, tell us how you keep your newsletter a two-way street of online communication. From traditional to ordinary and from unique to extraordinary, we want to know. We’ll post as many responses as we can in a future blog entry and in next months edition of iContact Marketing Monthly. Email me at Jgray@icontact.com and tell me how you make your newsletter interesting and interactive!

Rome was not built in a day. The Romans took their time building something great

You can’t take random ingredients and expect to bake great Lasagna. You need specific ingredients and instructions. If you’re buying email lists with unqualified prospects, it can turn out to be a recipe for disaster.

Building vs. Purchasing Email Lists

As a marketer you need to think like a consumer.  Consumers are smart, and they know what they want. If they receive an email from an unknown source, they will usually ignore it or delete it.  If, however, the email comes from a trusted company, they are much more likely to take a look.

By using purchased lists, you’re exposing your business to problems. False or out-of-date email addresses. Spam complaints.  All of which will eventually lead to a list that is a waste of your marketing dollars.

When you build a list, there are benefits that come with your subscriber base. You have the opportunity to track your emails (who received them, who opened them, etc). You can separate your list and segment it to those who want to receive certain emails or specific information. But more than anything else, you have a list of people who want to read your emails. Those can refer their friends to your business and help it grow through word of mouth.

Whether you create an email list from scratch or build an existing email list, you’re getting qualified leads of customers who are sincerely interested in what you have to offer them—otherwise they wouldn’t have signed up. You want to use that to your advantage—and you can, with targeted email marketing

Building an Effective Email List to Succeed in the e-World

Businesses can use email marketing effectively to develop strong leads, build relationships, and inexpensively get their message out.

Whenever customers are strolling through, browsing, purchasing, or just gathering information, you can be collecting email addresses. Your business is always open, readily available, and you can begin to build your email list by following a few simple suggestions.

Assure Personal Privacy

Consumers are very hesitant to give out personal information and email addresses have become a part of people, some don’t want to share. Gain their trust by reassuring them that their email address and any personal information will be guarded by you. Let them know that they will only receive a certain number of emails per month.

Keep it Simple

The easier it is to do something, the more likely it is someone will do it. If signing up for your email list is as easy as typing or writing their address—you will see many more addresses signing up.

Deliver on Your Content Promises

Make promises on what they should expect to receive in their emails from you and deliver (literally and figuratively). By letting the recipients know what they will be getting in their emails from you for signing up they will want to open the emails—to see what you have to offer.

Offer Choices

Democracy is a beautiful thing. Giving your subscribers choices of what they wish to receive from you gives you the control to cater to your customers. This also gives them satisfaction of not having to sift through irrelevant material.

9 Ways to Collect Email Addresses

Your website – If nothing else, use your website. If you’re not promoting your email list on your website, you’re not using your website well enough.

Current email lists – Using current email lists to build your own email list is an essential part of your growth. If your current recipients see something of value to them, they may think their friends will benefit as well. Allowing them to pass your email along may easily add more to your list.

In-store sign-up – When checking out or browsing around allow people to sign up for your email list by way of sign up forms.

Contests - Register participants address and announce the winner through your next newsletter list.

Coupons & discounts – Offer special incentives through email only, allow them to pass along to friends.

Advertisements & Direct mail – Never pass up the opportunity to inform readers about your email community. Direct them to your website or have them send an email to you requesting their addition.

Business cards – On the back of your business card, promote your website and the opportunity to receive informative emails or newsletters.

Trade shows & Networking Events – Offer collateral material that requests them to sign-up on their own.

Seminars - Give seminars on your area of expertise and have people sign-up to your mailing list for future seminars, discounted rates, and other announcements.

Be creative with these ideas, mix and match, or come up with your own ways to collect emails.

Maintaining your list

Just as important as building an email marketing list is maintaining your current list.
A few things to remember when doing this are to:

Build relationships with your customers—they will stay your customers longer if they feel connected. Ask for feedback and respond immediately. If they know that you care about them, they’ll stick around, as with any relationship.

Offer real value to your email readers; make them want to open your email each and every time. Whether this value is in the form of discounts, product information, tips, or fun stories, they should feel a need to read what you have to say.

Keep your emails interesting and your e-marketing will thrive. Send out only as many emails a month as you can keep appealing. Put some thought into what you want to communicate and you will have more valuable information.

Don’t hassle the loyal customers that have offered to receive your emails. If you don’t constantly bombard them, they’ll appreciate you more. You are privileged to have them on your list and you can respect that by not abusing it.

Go Build Your Empire!

First, realize that you need to build a list, not purchase one. Planning is essential in building your subscriber numbers. After you decide your objectives, use the previous suggestions to grow your list. Maintaining your subscriber base may be the most important thing you can do. What’s the point of creating something just to let it fall apart?

The Colosseum still stands in Rome after 2000 years. It was constructed well, and even with some deterioration there has been a constant effort to preserve.

Your business plan has been carefully drafted, written and re-written and is ready for implementation. You may have spent weeks or months writing it, and it represents all of the goals and objectives for your business. You will definitely have a website because you know that in today’s business world, that’s a necessity and it is mentioned somewhere in the marketing section of your website. There is even a line item in your start-up budget for its development and implementation, with a corresponding expense line item for hosting and occasional content updates.

Have you drafted your online business plan?

If you have not, then you have missed an important step in your business planning process. An e-business plan integrates your website and your business model and addresses website planning, development, marketing and management. It will ensure that your content targets the right customer type, enables you to realize the full value of the Internet as a marketing tool, and creates a process for informing and communicating with your customers.

For example, while listing your website with search engines will help you reach customers who are looking for similar websites, how can you entice them to search for your website? And what will they find when they get there? There are more effective methods of attracting your customers to your website than search engine listings. Are you aware of how to use them? Studies show that regular contact with customers helps to maintain your relationship with them and generates referral business. Are you aware of the best contact technologies available today? Your customers will expect content variety and incentive to return to your website. How will you ensure that those processes are in place and that they are completed in a timely manner? Your e-business plan will address those issues, as well as find the right mix of on- and off-line marketing tools, and establish procedures for e-business management.

Palo Alto Software is the first business planning software provider to include an e-business planning guide, The e-Business Primer, which can be purchased either in a bundle with Business Plan Pro software, or as a stand-alone guide. The Internet presents a wide range of marketing and communications opportunities for every business. Making those opportunities a reality requires careful planning, thoughtful assessment and directed focus. The e-business Primer provides you with the planning and decision-making tools to develop and implement your e-business strategy as you develop your business plan and place your business at the forefront of this exciting global environment. The ideas, goals and strategies you will formulate with the help of The e-Business Primer will aid you in producing a successful, well-planned e-business or e-commerce venture.

The e-Business Primer™ was developed using a combination of her technical and functional knowledge of the Internet and business world. This guide to e-business planning and implementation in four steps–plan, develop, market and manage–was written for the small to mid-size business owner and manager.

In theory, choosing a domain name is simple. If it is memorable, pronounceable, short, clever, easily spelled and suggests the nature of the commerce on your website, you’ve got yourself a winner.

But even if your choice is brilliant from a marketing standpoint, it may be worse than foolish from a legal perspective. Your name is at risk if it legally conflicts with any one of the millions of commercial names that already exist. It’s a big risk. If you put money and sweat into your website under one domain name and then are forced to give the name up, your Web-based business is likely to suffer a damaging, if not fatal, blow.

The rules for understanding whether a legal conflict exists comes from trademark law. Here are the basics you need to understand:

• Names that identify products or services in the marketplace are trademarks.
• Distinctive (clever, memorable) trademarks are protected under federal and state law.
• Distinctive business and domain names usually qualify as trademarks.
• The first commercial user of a trademark owns it in case of a legal conflict with a later user.
• One trademark legally conflicts with another when the use of both is likely to confuse customers about the products or services, or their origin.
• If a legal conflict — called an infringement — is found to exist, the later user will have to stop using the mark and may even be held liable to the trademark owner for damages.

Customer Confusion
Applying these principles to your domain name selection, you are at risk of losing your chosen domain name if the owner of an existing trademark convinces a judge or arbitrator that your use of the domain name creates a likelihood of customer confusion. Confusion in this context can mean two different things.

Most commonly, it means that the goods or services a customer buys are different than what the customer intended to buy. For instance, suppose, on the recommendation of a friend, you decide to purchase Lee’s famous Flamebrain barbecue sauce, which is sold only on the Web. You intend to type “flamebrain.com” into your browser but accidentally enter “flamerbrain.com” instead. You get a website run by Henry, who has both copied Lee’s idea to offer a barbecue sauce for sale on the Web and, with a very minor variation, the name of Lee’s sauce. You order two bottles, completely unaware that you ordered the wrong product from the wrong website.

The other kind of confusion occurs when a misleading name causes customers to believe — wrongly — that a product or service is sponsored by, approved of or somehow connected with a business they already know about. In other words, the customers are confused about the source of the product or service. This would be the case, for example, if you took your TV to a repair shop called IBM Electronics because you thought that IBM somehow sponsored the business.

The potential for confusion is a problem only when the names at issue are distinctive — that is, clever, and therefore memorable. A name may be distinctive because it is made up (chumbo.com for an online software store), arbitrary in the context of its use (apple.com for computer products), fanciful (ragingbull.com for investment advice) or suggestive — but not literally descriptive — of the underlying product or service (salon.com for an online magazine). A name such as Ben and Jerry’s, which by itself is weak because it uses personal names, may also become distinctive after it has been used for a long time and is recognized by the public. If the trademark owner has registered a name with the U.S. Patent and Trademark Office, it is probably distinctive.

Names that aren’t distinctive don’t qualify for trademark protection. Many domain names — for instance, coffee.com, drugs.com and business.com — are potentially powerful but generic. That is, they are the names of whole categories of products or services. Domain names that use surnames, geographic names or common words that literally describe some aspect of the goods or services sold on the website, such as healthanswers.com for, you guessed it, online health information, are also ineligible for trademark protection.

Avoiding Trouble
The way to choose a domain name that satisfies your own marketing needs and doesn’t get in the way of anybody else’s trademark rights is to search as many existing trademarks as possible, spot possible conflicts and then pick a name that’s unlikely to generate a nasty lawyer’s letter.

• The first place to go for possible conflicts is the trademark database of the U.S. Patent and Trademark Office at http://www.uspto.gov. Searching this database gives you all registered trademarks and all trademarks for which registration is pending. You should search not only for your proposed mark but also for other marks that are logically close, such as synonyms and variant spellings.
• In addition, you should also search the Internet and any business name registers, such as Thomas Register Online at http://www.thomasregister.com.
• (For more information about trademark searching, see Conducting a Trademark Search in the Trademarks & Copyrights area of Nolo’s Legal FAQs.)

If your search turns up any names that are the same or similar to your proposed domain name, ask these questions:

• Does your website offer goods or services that compete with the goods or services being sold under the other name?
• Does your website offer goods or services that typically are distributed in the same channels as the goods or services being sold under the other name? This would be the case, for instance, if you plan to offer sports equipment on your website, and the owner of the possibly conflicting mark sells sports clothing.
• Might your website in some way divert business away from the mark’s owner because of the name?
• For instance, could the other owner show that your domain name is so similar to the other name that users might end up on your website by mistake?
• Is the other name very well known?

If the answers to all these questions are no, you can feel reasonably free to go ahead and use your name without fear of creating a legal conflict. If you answer yes to any of them, there will be some risk of a legal challenge down the road. If you aren’t sure, take an informal poll of friends. Would they be confused by the simultaneous use of the two names? Might they end up on the wrong website? Another option is to run the possible conflicts by a trademark attorney. Although you can anticipate that the attorney will be more conservative than is actually necessary, you still may benefit from having a trained eye go over your circumstances. For more information about reserving, using and enforcing trademarks, see Using and Enforcing Trademarks in the Trademarks & Copyrights area of Nolo’s Legal FAQs.)

Domain Name Bullies
Sometimes a powerful company tries to force a smaller one to give up a domain name that was legally acquired in good faith by the smaller company. Because trademark conflicts are ultimately resolved in court, a business that can easily afford to pay lawyers is in a powerful position to sue the smaller company for trademark infringement (assuming there is any basis for doing so, which there usually is). When the smaller company realizes that it will cost tens of thousands of dollars to defend the suit, the big guy proposes a settlement under which the small company parts with the name for a relatively meager sum. In other words, the powerful company ends up getting what it wants simply because the court system is manifestly unfair to those who can’t afford attorneys. There are strategies to fight this sort of bullying. If the small company has the resources, of course, it can mount a defense and actually win. In addition, the Internet community has been extremely hostile to online bullies, and out-of-court campaigns sometimes make them back down. For more on this issue, visit the Domain Name Rights Coalition.

Starting an online business is much the same as starting any business. You should go to your local town hall and find out what the requirements are to form a business in your area. Also ask what is required at the state and federal level. In most communities you must register a trade name. If you will operate as a Corporation or a Limited Liability Company other registration requirements are required. Also, if you operate from your home you should inquire about the local zoning laws. All these steps are needed for any business.

Your business will likely fall under the category of a mail order business. Learn about the Sales Tax requirements. If you do not have nexus in another state you can sell and ship merchandise to residents of another state without charging Sales Tax. However, sales to residents in your state will require collection of Sales Taxes and remittance to your state’s Sales Tax Department. The Federal Trade Commission passed a rule in 1975 requiring you to ship merchandise within 30 days of receipt of payment. You must abide by the Truth in Advertising requirements which essentially require you not to be misleading in your ads. For example, when giving a guarantee, you must describe in detail how that will be carried out. It all boils down to the fact that you should operate your business honestly, which, by the way, is an essential key to your future success.

If you are going to be buying inventory for your online business from distributors you should:

• Make sure you are buying from a reputable source.
• Check references and call the Better Business Bureau and Consumer Affairs divisions in the distributors state concerning complaints.
• Try to obtain merchandise on consignment, thus conserving your cash.
• Look into companies that will drop ship on your behalf.

As a reseller you can then offer a larger selection. These techniques can supplement special sales of high mark up items you keep in inventory.

Do a business plan. Visit www.bplans.com. Look at all the valuable resources of information available to you in not only preparing a plan but also to learn how to market your product and how to operate successfully on the web.

Visit a local SCORE and SBDC office near you for free and confidential counseling. Call the US SBA for locations near you.

Every Web plan has to fit the needs and situation. You must be able to customize your Web plan to fit your company, rather than follow a recipe to build a cookie-cutter plan. Even so, there are standard components you just can’t do without. A Web plan should always have a market analysis, website strategy, specific development plan, sales forecast, and expense budget.

• Market analysis: Normally a Web plan will start (after an executive summary) with a market analysis, which should be a fundamental part of any business effort. Plans should almost always set the context in terms of the benefits offered to a specific target population. The market analysis will normally include a target market analysis, market research, and a market forecast.
• Website strategy: This should include the strategic focus, mission and objectives, development strategy, and Web marketing strategy.
• Sales (or benefits) forecast: One important point on Web planning is that not all websites produce sales, but all should have some business or organizational benefits, like sales. Maybe this is reduced cost, increased customer satisfaction, leads generation, or community communication. Whatever the target benefits, sales or not, they should be put into numbers and projected into the future. For practical reasons, we refer to this as sales. The plan should include enough detail to track sales month by month and follow up on plan-vs.-actual analysis. Normally a plan will also include specific benefits as sales, cost reduction, or other benefits in concrete terms, such as by product, by Web section, by user type, by manager responsibilities, and other elements. The forecast alone is a bare minimum.
• Expense budget: This ought to include enough detail to track expenses month by month and follow up on plan-vs.-actual analysis. Normally a plan will also include specific Web development plans, back end, front end, tactics, programs, management responsibilities, promotion, and other elements. The expense budget is a bare minimum.

Is this enough?

The minimum requirements above are not the ideal, just the minimum. In most cases you’ll begin a Web plan with an Executive Summary, and you’ll also follow those essentials just described with a review of organizational impact, risks and contingencies, and pending issues.

Include a specific action plan

You should also remember that planning is about the results, not the plan itself. A Web plan must be measured by the results it produces. The implementation of your plan is much more important than its brilliant ideas or massive market research. You can influence implementation by building a plan full of specific measurable, and concrete plans that can be tracked and followed up. Plan-vs.-actual analysis is critical to the eventual results, and you should build it into your plan.

A plan outline example

Of course the exact nature of your plan, and your marketing situation, dictates its contents. You add detail or take it away to suit your needs. This standard plan is a good starting point.

In the real world you’ll want to customize your outline according to whatever your company needs. Variables include whether you are a content, a community, a commerce site, or something else; whether you are selling products or services, to businesses or consumers, or if you’re a nonprofit organization. Although the outline does change in some respects as a result of these variables, this is a good standard sample outline for a basic Web plan.