Small Business: Shoestring Success

Updated June 24, 2008

There's a common notion circulating the Net that you can build a successful online enterprise on a shoestring budget. Indeed, not only is that a possibility, it's a proven reality.

For resourceful businesspeople, the Internet provides rich and dynamic grounds for selling products intelligently, strategically, and profitably. But what, precisely, is implied by the term "shoestring budget"? And how do you define success in this context?

In many cases, "shoestring" often translates as a "do-it-yourself" website built with sub-standard e-commerce products and third-party payment processors.

Here, success is usually of a qualified variety - constrained by a ceiling of low business expectations, limited by a false estimation of one's own e-commerce possibilities.

Does success mean covering the costs of a low overhead? Or does success translate as intelligent business development and intentional marketing? Does a successful online enterprise strategize in terms of making a few quick bucks - or in terms of realizing one's long term e-commerce potential?

The Internet is populated with online businesses that show a clear distrust of the digital medium they inhabit. Where the venture capital of the late 90s invested heavily - and rashly - in unarticulated e-commerce visions, the opposite extreme reveals a small-business sector that refuses to invest in their e-commerce future. Rather than approach e-commerce from a critical or tactical vantage, many online businesses simply settle for lowest-common denominator solutions based on myopic business plans and faulty appraisals of market reality.

In this context, you see e-commerce systems designed for auction sites being generalized to potentially lucrative e-business projects. Worse, you encounter "free" commercial websites built from point-and-click templates that, from an overarching business perspective, amount to nothing more than a house of cards. You can get shopping carts for free, too, but often at the price of customizable features - or by sacrificing the technical support you need to have it work the way you (and your customers) want it to.

For Internet novices, such confusion may be excused due to all the mis-and-dis-information swirling round the Web - all the easy answers, instant solutions, and cost-slashing illusions. Much of the Internet marketing literature currently proliferating online is driven by get-rich-quick ideology and short-term big-money fantasies. Yes, all you need is a laptop and a dial-up connection and you can be making money on the Web in five hours - guaranteed!

Unfortunately, there are a lot e-commerce vendors catering to that inexperienced market. And here's where you will locate a nearly criminal seduction, usually embodied in discount services and/or ultra-low rate merchant accounts and credit card processing systems. Show me a FREE merchant account or a payment processing provider with implausibly low rates and I will show you a future of hidden fees, concealed monthly charges, technical snafus, and e-commerce limitation following e-commerce limitation.

Banks and merchant account providers need to make money. So when we hear about rates that fall below the threshold of economic viability, we should instantly know that this provider will recoup losses with other covert charges, rates, and fees. Then throw poor or non-existent customer service into the equation.

Unethical? Not compared to the companies that coin technical neologisms in order to pad the monthly bill. Break down the ultimate cost of these solutions - all these little, insidious charges - and your end result is usually mediocre e-commerce at prices that often rival those of comprehensive e-commerce vendors. And when your secure servers go down or the payment processing systems collapse during peak-period transaction volumes, then the money you "saved" is retroactively erased from your books.

Beyond these types of e-commerce traps, businesses are also sacrificing e-commerce flexibility and scalability by employing the same payment processing systems on their websites that they use to wire their kids money in college. Are people making a profit on these kinds of sites? Maybe. But imagine what they could achieve if they took their business to a higher, strategic level.

By selling products without intentionality, an online business sells itself short - and even in the short-run, this is not the type of cost-effective business model Internet success stories are built upon. Your investment may be pecuniary, but ultimately, so will be your return on investment.