Newbie's Guide to Starting an ISP - continued

5. Marketing/Sales plan & budget
Most new ISPs skip this completely, and then wonder why they run out of money so quickly and have to sell out or go bankrupt. This is really the foundation for all of your ISP decisions. Here are some hard questions that require concrete answers before you begin:

• What will make your ISP unique?
• Why should someone buy access from you?
• How are you going to acquire your first thousand customers?
• How will you automate the order process?
• How much should you pay to acquire new subscribers?
• What are you going to do to retain your clients?
• What will be your minimum standards for the level of service you wish to deliver to your subscribers?
• What is your exit strategy?

While word of mouth can be a powerful sales agent for you, make sure you start out with a marketing budget; it will cost thousands of dollars to get the word out about your service. Moreover, it's foolish to believe that you can do it all (build, manage, support, and grow your ISP, no matter how small it is). You will need sales assistance—or at the very least, order taking—in the beginning.

6. Dialup kits
This is what the customer receives to get on your service. The easier it is to use and install, the higher your chance of converting your new trial customers into long term subscribers. You don't have to design or create your dialup kit; there are many companies that can provide this. For example, both Microsoft and Netscape have custom kits you can implement.

Your entire growth and signup strategy is wrapped around how well your dialup kit gets your new users up and running on your service, so give it serious attention. Keep in mind that it can—should—serve as a marketing tool as well. For example, you may want to include a users guide for your ISP, some tips and tricks to help your new subscribers get the most out of their new service, and of course a toll free or local phone number they can call for help.

7. Technical expertise (tech labor)
I'm not sure whether it's better to be starting an ISP as a techie without much business knowledge, or a business person without the technical chops. Either way, your up-time, reputation, and revenue all ride on your company's technical competence. Skimp, and you'll have hundreds of subscribers keeping you up at night, wondering why they can't get on the Internet, and eventually wanting to cancel.

There are many different levels of techies, and they range from front-line customer service techs to your Chief Technology Officer. Your front-line tech answers incoming calls, and if s/he can't answer them, refers them up to the Sys Admin. If the Sys admin can't handle the call, s/he refers it up to the Sr. Sys Admin on duty. If the Sr. Sys Admin can't answer the question, it isn't possible.

Sys Admins don't interact as much with clients as much as they are the secret behind keeping the back office running properly. Your Chief Technology Officer is your smartest tech person in the office, who also understands the business implications of budgets, uptimes, metrics, customer service, and he or she probably has years of experience in the real world. A typical ISP under 2,000 subscribers should budget at least $150K-$300K+ for first the year's tech labor expenses.

If there's an 8th thing you should have, it would be Cash, and lots of it. If you've read my past articles, you'd know that I'm a big friend of outsourcing dialup ports, and funneling your all-too finite war chest into marketing and sales activities to get the highest ROI (Return on Investment). If you outsource your ports, you not only save on the capital startup costs, but you may not need the same level of tech labor on staff to manage your business. There are real disadvantages to outsourcing your Internet access ports, such as not having ultimate control over your network and being at the mercy of someone else when your network is down.

One other article you should read is How Big Could You Be?, which covers some more of the exploratory thoughts on where to take your ISP—thoughts you'll move on to once you've gotten your new business off the ground..

Tip: A good rule of thumb to follow is that your ISP should make you more money than you could earn by day trading ISP stocks. (Many ISP friends have reported 6 and 7 digit gains on their ISP stock market plays, vs. losses their ISP businesses.) I'm not suggesting that you play the ISP stocks instead of starting an ISP business, just pointing out that for the business to be financially sane, its goal must be to out-earn what you could make in the stock market with your finite investment capital.

If this article opened up more questions than it gave answers, or if you've got a topic you'd like to see me address in a future article, send me your thoughts and feedback.

To Your ISP's Success!
Christopher Knight, Founder & Managing Editor
The ISP-Lists

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