1. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 1 CHAPTER 12 E-Entrepreneurship OBJECTIVES 12-1Explain the difference between bricks-and-mortar and virtual businesses. 12-2Discuss the scope of the e-entrepreneurship market and how to address e-entrepreneurship in the business plan. 12-3Explain the process of creating an e-business web site. 12-4Discuss e-entrepreneurship and the law. 12-5Evaluate an e-business web site according to a checklist of important factors. 12-6Discuss the myths of e-entrepreneurship. 12-7Analyze common e-entrepreneurship mistakes.

2. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 2 E-entrepreneur An e-entrepreneur is defined as an individual willing to take the risk of investing time and money in an electronic business that has the potential to make a profit or incur a loss. E-entrepreneurship is the act of managing an electronic enterprise that has the potential to make a profit or incur a loss.

3. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 3 Bricks and Mortar Business Has a material presence Has a tangible location where potential customers can actually walk in and interact with employees Examples: storefront, storage facility, office space, or manufacturing facility

4. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 4 Virtual Business Does not have a material space designed to receive customers Transacts most of its business online Can deal with customers from any location that offers Internet capability

5. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 5 The E-Entrepreneurship Market Approximately 75 percent of Americans have access to the Internet from home. That means over 200 million people are potential customers for the entrepreneur with an Internet site.

6. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 6 History of E-Entrepreneurship In the early 1990s, electronic data interchange was standardized and companies could reliably complete transactions among themselves. In 1992, Compuserve offered online retail products to its customers. Netscape arrived on the scene in 1994 and provided users with a simple and colorful browser with which to surf the Internet. Netscape also provided a safe online transaction technology called Secure Sockets Layer.

7. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 7 History of E-Entrepreneurship The following year saw the launch of Amazon.com and eBay. In 1998, DSL, or Digital Subscriber Line, which provided fast, always-on Internet service, was offered to customers across California. By 1999 retail spending over the Internet reached an estimated $20 billion. In 2004, the U.S. government extended the original 1998 moratorium on Internet taxes until at least 2009. (continued)

8. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 8 E-Entrepreneurship in the Business Plan The e-entrepreneurship components of the business planning process integrate your Internet site and your basic business model. They should address web site planning, development, marketing, legal, financial, management, and special considerations. They should be designed to ensure that your Internet content reaches the right customer while leveraging the full value of the Internet as a marketing tool.

9. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 9 Create an E-Business The first step toward e-entrepreneurship is usually the selection and registration of a domain name, which is the unique name that identifies an Internet site. The selection of a domain name is a chief concern when doing business online.

10. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 10 Domain Name Process Choose a domain name that is easy to remember and is not easily confused with other names. Use a search engine to check for other companies using the same name or a derivation of it. Through registration it becomes a legitimate part of the Domain Name System (DNS).

11. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 11 Domain Name System Every computer linked to the Internet has an exclusive address, called its Internet Protocol (IP) address. The DNS makes using the Internet easier by allowing a recognizable string of letters (the domain name) to be used instead of the numeric IP address. So instead of keying a long number, you can key the URL (Uniform Resource Locator), for example http://domainname.com.

12. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 12 ICANN Registration of domain names is controlled by a private-public partnership called the Internet Corporation for Assigned Names and Numbers (ICANN). Numerous companies have been accredited by ICANN to act as registrars. Domain names can be registered through the many different registrar companies.

13. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 13 Components of an E-Business Site Web site design Content Web host Security and/or firewalls Search site submission On-site search engine Database software

14. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 14 Additional Features Needed for Online Payment Product catalog Shopping cart Merchant account provider Alternative payment options Order fulfillment Customer service E-mail notification Customer FAQs

15. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 15 E-Entrepreneurship and the Law Fraud and deception are unlawful no matter what the medium. The Federal Trade Commission has enforced and will continue enforcing its consumer protection laws.

16. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 16 Advertising Online consumers are protected by many of the general principles of advertising law that also apply to Internet ads. The same consumer protection laws that apply to commercial activities in other media apply online.

17. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 17 Spam Spam is defined as unsolicited “junk” e- mail sent to large numbers of people to promote products or services.

18. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 18 CAN-SPAM Act of 2003 The Controlling the Assault of Non-Solicited Pornography and Marketing Act (CAN-SPAM) Establishes requirements for those who send commercial e-mail Spells out penalties for spammers and companies whose products are advertised in spam if they violate the law Gives consumers the right to ask e-mailers to stop spamming them

19. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 19 Main Provisions of CAN-SPAM Act of 2003 Bans false or misleading header information Prohibits deceptive subject lines Requires that commercial e-mail be identified as an advertisement and include the sender’s valid physical postal address Requires that the e-mail give recipients an opt-out method

20. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 20 E-Consumer Complaints The FTC has an online general complaint form that can be used by consumers to register complaints relating to online transactions in the U.S. Another FTC form may be used for e- business complaints involving a foreign company.

21. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 21 Global E-Entrepreneurship Agreement The U.S. and 29 other countries are members of the Organization for Economic Cooperation and Development (OECD).

22. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 22 Global E-Entrepreneurship Agreement Guidelines Fair business, advertising, and marketing practices Enough information to allow consumers to make informed choices, including disclosures about online businesses, their goods and services, and the terms and conditions of sale Clear processes for confirming transactions Secure payment mechanisms

23. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 23 Global E-Entrepreneurship Agreement Guidelines (continued) Timely and affordable dispute resolution and redress processes Privacy protection Consumer and business education International government cooperation

24. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 24 Application of OECD Guidelines Follow fair business, advertising, and marketing practices. Provide accurate, clear, and easily accessible information about the company and the goods or services it offers. Disclose full information about the terms, conditions, and costs of the transaction. Ensure that consumers know they are making a commitment to buy before closing the deal. Provide an easy-to-use and secure method for online payments.

25. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 25 Application of OECD Guidelines Protect consumer privacy during electronic transactions. Have policies and procedures to address consumer problems quickly, fairly, and without excessive cost or inconvenience to the consumer. Adopt fair, effective, and easy-to-understand self- regulatory policies and procedures. Help educate consumers about electronic commerce, thereby contributing to a consumer-friendly electronic marketplace. (continued)

26. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 26 Better Business Bureau/ BBB Online Code of Online Business Practices Truthful and accurate communications Disclosure Information practices and security Customer satisfaction Protecting children

27. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 27 Web Site Checklist

28. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 28 Myths of E-Entrepreneurship E-entrepreneurship is a no-brainer. E-entrepreneurship is cheap. The best price is always online. E-commerce will kill traditional retail. E-entrepreneurships make an obscene amount of money. E-entrepreneurship is not safe.

29. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 29 Myths of E-Entrepreneurship E-entrepreneurship success depends on the right technology. Getting products to consumers is an e-entrepreneur’s biggest cost. Most Web consumers are “young.” If a product or service can be sold, it can be sold on the Web. Everyone else is selling online. (continued)

30. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 30 15 Most Common E-Entrepreneurship Mistakes 1.Trying to sell the wrong product online 2.Misjudging the web site’s potential 3.Forgetting that a first impression can only be made once 4.Making the site too complicated 5.Using a complicated navigation system 6.Forgetting to list your phone number 7.Supporting only one browser 8.Featuring out-of-date content

31. SUCCESSFUL BUSINESS PLANNING FOR ENTREPRENEURS © South-Western Thomson Chapter 12Slide 31 15 Most Common E-Entrepreneurship Mistakes (continued) 9.Requiring excessive download times 10.Ignoring customer service 11.Not validating the functionality of your site 12.Not merging your web site with your conventional business 13.Not promoting the site 14.Using spam promotion 15.Failing to deliver products