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Could you be a dotcom success?

Linda Whitney, This is Money
5 April 2000

Suddenly, dotcom millionaires seem to be everywhere. So how do you do it? Setting up an internet-based business from scratch is not the same as setting up a more mainstream firm, or even putting an existing company on a website.

On top of things such as whether your goods or service will sell, and how much to charge, you must consider the cost of the technology involved and face some hot competition on the net.

Edward Mills, 35, who runs his own financial services company in Aylesbury, Bucks, is a long-time wine lover. He wanted to go into the wine trade and in 1998 set up Itswine.com with his wife Jeanette, 35.

The company was initially run in their spare time from home, but now it is their full-time job and there are 26 staff.

Edward says: 'If you want to compete with the biggest in your business you must recruit top staff from competitors, so salaries are one of our highest costs. You're also dependent on technology, so IT costs are high. But you may save on other things like premises.

'Internet business is so new that costs for things like IT services are not yet standardised which means you can get very good deals by negotiating.' You also have to be prepared to give core staff and investors shares in the company in order to get them on board, he says, but this is a great motivator.

Don't expect to find raising money easy. 'The banks were unwilling to take the risk and few venture capitalists were interested in internet-based investments, so we have raised money mainly through personal contacts. Having a good business plan is a huge help in raising money,' Edward adds.

Before you jump into the dot.com fray, Simon Davies, a principal at Interregnum, an internet business consultancy and investor, has some advice:

• Get a website up and running to find out if your business idea will work. Give it at least a few months to prove itself.

•If it does, think big from the start. Assume your company will be worth millions in a few years and draw up a business plan to reflect this so that you can attract top-calibre staff and big money from the beginning.

•Get help from a consultant specialising in dotcom companies. These are difficult to find, but try personal recommendation from other dotcoms, IT experts, accountants or law firms.

•Get a high-calibre IT expert in your team as soon as possible to make sure you keep up with developments.

•Employ executives from the industry you are in, to bring national experience and contacts. You may have to headhunt them from big-name companies, so expect your wages bill to be high. They will also expect shares in the company for taking the risk.