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San Diego’s Internet entrepreneurs find new income streams

19 July 2009 No Comment

By Helen Kaiao Chang

See original story on SDNN

Karen Santhanam has a full-time job at the UC San Diego as an administrative analyst. But she recently started an online business selling safe baby products.

Although the site at www.baby-safety-resources.com has yet to generate revenue, she is aiming for the business to bring in $2,000 a month by year’s end selling products and ads.

She is largely motivated by California’s budget cuts.

“Between furloughs, pay cuts and layoffs, anything can happen the way the economy is,” she said. The economic uncertainty is “definitely a factor in wanting to grow my business.”

In a tough economy, more people are becoming Internet entrepreneurs as a way to generate income. For some it’s a way to create a new job. For others, it’s a way to grow an existing business hit by recession. For others, it’s a fall-back plan, in case the regular job gets axed.

“Because the Internet is growing, traffic is growing, there’s a bigger pool of people who are coming onto the Internet to make some money there,” said Don Coggan, director of Sitesell Education, an Internet entrepreneur training company, which held a three-day conference in San Diego last month.

Internet entrepreneurs are seeking options in the current economy. He said many already have jobs but want “something they can’t be fired from, something they can’t be downsized by, something that gives them independence.”

“This isn’t something new, but now it’s something that’s available to do on the Internet,” he said.

Internet businesses also fit San Diego’s lifestyle, said Kevin Koskella, organizer of the San Diego Internet Marketing Meetup Group, which has about 300 members.

“San Diego is a place where people move to for lifestyle,” said Koskella. “There’s not a lot of huge companies and jobs, so they have to find a way to make it work here. It becomes working harder or getting a part-time job. You can work from anywhere with an Internet business.”

Full-time income

For some entrepreneurs, the Internet provides a full-time income. Koskella, who went full-time with his Internet business at Triswimcoach.com in 2005, said his income has grown by at least 20 percent each year to its nearly six-figure rate this year.

Among the members of the meetup group he leads, some 15 percent to 20 percent – or 45 to 60 members — are full-time Internet entrepreneurs, said Koskella.
Just as San Diego is home to many motivational business leaders, many leading Internet entrepreneur teachers also live here, he said. “San Diego is an Internet marketing hotbed,” said Koskella.

Supplement traditional business

Entrepreneurs with traditional brick and mortar businesses are also using the Internet to create additional revenue streams. Geoff Kipps-Bolton, the owner of San Diego Bees, said his bee removal service business has softened due to the economy. It is also constrained by his geographical location in San Diego, where the insect flourishes.

To grow the business, Kipps-Bolton started a new online site, www.bees-on-the-net.com, which appeals to an international market. Launched in April this year, the site has gotten hits from all U.S. states and 120 countries he said.

“I think it’s very cool to think that someone from Australia or Russia is sitting at their computer, looking at my Web site.”

Revenue is currently about $100 a month, but Kipps-Bolton expects to grow it to $1,000 a month by year’s end, selling honey and advertising, he said. He also plans to use this knowledge to build other Web sites that also produce passive income, he said.

Eventually, Kipps-Bolton aims to completely replace the brick-and-mortar business with online businesses, he said.

Other Internet entrepreneurs go online as a way to supplement income from jobs. Gavin Stone joined two partners who run a regular house-cleaning company to form an online business. The site at www.bidmyAtoZ.com allows users to solicit bids and schedule cleaning appointments online.

While the online business has yet to make enough profit to replace their regular jobs, the site serves as another revenue stream, said Stone.

Low entry barriers

Entrepreneurs like that the barriers to entry for Internet businesses are low. Stone, of the house cleaning bidding site, noted that “we could get in with very minimal startup costs.”

Open sourcing, free tools and low-cost hosting mean low overhead costs, said Stone. Other costs, such as a laptop and a home office, are also affordable for most people, said Koskella.

In contrast, other business models, such as franchising, can require anywhere from $50,000 to $200,000 in start-up costs. But Internet business can start with as little as about $100 for annual hosting and site fees. Sitesell Education charges $300 annual subscription. “Internet businesses are affordable compared to other types of business,” said Sitesell’s Coggan.

Flexibility

Internet entrepreneurs also like the flexibility of location. Santhanam said her mother ran a shop, but was tied to the store for long hours. On the Internet, she said, “You can work with anybody anywhere.”

Stone, who runs the cleaning business site, can work his partners despite living in different cities. Stone is based in San Diego, while two other partners live in Texas.

Santhanam also likes the flexibility in hours. With an online business, she has the freedom to spend time with her family and work on the site after the children – ages four and seven — are in bed.

Different mindset

Online businesses have their challenges. Sitesell’s Coggan said many Internet entrepreneurs who come from a job need to develop business mindsets to succeed.

“They’re not used to thinking about marketing, sales, content, administration – all the aspects of running a business,” he said.

Koskella of the Internet Meetup group said many who come from traditional business backgrounds also need to adapt their skills online. He said the new type of marketing can’t be learned through obtaining an MBA, rather it requires “an open-mindedness to what works and what doesn’t.”

Doing the legwork

Koskella said a lot of newbie Internet entrepreneurs also make the mistake of spending too much on advertising.

“A lot of people think they can get into it by putting (their Web sites) in Google AdWord ads and throwing down credit cards,” he said. “It’s more about the legwork — doing a lot of writing and creating relationships with different people.”

For Coggan, doing legwork also means planning for the business. This means focusing on the target market, providing relevant information and planning multiple income streams, before actually building the site.

Takes time to grow

Like any business, Internet businesses also take time to grow.

Stone, of the cleaning site, said he won’t be quitting his day job anytime soon. “We’re running on fumes at this point, putting in our own money and efforts,” he said. “The online business might one day be a full-time possibility, but “right now, the day job is still the most important thing.”

Koskella said he started working on his site in 2003, before going full-time in 2005. He has continued to grow his business by adding products – eBooks, DVDs and books – and content, such as articles, blogs and podcasts.

But many newbies are not willing to put in the time and energy to be successful, said Koskella.

For entrepreneurs like Santhanam, who runs the baby products’ site, the Internet is a place of opportunity.

“You don’t have to be a technical genius to be able to do this,” she said. “You just have to be a person with a lot of ideas and who’s really be willing to work at it. That’s the most important thing.”


Resources for Internet entrepreneurs

Grossmont College

UCSD Extension

San Diego Continuing Education

SCORE

San Diego Internet Marketing Meetup Group

San Diego Internet Entrepreneurs Meetup Group

Sitesell eLearning

Follow Helen on Twitter @HelenChang.

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