I didn’t like the direction things were going here so there won’t be any new postings in this format. Look for a new project to appear in this space really soon.

Hosting is a term used in the computer industry for a company that uses their servers and network connections to provide space for your website. In the old days, hosting was an expensive proposition because there wasn’t much competition and the alternative was to set up your own servers and high speed connection(s). Sometime in the 90s a whole bunch of people figured out that there were a few people making a ton on money running hosting companies. See the thing about hosting is that it’s almost all sunk cost. That is, once you set up the basic infrastructure it doesn’t matter whether you’re hosting 1 or 100 or 1,000 websites. So, once you’ve sold enough hosting accounts to cover your costs the rest is pure profit.

Once the price of hardware started to come down to the essentially free level (who’d have thought you could buy a brand new Dell for less than $500?), a lot of people jumped on the hosting bandwagon. Good news for you and me because that means prices come down. And come down they have. In the mid 90’s, I had a hosting account that provided 5Mb of space and 5 email addresses for 1 domain and was limited to some painfully small amount of bandwidth (traffic) after which I started paying by the megabyte. It cost $30 a month. Now there are a lot of companies that offer hosting for less than $10 a month that allow unlimited traffic, large amounts of disk space, and unlimited domains.

At any rate, with the prices being what they are, how can you afford not to have a website? For $120 a year you can add legitimacy to your micro, because on the Internet, with a well designed website, nobody can tell you’re operating out of your mom’s basement. Maybe the price isn’t the problem, maybe it’s that you feel like you aren’t technically capable. Most webhosting companies have addressed that with some sort of software that helps you build a website without ever mucking with any of the goring details. A lot of hosting companies use Site Studio ( demo here), a browser based website creation utility that lets you literally set up a website in a few minutes if you already know what you want to say.

OK, then, what if you’re the cheapest person on the planet and don’t want to pay somebody $10 a month to run your websites? Wouldn’t it be cheaper to get DSL or cable and set up my own server? Maybe even run my own hosting company? NO! Don’t Do It! I worked for a company in the 90s that thought it would be a good idea to jump on the hosting bandwagon. Then they could get other people to pay for their expensive T-1 connection. So they set up a totally inadequate former PC in a spare office and started selling web hosting to local businesses. What they didn’t realize was that running a hosting company is a lot of work. It has to be available 100% of the time. If a piece of hardware fails it has to be able to be switched out—-right now. The short form of the story is that it didn’t work out. If you’re working on internet based businesses, you should be able to expense your internet connection anyway. So cough up the extra dollars.

A report by the Kauffman Foundation is out that indicates an increase in entrepreneurial business starts in 2008 of .02% over 2007 according to The Policy Dialog on Entrpreneurship blog. My guess is that a lot of the increase is due to entrepreneurs of necessity–people who are starting businesses because of layoffs or downsizings. The thing that confuses me a little is the breakdown by state. Some of the states with the highest job losses are among the lowest in new business starts. The only thing I can think of is that they’re not thinking about anything outside of their local economy. What people need to realize now is that because of the Internet the world is a very small place.

I got tied up in starting a new micro and haven’t had a chance to post here. I’ll try to do better in the future.

I have heard it said that in the early days of our country 95% of the male population was self-employed. I can’t find any independent validation of that number but if you consider that most people were farmers, artisans or merchants and that almost anything in the Colonial period would be what we have defined as either a small, micro, or submicro business I’m inclined to believe that it’s close to the truth. It wasn’t until the Industrial Revolution that big business and it’s attendant wage slave mentality took hold.  I can’t help but think that getting back to numbers that look more like that would make the US a better place. Not that I think everybody should be a subsistence farmer but there are a lot of people doing essentially pointless “work” at their jobs that could be running micros to make the world a better place.

That said,  Small Business Trends recently posted 5 Key Microbusiness Trends for 2009 that’s well worth a read. It contains some excellent insight on micro trends for the coming year.

The Internet has changed the way we can do business in two important ways especially for small and micro-businesses.

• It allows you to be open for business 24/7

• It allows micro-niches to be served

In some sense these are merely improvements over mail order but they allow you to do things that wouldn’t have been economically feasible pre-net.

The ability to be “open” all the time –like many things– can be both a blessing and a curse. You have to watch the amount of time you’re investing and you have to plan for “down-time” like vacations. In other words, what are you going to do when you want to take off for 2 weeks? You have to have a plan up front instead of coming up with something just before you leave if you are physically involved in order fulfillment or product delivery. Remember: the idea is to make a lot of money and have the time to spend it. A properly structured fulfillment system will alleviate many of these headaches.

The second way the Internet has changed things is that it allows micro-niches to be served that wouldn’t have been close to profitable in the pre-net days. Back then to reach a micro-niche you had to use mail order which meant printing a catalog, finding your customers and selling your product to them. The ‘Net isn’t magic, it’s just made the world a small place again. Now, on the web, you don’t have to print a catalog and you don’t have to pay somebody else to find your customers. That means you can bring your target market (the people you sell to) to a razor edge — ie. people who collect stuffed skunks.

One last note — conventional wisdom says that to make money on the web you have to cultivate customers (spend money) the same way you do with a brick and mortar — which is true if you’re running a small business on the web. If you’re running a micro-business on the web you only have to make enough profit to justify the time you’re putting in to it. I have one website that only makes about $50 a month profit. Not much, you say, but I only spend about 10 minutes a week on it. $50/0.66 hrs = $75/hour … good enough for me. And as near as I can tell this money will keep coming in forever.

I was going to write a post about tools that you should have at your disposal when starting your new venture but discovered that Lifehacker had beat me to it while I was looking for a way to put tasks on my Blackberry and sync them to my PC without using Outlook. (Still haven’t figured that one out, I’ll let you know when I do.)

I agree with most of what was presented. Godaddy can be, ummm, strident in their marketing but it doesn’t bother me that much. I’ve never used DreamHost but it looks like they’ve got a pretty good deal running through 4/25/2009 and I like that they’re concerned about the environment. If you’re planning one sticking with just one domain for the forseeable future almost all the hosting companies have a deal that includes domain registration. Just make sure you can take it with you when you leave. There’s nothing worse than building up your brand and finding out that you’ve got to abandon it if you want to change hosting companies.

If the last few months have taught us anything it’s that we can’t rely on Corporate America to take care of us. Gone are the days when you spent your life working for one company. Now you’re a commodity and if the bean counters think you can be replaced with a cheaper alternative you’re gone. J. Paul Getty had eight rules for accumulating wealth that are as useful and relevant today as they were in his time. Here they are

• Rule No. 1: To acquire wealth today, you must be in your own business.

  You may think that the corporate executive with a $100,000 salary is better off than small shop owner, but the executive will be hard-pressed to double his income and taxes will eat up most of any increase. The simplest peanut vendor has unlimited opportunity to expand his business and his income, and even salesmen, who in most cases are able to write their own paychecks, can control his sale increases himself.

• Rule No. 2. You must have a working knowledge of the businesswhen you start and continue to increase your knowledge of it as you go along.

  If you don’t know what you’re doing when you start, your mistakes will be costly and often unnecessary, and you won’t be able to keep up with the technological explosions in any field. Start smart and stay that way.

• Rule No. 3. You must save money in your personal life and in your business venture as well.

  Discipline is the key to saving money. You must develop the will power to deny yourself immediate gratification or the temptation to gamble on the quick buck. Resources will be needed for expansion and should be guarded carefully.

• Rule No. 4. You must take risks, both with your own money or with borrowed money.

  Risk-taking is essential to business growth. Nelson Bunker Hunt is admired for his guts in trying to corner the silver market, not scorned for losing money on this deal. Some of the richest men have staked their entire fortunes and lost, several times over, before the risk-taking paid off. Back those risks with good judgment, experience, commitment, and the right support. Seek advice on risks from the wealthy who still take risks, not friends who dare nothing more than a football bet.

• Rule No. 5. You must not only learn to live with tension, you must seek it out.

  Thrive on stress! If it means getting physically fit, having a psychiatric overall or losing 50 pounds before you can handle it, do it. Once you can learn to thrive on stress, you will not only enjoy it, you will seek it out willingly and enthusiastically and wonder how you could live any other way. Men of means look at making money as a game which they love to play. Consider it serious business and you will suffer far more stress than you need or want. Keep your perspective or your stress level will rocket beyond your control.

• Rule No. 6. Build wealth as a by-product of your business success.

  If wealth is your only object in business, you will probably fail. Wealth is only a benefit of the game. If you win, the money will be there. If you lose, and you will from time to time if you play long and hard enough, it must have been fun or it was not worth it.

• Rule No. 7. Patience.

  This is the greatest business asset. Wait for the right time to make your moves. Let your business grow naturally, not by pressing your luck.

• Rules No. 8. Diversify at the top.

  Once you’ve made it, you’ll understand that any business is limited in the challenges it offers. You’ll want and need other games to play, so you’ll look for other ventures to hold your interest.

What’s a microbusiness you may ask? There are a lot of definitions floating around but for our purposes I’m going to go with Vermont’s Micro Business Development Program and say it’s a business with 5 or fewer employees (including the owner) and requiring start-up capital of less than $35,000.

Why do I like micros? Several reasons:

• In the current environment, business credit has all but dried up. Which basically means the only way you can get a loan is by proving you don’t need it.
• According to this Business Week post, The Wells Fargo/NFID Series on Business Starts and Stops indicates that 39% of businesses make a profit, 30% break even and 30% lose money with 1% falling into a cannot determine category. Starting lots of micros rather than one small business diversifies your investments.
• Upside is almost infinite, downside is limited.

Having said that, OItNB is going to focus on significantly smaller enterprises than I’ve listed above. Our goal is to showcase and support micros that have one or two employees  and cost as little as possible to start up or what we call a submicro. Our stance is that finding a business that will generate $50,000 in income a year is significantly harder than finding 10 part-time businesses that generate $5,000 in income but it works out to the same thing. You just need to make sure you’re controlling your time. As far as I’m concerned if you’re taking more than 2 hours a week to run and manage any submicro after the start-up phase it’s not worth the effort.

Hi. Thanks for stopping by. In the coming weeks and months I’ll be laying out the basics behind starting and running successful microbusinesses. Hope you enjoy!