Dot Com Craze Dwindling
by Tammy Harrison

The experts agree that in order to truly find success with a product, you need to integrate all facets of retailing and that includes e-tailing. For people who offer services instead of products, a website presence is important to get your information out to the masses. 

We have endured the dot com craze and now the seeming demise of this craze. What does that mean to your home-based business and your online business?

Think about the basics of economics: supply equals demand. To put this into understandable terms, look at the toy market. Compare the staying power of Rainbow Bright® to Barbie®. Rainbow Bright® hit the toy shelves long after Barbie® did, and after her popularity waned she went on sale and then she went into a box in the back of the store's warehouse. Barbie®, on the other hand, has had staying power. She hit the shelves and continues to thrive in the toy market.

The doll example is what is, in essence, happening to the dying dot com companies. Someone has a great idea, and they prepare projections and goals for their markets and then obtain financing (usually) based on those projections instead of on actual usage and durability of a product or service. In fact, if you look at the dot coms that have recently turned their servers off, the majority are in the business-to-business category (i.e. middlemen) or in the service business with some unique and exclusive software that boosted their image. 

When a dot com was able to obtain financing through a venture capital firm or an angel investor, they had a great start at growing their businesses. They used their money to invest in employees, enhance their product or service and advertise. Then most of them wanted more and hit the stock market running as a publicly traded company. 

Once they become a publicly traded company, their real worth is evaluated and speculated upon - long before they are truly able to calculate instead of project their demand. 

This is where the big boys differ from home-based businesses. Most small businesses start small and grow at a controlled rate. Yes, it would be lovely to do all of the thinking and, if the financing were available, to hire others to do all of the work. I would like nothing more than to play with my kids all day while the money rolled in because my staff was doing all of the work! But, that is not reality in my business and in most home-based businesses. 

As small business owners, it is imperative to study the dying dot coms and understand why they are losing ground. Is it because they obtained too much money too soon and did not understand their target audience? Is it because they went public before the true worth of their product or service was measured? Could it possibly be because they spent all of their financing up front instead of budgeting for bad times? 

These are things that small businesses owners should always consider when starting and growing their businesses--not after they have hit the money jackpot. 

So, the dot coms that are not surviving impact home-based business owners in a very small way (unless you invested in their stocks). They do give us the opportunity to look at supply and demand of our own product or service. Through research, we can try to understand why they are dying; to make sure we do not make the same mistakes that they did. They also may be closing some of the VC and angel financing doors that we may have dreamed of. And, with the loss of some of the companies, you can be sure that they are not taking your customers from you! 

But the most important lesson we can learn from the death of the dot coms goes right back to the basics of supply and demand. If you continue to obtain customers, clients and people interested in your product or service then you may very well have enough demand for your supply and, in the end, your home-based business will grow, and you will likely find the success you seek from your home office! 

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