Internet entrepreneur

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The term Internet entrepreneur is derived from the French loan word entrepreneur, and is someone who engages in Internet entrepreneurship. The term entrepreneur is especially associated with innovation and risk-taking.

One could view the Internet as an attractive area for business because the cost of setting up a business can be relatively low and the potential to attract customers can be relatively high.

But this all depends, of course, on the right business idea that is interesting enough for potential customers and can lead to customer loyalty. An Internet business can start with a single, rented server located at the Internet service provider.

The Wikipedia articles which are linked by the course should be read in order to understand the course. Further literature is recommened for this course but it is left to the reader which references he considers sufficiently important.

Qualification and education[edit]

As further literature for this course one could recommend, for instance, the wikibooks Business Strategy, Transportation Economics and E-Commerce and E-Business; the course web design may also be interesting. For the operation of computers under Unix or Linux the Linux Guide and the LPI Linux Certification are relevant. If custom software development is intended one should look at Computer Programming, otherwise programmers can easily be found as feelancers or as employees through personnel service providers and job search engines.

For the education of the founders it is recommended, but not strictly required, to consider for instance some of the following subjects; with a part time job or other employment it can be possible to attend for instance online courses at the Open University or other distance learning institutes.

See also[edit]

Planning[edit]

Business Idea[edit]

There should be still many good business ideas for the Internet left but there is also often room for competitors where other companies are already successful. Many business ideas are based on the idea to offer services that are asked for and to earn money only from the advertisements that are shown to visitors or which they select. An alternative are Internet shops that deliver goods and, of course, service providers who require payment for their services. The payment doesn't necessarily have to come from a customer but may also be a payment from a partner company which purchases the service of the first company for its own customers. Kollmann distinguishes three types of electronic business processes: E-Shop, E-Procurement und E-Marketplace.[L 1] Providers of educational offers on the Internet may also offer nonprofit services for the public good.

Support[edit]

Depending on the complexity of your plan support during the planning phase can be necessary. Support can be got from professional advisors[1] [2] or through working in a team. The Internet also offers many sources of useful information.

There are also start-up initiatives and startup websites, such as Starter Center NRW,[6] NUK New Entrepreneurship Rheinland e.V.,[7] Entrepreneurs Pact of Bavaria,[8] Berlin Startup,[9] German startups,[10] START-Fair and the incubator of the KfW Mittelstandsbank Bank.[11] In some cities there is also a department of business development, otherwise there is always a competent chamber of industry and commerce, which gives advice to start-ups as well. Foreign entrepreneurs in Germany can also get support from the Regional Support Centre for foreign Entrepreneurs and Businessmen (RFZ).[12]

Business Plan[edit]

A business plan describes the previous planning of a company for potential business partners, lenders and venture capitalists. The business plan describes the planning for finance, personnel, organization and strategy. For business plans, there are quite precise instructions and templates for the expected content. A business plan should meet those expectations, at least insofar as the potential entrepreneur has that claim to professionalism. A smaller company with less demand for planning can, of course, also put too much effort into the business plan which nobody wants to read anymore. The business plan of a company is confidential and should only be made available to persons who are involved in the planning phase of the company.

A guide to the outline of a business plan can be found in the Wikipedia article Content of a business plan.

See also: Sustainable Business (Wikibooks), Writing a Business Plan (Wikibooks), Getting Started as an Entrepreneur: Business Plans (Wikibooks)

Financing[edit]

If the business plan is finished one can talk to banks about financing. Like in medicine one might want to hear different opinions from several experts. A sensible business plan should be important enough to hear several opinions, at least if the first attempt didn't lead to the desired results or there are other doubts about the advice that was given.

See also: Corporate finance, Liability, Cash flow statement, Capital budgeting, Return on equity

Venture Capital Financing[edit]

Venture capital is capital that is provided by venture capitalists.[13][14][15] The goal of the venture capitalist can be, for instance, to receive a very high rate of return during the startup phase of a new enterprise but at an unusual risk and to withdraw from the company after the company has reached a sufficient value, possibly by selling shares. Thus the venture capitalist has the chance to make very good profit and the entrepreneur can secure his financing. Venture capital is therefore primarily available for companies with very good potential for growth during the first years.

Exercise: What is the role of private equity and venture capital?

See also: Venture capital financing (Wikipedia)

Legal form[edit]

The legal form for a small company in Germany can, for instance, be the Unternehmergesellschaft or the limited liability company (GmbH in Germany). Since 2004/2006, there is also the possibility to use a European legal form, such as the European Cooperative Society.

Some U.S. states allow foreigners to found companies in the United States from abroad. Companies like The Company Corporation or MyCorporation.com allow to set up a company in the U.S. conveniently.

Like the German Unternehmergesellschaft the English and American limited liability companies can be founded with little capital, while the German limited liability company requires a sufficient amount of available capital (25.000 euro). In case of liability a limited liability company may be subject to either law but the concept of piercing the corporate veil due to misbehaviour of the company management is known in different legislations. The English law, for instance, allows the closure of the company as a result and even the transfer of the assets to the British Crown is provided for in English law.[16]

A reason for choosing an American or European company as the legal form could be the more well-known legislations of Europe and the United States. Tourists, for instance, may be reluctant to enter their credit card numbers on a web site that operates under a jurisdiction mostly unknown to them. Tax avoidance is not necessarily the result: While a daughter company can for instance operate in Florida (with low taxation for foreign companies) the parent company can still reside and pay tax like a responsible citizen in its home country. A disadvantage of the jurisdiction in the state of Florida is that Florida applies the death penalty; according to the Guideline for ethically sustainable investments in the Evangelical Church in Germany one would consequently have to boycott Florida.

See also: U.S. Corporate Law (Wikibooks), Companies law (Wikipedia), European Company Statute (Wikipedia), Tax avoidance and Africa (ethicalconsumer.org)

Corporate Social Responsibility[edit]

Corporate social responsibility refers to the social, environmental and economic policies and objectives a company is committing to voluntarily in order to overexceed the legally required minimum standards.

Companies which sign the United Nations Global Compact, for instance, should:

  1. support and respect the protection of internationally proclaimed human rights;
  2. make sure that they are not complicit in human rights abuses;
  3. uphold the freedom of association and the effective recognition of the right to collective bargaining;
  4. uphold the elimination of all forms of forced and compulsory labour;
  5. uphold the effective abolition of child labour;
  6. uphold the elimination of discrimination in employment and occupation;
  7. support a precautionary approach to environmental challenges;
  8. undertake initiatives to promote environmental responsibility;
  9. encourage the development and diffusion of environmentally friendly technologies;
  10. work against corruption in all its forms, including extortion and bribery.


See also:

Exercise: Describe the aspects of corporate social responsibility.

Entrepreneurship and ethics[edit]

Entrepreneurship and especially entrepreneurship through the internet could be seen as a course of action that is in conflict with the categorical imperative:

"Act only according to that maxim whereby you can, at the same time, will that it should become a universal law!"

The categorical imperative is, however, not a law of nature but a moral obligation. Should one have the need to substantiate corporate social responsibility then one could, for instance, derive it from the view that as an entrepreneur one already has ignored the categorical imperative in a not exactly irrelevant area and that this may already result in a moral obligation.

The second formulation (or Formula of the End in Itself) of the categorical imperative by Immanuel Kant demands:

"Act so that you treat humanity, whether in your own person or in that of another, always as an end and never as a means only."

While it may be difficult for private individuals in day-to-day life to turn this quote into an universal principle one could say that for entrepreneurs and companies this should be possible to accomplish, if one was willing to make the effort. One could derive the demand from this observation that private individuals as consumers had the obligation to make that demand to all businesses.

Exercises:
  • What efforts would be necessary to comply with the second demand?
  • Are there other reasons for corporate social responsibility than those given above?

See also: Functional social behavior (Parent Education Course Writer's Guide, Wikibooks)

National laws[edit]

See: List of short titles (used for legislation in the United Kingdom and other countries)

See also: Category:Computer law, Category:Telecommunications law

Privacy Law[edit]

See: Privacy law

Exercise: Describe the relevant privacy regulations.

Consumer Protection[edit]

Consumer Protection (Distance Selling) Regulations 2000[edit]

See: Consumer Protection (Distance Selling) Regulations 2000

Consumer protection laws[edit]

See: Consumer protection laws

Internet Law[edit]

See: Legal aspects of computing#Internet Law

Exercise: Describe the areas of Internet law.

E-mail spam legislation by country[edit]

See: E-mail spam legislation by country

European and International Regulations[edit]

Directive 2000/31/EC (Electronic Commerce Directive)[edit]

The directive 2000/31/EC states that "Member States and the Commission are to encourage the drawing-up of codes of conduct; this is not to impair the voluntary nature of such codes and the possibility for interested parties of deciding freely whether to adhere to such codes." [17]

See: Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market

Exercise: Describe the purpose and objectives of the Directive 2000/31/EC on electronic commerce.

Directive 95/46/EC (Data Protection Directive)[edit]

See: Directive 95/46/EC on the protection of individuals with regard to the processing of personal data and on the free movement of such data

Directive 2002/58/EC (Directive on Privacy and Electronic Communications)[edit]

See: Directive 2002/58/EC of the European Parliament and of the Council of 12 July 2002 concerning the processing of personal data and the protection of privacy in the electronic communications sector

Directive 2003/98/EC (Directive on the re-use of public sector information, PSI Directive)[edit]

See: Directive 2003/98/EC of the European Parliament and of the Council of 17 November 2003 on the re-use of public sector information

Directive 2001/29/EC (Copyright Directive)[edit]

See: Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society

Directive 2003/88/EC (Working Time Directive)[edit]

See: Directive 2003/88/EC of the European Parliament and of the Council of 4 November 2003 concerning certain aspects of the organisation of working time

Directive 97/81/EC (Part-time Work Directive)[edit]

See: Directive 97/81/EC of 15 December 1997 concerning the Framework Agreement on part-time work concluded by UNICE, CEEP and the ETUC

Directive 2006/54/EC (Equal Treatment Directive)[edit]

See: Directive 2006/54/EC of the European Parliament and of the Council of 5 July 2006 on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation

United Nations Convention on Contracts for the International Sale of Goods[edit]

See: United Nations Convention on Contracts for the International Sale of Goods

Exercise: Describe the importance and applicability of the CISG.

See also: List of European Union directives, Category:Private law, Category:International law

Certifications and evaluations[edit]

Cquote1.svg  I am not bothered by the fact that I am unknown. I am bothered when I do not know others.  Cquote2.svg

Wikiquote, Confucius

Certification should be regarded as an important quality characteristic. A good certification could even be seen as a unique selling proposition Certifications and rating systems for internet companies include:

See also: Certification marks

Industry and Commerce[edit]

Membership in a chamber of commerce is required by law for enterprises in Germany (but not necessarily for craft businesses, farms and freelancers).[22] The chambers of commerce in Germany are compulsory and constitute a system of regional self-administration of their members under the inspectorate of the state ministries of economy; they are democratically organized and conduct their own elections. Chambers of commerce may be interesting for founders because they may also give advice to founders and provide contacts to the local economy.

Foreign chambers of commerce, such as the Turkish-German Chamber of Industry and Commerce (TD-IHK), exist to promote integration and international trade. Support of foreign entrepreneurs is also taken care of by the Regional Support Centre for foreign Entrepreneurs and Businessmen (RFZ).[12]

Exercises:

What are the duties and functions of chambers of commerce and industry

Advertising[edit]

Internet marketing is the generic term for the various advertising methods on the internet. Marketing measures are often conducted by advertising agencies, affiliate system operators or web design agencies on behalf of the advertising companies. Advertising for particularly interesting offers can also make use of word-of-mouth marketing; companies make use of this when they ask customers to send email to friends and acquaintances through their web site or to add the web site to social bookmark networks.

Exercise: What types of online marketing do exist and which advertising strategies are available?

Affiliate Marketing (Affiliate Programs)[edit]

Affiliate marketing usually takes place through affiliate system operators. These providers connect the advertising companies with operators of web sites that offer advertising space. The partner programs of the advertising companies may have different conditions for participation of promotional web sites and may also have different commissioning models. In some cases the advertising companies themselves approve and verify the content of participating web sites.

Lists of affiliate system operators can be found in the Open Directory Project or in the Yahoo Directory.

Exercise: What do pay per lead, pay per click and pay per sale mean?

See also: Cost per action

Bankruptcy[edit]

Of course one should try to retain a sufficient amount of personal reserves but if a personal bankruptcy is the consequence of bankruptcy it is important to note that different jurisdictions have different laws concerning personal bankruptcy but may respect the result of a personal bankruptcy filed in a different jurisdiction. For instance a personal bankruptcy filed in Germany may require up to seven years until a debt relief order becomes effective while it may become effective within 1-3 years in England or France and is considered valid in Germany. The feasibility of personal bankruptcy within the European Union is governed by Council regulation (EC) No 1346/2000.[23] A verdict of the Federal Court of Justice of Germany from 18 September 2001 confirms that a debt relief order granted in a foreign country is considered valid in Germany.[24] According to the German Federal Bureau of Statistics the number of business insolvencies has gone up in the first half year of 2010 by 2% to 16.468 cases of insolvencies in Germany.[25]

Icon-Rechtshinweis-blau2-Asio.svg  Please notice the legal disclaimer.

See also: Chapter 7: Bankruptcy Liquidation (Khan Academy), Chapter 11: Bankruptcy Restructuring (Khan Academy)

References[edit]

  1. http://www.gruendungsstarter.de/ (German)
  2. http://www.kfw-mittelstandsbank.de/DE_Home/Gruenden/Gruendercoaching_Deutschland/index.jsp (German)
  3. http://www.existenzgruender.de/ (German)
  4. http://www.arbeitsagentur.de/nn_26400/Navigation/zentral/Buerger/Hilfen/Existenzgruendung/Existenzgruendung-Nav.html (German)
  5. http://www.deutscher-gruenderpreis.de/ (German)
  6. http://www.startercenter.nrw.de/ (German)
  7. http://www.neuesunternehmertum.de/ (German)
  8. http://www.startup-in-bayern.de/ (German)
  9. http://www.berlinstartup.de/ (German)
  10. http://www.deutsche-startups.de/ (German)
  11. http://www.kfw.de/kfw/en/Domestic_Promotion/Our_offers/Business_start-ups.jsp
  12. 12.0 12.1 http://www.foerderzentrum.org/, See also: GründerZeiten Nr. 10: Gründungen durch Migranten (German)
  13. http://www.entrepreneur.com/vc100/stage/early.html
  14. http://www.evca.eu/knowledgecenter/default.aspx?id=2704
  15. http://www.bvkap.de/privateequity.php/cat/84/title/Members_Directory
  16. Detlef Kutta, Karsten Mühlhaus. Erfolgreich selbstständig 2008/2009. BusinessVillage GmbH, Göttingen 2008, ISBN 978-3-938358-80-1, URL
  17. Directive 2000/31/EC of the European Parliament and Council on Electronic Commerce
  18. http://www.tuvdotcom.com/
  19. Independent Centre for Privacy Protection Schleswig-Holstein
  20. EHI Retail Institute
  21. http://www.ethicalconsumer.org/shoppingethically/ourethicalratings.aspx/
  22. http://www.gesetze-im-internet.de/ihkg/__2.html (German)
  23. Council regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings
  24. LexisNexis: BGH, 18.9.2001, IX ZB 51/00
  25. Newsticker. In: VentureCapital Magazin. 24. September 2010, ISSN 1611-1710, S. 52. (German)

Literature[edit]

  1. Kollmann, Tobias (2008) (in German). E-Entrepreneurship: Grundlagen der Unternehmensgründung in der Net Economy (3 ed.). Wiesbaden: Gabler Verlag. ISBN 978-3-8349-0978-7. http://books.google.de/books?isbn=978-3-8349-0978-7. 

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