Operating expenditures

As with the startup expenditures, the operating expenditures involve employee time. The e-commerce manager, MIS, programmers, graphics people, and customer service representatives must all be involved on the operational side of an e-business. Further telecommunication expenses are incurred monthly or quarterly, as well as basic utility expenses. 

Advertising also comes into play on the operational side of an e-business. Literature and other ‘hard’ advertising pieces must be created. Pay-per-click advertising and e-marketplaces should be advertised in so that horizontal partners push users to your site.  ABC may also wish to conduct live web demonstrations of its capabilities. This per-month resource must be budgeted.

While some business costs can be reduced in the e-business environment, it is more accurate to say that money can be spent more wisely after e-business implementation as a result of better reporting, trends data, and better accountability for marketing dollars spent versus true customer acquisition, ROI and lifecycle earnings from a customer.

The budgeting process is just as important in the e-business environment, so we will discuss budgeting in the next post.

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A Complete View of Costs Associated with Starting an e-Business Enabled Company
 

Startup expenditures

Even though ABC is a successful brick and mortar business in its own right, there are many expenses associated with starting an e-commerce division of a company. For instance, there are development costs involved. ABC wants to offer its users a unique and industry-leading searching mechanism for finding cogs based on several criteria. This will require development time and money. Further, the graphical layout for the new site will have to be determined. This will primarily be done in house, but a portion of the finished style sheets will be imagined and created by an outside graphic artist. This will require an expenditure. 

A minimal, but necessary, charge will be incurred to obtain a domain registration for the new company division. This project will require time from the marketing manager, e-commerce manager, graphics artist, programming, IT and accounting departments. The time involvement from these individuals is an incurred soft cost. Also, equipment must be purchased in order to service users in an efficient and secure manner. A middle-ware server must be bought and put in place so that credit card numbers are not floating around on the Net. This middle-ware server will also act as a liaison between the e-commerce site and the back-end inventory and financial systems. ABC will also require an additional router, a new hosting provider, and more programmed jobs to run security backups of information. 

These are the starting expenditures that must be considered in a financial plan. Next time we will discuss the operating expenditures.

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Critical Steps for Success

There is a theory when it comes to implementing a successful project and that theory maintains that there are four (4) critical areas of any project:

• Time Frame
• Quality
• Scope and
• Budget

The first step that ABC should take is to move towards standardizing its procedures in order to increase efficiencies and decrease costs and the likelihood for errors. Another major step in the process is for ABC to establish a detailed disaster recovery plan. If a majority of its customers are self-servicing themselves, and if new customers are ordering or looking for the first time, the site must be up and functional all of the time. A disaster action plan and team should be put into place in order to assure that ABC’s site remains online and functional 99% of the time.

Further, ABC should market itself on horizontally and vertically integrated marketplaces. Lastly, the sales and customer service force should be trained on the implications of the website. They should understand how to use the site and be aware that any time-savings that the site affords them should be used to gain new leads and sales and to grow sales among the current customer list. In these ways, ABC’s strategic plan can have a direct impact on business and customer relationships. After this has been accomplished, the focus should turn to developing a marketing strategy that incorporates ABC’s goals.

For ABC to create a successful e-business marketing strategy, it must answer some fundamental questions regarding its business practices, external obstacles and long-term strategic vision. Among the most intrinsic questions for ABC to answer are its marketing strategy, internal realties, effective measurement of benchmarks and its overall branding and positioning strategy. Each one of these questions can be broken down into more detailed and insightful questions for ABC to answer.

In our next discussion, we will turn to the topic of marketing strategy.

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SEO Quickie

Search engine optimization really just takes the best parts of corporate tribal knowledge and Web tracking reports and uses that information in all areas of the site in order to flood the site with the “right’ information in order to be found by the search engines and placed toward the top of the results.

It is somewhat just a matter of focus and consistency. One must focus on the keywords and phrases that attract the best potential customers and then be consistent in how those keywords are spread across the site or the page. For instance, if ‘soft feel golf balls’ is a strong keyword that the Web manager needs to optimize, then at least one page URL on the site needs to be created with the term ‘soft feel golf balls’ in it, as well as a having that terminology in the source code for that page’s title, keywords and metatags. 

Further, a strong heading on that page should read ‘soft feel golf balls’ and that term should be used several more times on that page; this is called keyword density. Plus, any pictures on the page that are related to that term should have an ALTAG of ‘soft feel golf balls’. Now that that page is optimized for that key term, it is time to use the rest of the site to further enhance that term. 

Anywhere on the site where the term ‘soft feel golf ball’ is used, it should be linked to that optimized page. DO NOT link to the page with a ‘click here’. Link to the page with a ‘soft feel golf ball’ link. This is called “interlinking” and is a great tool for Website optimization. Further, any other Websites that agree to link to that optimized page should be instructed to use that terminology. So, instead of having a link to ABC Company, have them link to ‘soft feel golf balls’. This keyword relevance gets picked up by the search engines and helps move the page up the results ladder. So what’s the theory behind all this stuff?

This stuff is not just theory; it is proven practice.  If a company ABC is a completely brick and mortar business and wishes to branch out online as well as create e-business efficiencies within its organization, how would it go about accomplishing those goals?  It would look to its e-Business Manager, Web Manager, Technology Manager and other Managers, and ask them to lead the way. But there is far more detail involved when it comes to putting this knowledge into practice? 

In our next posts, we will examine the multiple facets involved in creating the e-business.