"Do I need a business plan?" "How do I introduce drug-testing for my employees?" "Where can I get legal advice on a merger?" Small-business owners often have questions about how to run their companies. This column will attempt to provide answers from a variety of experts. Consultants are interviewed by freelance writer Karen E. Klein.
Q: What type of expenses are involved in setting up an online shopping site?
--Emory Davis, Palm Springs
A: You can actually set up your own Web server, but you would have to be very knowledgeable about the Internet and expect to pay anywhere from $25,000 to $50,000 or more for a dedicated telephone line, computer hardware and specialized programming.
An alternative would be to rent a computer space from a Web presence provider who will create your Web page and provide you with the security encryption service you need to be able to take credit card orders online. The cost depends on how many pages you want and how graphically creative you want them to be. The low-end figures would range from $7,500 to $15,000. Large companies with big, technically advanced Web sites spend $500,000 or more.
A third choice would be to sign up with an online "mall" that would create your Web page, provide security and manage your orders. Prices range from $1,000 for a one-page site to $3,000 for a five-page site. You can run the business out of your home with a computer if you don't want to rent office space. You can ship your own inventory or you can hire a distribution house to carry the inventory, process the orders and ship them for you. The distribution house takes about 20% of your sales as its fee.
To find a distribution house, go on the Net and do a search at www.yahoo.com for the industry you're interested in (say, "music distribution" if you're interested in music). You'll probably find one or more companies' Web sites. If you don't have Internet access, go to the library and look up the industry in a book called the California Service Registry.
Vice president of development,
A: If you are interested in a "grow your own" model, there are a number of companies coming out with software packages that allow you to create your own catalog, provide security encryption and hook you up with a financial institution that will approve or deny credit cards. The software costs between $2,000 and $20,000.
If you have the expertise to work with this type of software or know a computer expert who could set it up for you, you could plug into an Internet service provider that would act as your onramp into the Internet for a monthly fee of $300 and up.
I agree that a mall is the easiest way to get started and learn what works and what doesn't if you don't have much expertise with marketing online. The mall also brings in traffic that may boost your sales to begin with.
Senior technical executive, AT&T;,
and executive vice president,
Internet Developers Assn.
Q: How can I improve my communication and persuasion skills so that I can negotiate contracts favorably?
A: The majority of people who have problems with negotiating come into the negotiation without having clearly delineated what they want and what they're willing to give to get it.
Before you start negotiating a contract, you should have a clear understanding of what you want and the cost-benefit analysis worked out in your mind. If you're not getting what you want, don't agree to it.
After you know what you want, create some type of bond with the other person. Small talk can give you insights into who this person is. Once you find some common ground and you get people in an agreeing mood, then the less-favorable issues that arise won't make them as defensive.
During negotiations, strong communication skills are an absolute necessity. I find that people generally are very poor listeners. They're so busy thinking of what they're going to say next that they haven't heard the other person, nor have they clarified any possible ambiguous language. You need to listen and ask questions. Find out what the person you are negotiating with really means by what he or she says. Don't assume you understand. Ask open-ended questions and clarify, clarify, clarify as often as possible to make sure you are both on the same track.
The skill to effectively creating winning negotiations is learning how to bring people over to your way of thinking. You cannot change somebody else, and you cannot drag someone over to your side. But you can open the door for the other side to accept your point of view. This begins by allowing them the freedom to express their point of view and showing them that you respect and accept that point of view.
This does not necessarily mean that you have to agree with them. There are many ways to disagree with other people's point of view and to promote your own without antagonizing them. For instance, if someone said, "All apples are green" and you knew that all apples weren't green, you could say, "But haven't you ever seen a red apple?" The word "but" is like throwing darts at that person. However, if you said, "I've seen a lot of green apples and I've seen a lot of red apples," you would give him or her the comfort and satisfaction of knowing that you accept and recognize that person's point of view. By using "and" instead of "but," you are not diminishing the other person's viewpoint but adding to it.
There are lots of other techniques and tips for negotiating that you can learn by taking a course or reading one of the many books on this topic.
If you have a question about how to start or operate a small business, please mail it to Karen E. Klein in care of the Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia 91016 or e-mail it to firstname.lastname@example.org. Include your name and address. The column is designed to answer questions of general interest. It should not be construed as legal advice.