Is a web site smart for your business?

In my experience, a web site for a small business can serve three basic functions, depending on the needs of that business: Communication, Sales, and Community.

1. Communication

In its simplest form, a web site can act as an online version of a businesses brochure and a sort of online file cabinet. These sites, which are cheap and low-maintenance, usually have the following:

• Business name and contact information (address/phone/fax/e-mail)
• Descriptions of products and services offered, and pricing information C. Location/driving directions (if applicable)
• Links to other useful sites
• Commonly used forms or other documentation.
• Work samples and customer testimonials

A basic site like this can raise a business's profile, make it appear more "legitimate", and increase communication with customers. For a $10-$15 per month hosting fee and less than an hour per month of site maintenance, this is a pretty good investment for many businesses.

ANY web site should include these communication elements. Also, keep in mind that your company image is part of that communication. Make sure it looks professionally done, even if your 13-year-old neighbor has volunteered to do it for your for free.

2. Sales

There are two ways of handling web-based sales. The simplest is to list your products on a site like eBay, Yahoo! Auctions or Craig's List. This is cheap, fast and easy, but those sites will take a percentage of your sales price in exchange for listing with them, and you don't have as much control over how your products are displayed.

The alternative of course is to create your own point-of-sale web site. These sites will have an online catalog and the ability to

• Submit orders, pay with credit cards and arrange shipping
• Track shipping
• Handle customer service issues (questions, returns, etc.

These sites are significantly more expensive to develop and host, and require substantially more effort to maintain. Similarly, as with a traditional brick-and-mortar store, they must be aggressively advertised, and credit card companies will usually charge a significant amount for their services to be available.

When deciding if a web site storefront makes sense for your business, consider it from a customer perspective:

• Is this a product I'm willing to wait several days for, like a new DVD, or is it something I want right now (like a gallon of milk)?
• Is this a product I'm comfortable buying site-unseen (like a pair of socks), or is it one that I'll want to see and try out in person (like a guitar)?
• Is this an item whose cost of shipping is too high when compared to the item's cost itself? Spending $2.00 to ship a $20.00 CD is probably reasonable; spending $40.00 to ship a $50.00 marine battery probably isn't.
• Is this an item for which returns, exchanges and repairs can be handled efficiently though the internet?

One neat trick many internet retailers use is to offer some or all of their products through eBay, where they can reach a larger group of customers, but then to direct those customers to make future purchases through the businesses own web site, thus avoiding eBay making a "cut" off of those sales.

3. Community

Often a business can increase repeat and referral, or word-of-mouth, based sales by creating an online community of customers with a shared interest. For instance, a custom guitar maker might have a blog on his or her site where he/she can share information about new products, product reviews, stories of who is playing his guitars and where, etc. This provides a chance for customer feedback and to connect customers with each other.

Other community-building tools include video or audio podcasts, online games or contests and newsletters in e-mail format. Right now many organizations are taking this a step further by having "virtual" stores and offices (where real sales can be made and real experts are available) in the online community Second Life. Is your customer base tech-savvy enough to go for that? CBS does it with their hit show CSI; NPR Science Friday does as well.

As with web sites providing direct sales, community sites are more labor intensive to maintain and can be more costly as well, although free services like Blogger.com and Yahoo! Groups can be used to keep those costs down, at the expense of control over how the site looks and functions.

What makes sense for your business idea? No web site? A communication-only site? Direct sales through eBay or one of its competitors? Your own e-commerce site? A hybrid of eBay and e-commerce? Is there a marketing opportunity to be exploited by creating and hosting an online community?