From the September 2000 issue of Entrepreneur

Question: I want to sell books on-line to a niche market. I know books are the No. 2 item bought online. I'm concerned, however, about suppliers and money. Can I get started with only a few thousand dollars for stock? I don't think I can get a line of credit from the suppliers. Do you think this is a feasible idea? And what business structure do you recommend?
Nancy Halsey
Via e-mail

Answer: For a small business to compete among giants like Amazon.com, we believe you must find a niche that meets three criteria: 1) people identify so strongly with your niche that they'll come searching for you; 2) you can serve customers interested in this niche better than the larger books sites; 3) the niche is large enough to provide your site with enough customers from the worldwide market.

What makes your niche sufficiently narrow? Choose a specialty within a specialty-like the Civil War or some rarified collectible. In addition, we recommend finding a niche that is based in part on an interest of yours.

Of course, you have to make your site known and then make it "sticky" by giving people a reason to return to it-offering current news about your niche or contests, for instance.

See whether suppliers will work with you on a drop-ship basis, so you can minimize or even eliminate stock. We'd hate to see you invest the thousands it takes to acquire inventory while you're testing your idea and can no doubt use that money for marketing. But you also need to provide quick delivery, so you should ask for supplier financing or at least get a good deal on drop shipping with a guarantee that they'll quickly process your orders.

The structure for a venture that can minimize your exposure to liability is a corporation or a limited liability company (LLC), which we often recommend because it's less expensive than a corporation to form and maintain. For more on LLCs, see Form Your Own Limited Liability Company (Nolo Press, www.nolo.com).

P.S. Be sure to obtain a descriptive domain name for the niche you choose.



Small-business experts Paul and Sarah Edwards' latest book is The Practical Dreamer's Handbook(Putnam Publishing Group). If you have a question regarding a start-up business issue, contact them at www.paulandsarah.com or send it in care of Entrepreneur.