1. Editor's Message: On this Issue 7
2. Google Goes Bananas! Is this the Beginning of the End for Google?
3. The Different Types of Businesses: Avoiding the "E-Myth"
4. The Entrepreneurs' Creed

I am beginning to write this issue at 12:22am on December 3, 2003 and do not intend to stop until it is sent. Welcome to Issue Seven of the Entrepreneurs' Chronicle. This issue is two days tardy as I've just returned from a wonderful vacation in Florida. It's surely is nice to see your family, relax, and get a tan on December 1 all on the same trip. I hope your Thanksgiving was similarly as pleasing.

First, let me thank all those who have purchased my recently released book, Zero to One Million. We have sold over 140 copies in the first two weeks. We are currently going through the processes of obtaining endorsements, registering with the Library of Congress, sending out copies for reviews, and generating initial press. Our goal is to sell the heck out of the book (at least 5,000 copies) through the web site, a speaking tour, initial store distribution, library sales, premium sales, and corporate sales, establish a track record, and then approach a larger publisher to assist us with much greater marketing and distribution.

Much has been happening in the world of search engines in the month of November. Google, the world's most popular search engine, has done a dance like none other. It seems on November 15, 2003 it let loose an 'over optimization filter' on its rankings that has taken many top sites out of the results completely, seriously hurting the prospects of Christmas season success for small and large sites alike. Is this a ploy by Google to increase revenues before a Spring IPO or simply a misguided filter put on too tight? Section 3 of this month's issue will explain what's going on, teach you how to tell if your site is affected, and advise on suggested changes to make.

Next in this month's issue you'll find an excerpt from Zero to One Million. An excerpt from Chapter Six, 'The Different Types of Businesses: Avoiding the E-Myth' has been provided.

Finally, in section four I will, for the first time online, be publishing The Entrepreneurs' Creed. This is framed in my bedroom and read before I go to sleep every night. While you may find it a bit corny, it seems to enable me to wake up every morning motivated and ready to execute and give my best all day. See if it can do the same for you!

If you have any comments, suggestions, or would like to contribute content to be published in the newsletter or online, I encourage you to contact me at ryan@zeromillion.com. Please do feel free to forward this newsletter on to your colleagues and associates. On behalf of the Zeromillion.com team I thank you for being a subscriber.

Yours entrepreneurially,

Ryan P. M. Allis, founder
http://www.zeromillion.com
Business & Entrepreneurship Resource

Zero to One Million Guide for aspiring entrepreneurs on how to build a company to one million dollars in sales. Price: $14.95 | More Info

Obtaining a #1 Ranking in the Search Engines The book the professionals use to consistently obtain top search engine rankings Price: $57.00 | More Info

IntelliContact Pro by Broadwick Corporation is web based software that enables you to send out permission-based HTML and text newsletters to your prospects, customers, and subscribers and track campaign metrics such as opens and clickthroughs. Manage and contact all of your prospects, customers, affiliates, employees, and suppliers. With plans starting at $10/month and a free fully functional fifteen day demo, IntelliContact Pro is a top choice for list management software. We encourage you to sign up for a free 15 day trial or learn how IntelliContact can benefit your organization. If you have any questions about the software feel free to contact CEO Ryan Allis at ryan@broadwick.com or Vice President of Marketing Josh Carlton at (919) 968-3996.

On November 15, 2003, the SERPs (Search Engine Result Pages) in Google were dramatically altered. Although Google has been known to go through a reshuffling (appropriately named a Google Dance) every 2 months or so, this 'Dance' seems to be more like a drunken Mexican salsa that its usual conservative fox-trot.

Most likely, you will already know if your web site has been affected. You may have seen a significant drop-off in traffic around Nov. 15. Three of my sites have been hit. I've lost a #1 ranking for "email marketing software" and a #1 ranking for "colon cleansing," among many others. While one could understand dropping down a few positions, since November 15, the sites that previously held these rankings are nowhere to be found in the top 10,000 rankings (you can use a free tool at digitalpoint.com to track your rankings). Such radical repositionings have left many mom-and-pop and small businesses devastated and out of luck for the holiday season. With Google controlling approximately 85% of Internet searches, many businesses are finding a need to lay off workers or rapidly cancel inventory orders. This situation deserves a closer look.

What the Early Research is Showing

From what early research shows, it seems that Google has put into place what has been quickly termed in the industry as an 'Over Optimization Penalty' (OOP) that takes into account the incoming link text and the on-site keyword frequency. If too many sites that link to your site use link text containing a word that is repeated more than a certain number of times on your home page, that page will be assessed the penalty and either demoted to oblivion or removed entirely from the rankings. In a sense Google is penalizing sites for being optimized for the search engines--without any forewarning of a change in policy.

Here is what else we know:

• The OOP is keyword specific, not site specific. It has selected only certain keywords to apply the OOP for. As an example, my informational site for Broadwick, www.email-marketing-software-resource.com was #3 for "email marketing" and is no longer in the top 10,000 results. However, it remains #1 for "email marketing resource"
• Certain highly competitive keywords have lost many of the listings. For example, 92 of the former-top 100 sites for "Celebrex" are gone. 83 are gone for "Xanax." 65 for "glucosamine." (source: scroogle.org).

How to Know if Your Site Has Been Penalized

There are a few ways to know if your site has been penalized. The first, mentioned earlier, is if you noticed a significant drop in traffic around the 15th of November you've likely been hit. Here are ways to be sure:

1. Go to google.com. Type in any search term you recall being well-ranked for. See your site logs to see which terms you received search engine traffic from. If your site is nowhere to be found it's likely been penalized.
2. Type in the search term you suspect being penalized for, followed by "-dkjsahfdsaf" (or any other similar gibberish, without the quotes). This will remove the OOP and you should see what your results should be.
3. Or, simply go to www.scroogle.org to have this automated for you. Just type in the search term and see quickly what the search engine results would be if the OOP was not in effect. This site, put up less than a week ago, has quickly gained in popularity, becoming one of the 5000 most visited web sites on the Internet in a matter of days.

The Basics of SEO Redefined. Should One De-Optimize?

Search engine optimization consultants such as myself have known for years that the basics of SEO are:

• put your target keyword or keyphrase in your title, meta-tags, and alt-tags
• put your target keyword or keyphrase in an H1 tag near the top of your page
• repeat your keyword or keyphrase 5-10 times throughout the page
• create quality content on your site and update it regularly
• use a site map (linked to from every page) that links to all of your pages
• build lots of relevant links to your site
• ensure that your target keyword or keyphrase is in the link text of your incoming links

Now, however, the best practices for keyword frequency and link text will likely trigger the Google OOP. There is surely no denying that there are many low quality sites have used link farms and spammed blog comments in order to increase their PageRank (Google's measure of site quality) and link popularity. However, a differentiation must be made from these sites and quality sites with dozens or hundreds of pages of informational well-written content that have taken the time to properly build links.

So if you have been affected, what can you do? Should one de-optimize their site, or wait it out? Should one create one site for Google and one for the 'normal engines?' Is this a case of a filter been turned on too tight that Google will fix in a matter of days or something much more?

These are all serious questions that no one seems to have answers to. At this point we recommend making the following changes to your site if, and only if, your rankings seem to have been affected:

1. Contact a few of your link partners via email. Ask them to change the link text so that the keyword you have been penalized for is not in the link text or the keyphrase is in a different order than the order you are penalized for.
2. Open up the page that has been penalized (usually your home page) and reduce the number of times that you have the keyword on your site. Keep the number under 5 times for every 100 words you have on your page.
3. If you are targeting a keyphrase (a multiple-word keyword) reduce the number of times that your page has the target keyphrase in the exact order you are targeting. Mix up the order. For example, if you are targeting "Florida web designer" change this text on your site to "web site designer in florida" and "florida-based web site design services."

It is important to note that these 'de-optimization' steps should only be taken if you know that you have been affected by the Google OOP.

Why did Google do this? There are two possible answers. First, it is possible that Google has simply made an honest (yet very poor) attempt at removing many of the low-quality web sites in their results that had little quality content and received their positions from link farms and spamdexing. The evidence and the search engine results point to another potential answer.

A second theory, which has gained credence in the past days within the industry, is that in preparation for its Initial Public Offering (possibly this Spring), Google has developed a way to increase its revenue. How? By removing many of the sites that are optimized for the search engines on major commerical search terms, thereby increasing the use of its AdWords paid search results (cost-per-click) system. Is this the case? Maybe, maybe not.

Perhaps both of these reasons came into play. Perhaps Google execs thought they could

1) improve the quality of their rankings,
2) remove many of the 'spammy' low-quality sites
3) because of #2, increase AdWords revenues and
4) because of better results and more revenue have a better chance at a successful IPO.

Sadly, for Google, this plan had a detrimental flaw.

What Google Should Do

While there are positives that have come from this OOP filter, the filter needs to be adjusted. Here is what Google should do:

1. Post a communiqué on its web site explaining in as much detail as they are able what they have done and what they are doing to fix it;
2. Reduce the weight of OOP;
3. If the OOP is indeed a static penalty that can only be removed by a human, change it to a dynamic penalty that is analyzed and assessed with each major update; and
4. Establish an appeal process through which site owners which feel they are following all rules and have quality content can have a human (or enlightened spider) review their site and remove the OOP if appropriate.

When this recent update broke on November 15, webmasters clamored in the thousands to the industry forums such as webmasterworld.com. The mis-update was quickly titled "Florida Update 2003" and the initial common wisdom was that Google had made a serious mistake that would be fixed within 3-4 days and everyone should just stay put and wait for Google to 'fix itself.' While the rankings are still dancing, this fix has yet to come. High quality sites with lots of good content that have done everything right are being severely penalized.

If Google does not act quickly, it will soon lose market share and its reputation as the provider of the best search results. With Yahoo's recent acquisition of Inktomi, Alltheweb/FAST, and Altavista, it most likely will soon renege on its deal to serve Google results and may, in the process, create the future "best search engine on the 'net." Google, for now, has gone bananas in its recent meringue, and it may soon be spoiled rotten.

This is an authorized excerpt from Zero to One Million by Ryan P. M. Allis

There are many different types of businesses that you can start. All, however, will fall under the four basic categories of manufacturing, wholesale, retail, or service. A manufacturing business actually makes the product, wholesale businesses sell products to stores, and retail businesses sell products to end buyers—which may be businesses or consumers. Service providers, on the other hand, sell their time and expertise instead of a tangible product.

My experience in business is in selling products at wholesale and retail and providing a service. Though my experience, I have found a very big difference in running product-centered and service-centered businesses. My current product-centered business in called Broadwick Corporation. We sell the web-based email marketing software IntelliContact Pro. My current service-centered business is called Virante, Inc. We do web marketing consulting for high potential companies and take payment in cash, equity, and commissions on generated sales.

Whether you start a service-based or product-based business will have a large effect on the steps you’ll have to take to build it to one million dollars in sales. I find that product businesses, in general, are more entrepreneurial and easier to grow exponentially, whereas service based businesses are nearly always limited. While one can be making money while they sleep selling a product, in most service-based businesses, you can only make money when you’re working. Your income is limited by the number of hours you can work. In order to overcome this, as a service-based business owner, you’ll have to put the proper systems and processes in place and hire employees that can do the work for you so all you’ll have to do is manage the company and set its vision. You’ll have to find high margin services in areas where you can truly add value for your customer. While services such as programming, web design, marketing consulting, and search engine optimization can be lucrative, it is rare that a one-person company makes more than $200,000 per year. To reach that $1 million dollar level you’ll have to stop working in your company and start working on your company—the classic advice of Michael Gerber in his book The E-myth.

Another difference I often find between product and service-based companies is that there is often only one founder of service based businesses—whereas there are more often than not three or four founders of product-based companies. This holds true with my companies. I maintain 100% of the equity of Virante, Inc., but share the equity in Broadwick with 6 others. I consider Broadwick to be my “entrepreneurial” company that we will hopefully sell for tens of millions in a few years, while Virante will always be my personal service firm, holding company, and tax advantaged business. This can be further seen by the fact that Broadwick is a C corporation—what all large corporations are—whereas Virante is an S corporation that will allow the profits of the company to pass through to me without being taxed twice. Service companies tend to by lifestyle companies whereas companies selling a product tend to be high-potential companies.

By selling a product, one can automate much more of the business—especially if that product is delivered online or you can set up an autobilling system. One can easily automate an affiliate program, shopping cart, online merchant account—and then hire someone at $10 per hour to do the shipping and answer the phone. Further, there is much more ability to scale up. While I was working with the nutraceuticals company, they handled over 400 orders per day with one customer service rep and one fulfillment person. In a service firm making $2.5 million per year, you’d likely need at least 20 people.

If you do decide to start a service based company, see if you can also develop a product based on your expertise in your niche—perhaps an ebook or informational product. If you can develop a product in addition to your services, you’ll gain additional credibility and be able to develop a stream of income that will allow you to increase your revenue in a way that is not directly tied to the number of hours you work.

This concept is illustrated well by Robert Kiyosaki when he notes the difference between a small self-employed service provider with that of a business owner in his Rich Dad’s Guide to Investing:

Those who are self-employed will never become rich because they are not building an asset. If they stop working, they will stop making money. If a business owner stops working, he or she will continue to earn passive income from the asset he has built. At the core of assets are systems.

I will end this article with the Entrepreneurs’ Creed. I wrote this in May 2003 and have read it every night before I go to bed since. You may find this a bit corny, but I’ll publish it below anyway. Reading it seems to inspire me each night and give me the motivation needed to wake up ready to execute.

This concludes issue seven of The Entrepreneurs’ Chronicle (It's now 3:46am). We'll see you January 1, 2004. If you are not subscribed and would like to subscribe, please visit http://www.zeromillion.com. If you would like to contribute content, become involved with the zeromillion.com team, make suggestions, or provide feedback please feel free to contact us at info@zeromillion.com.

This newsletter is published by www.zeromillion.com with support from the Entrepreneurs’ Coalition and the Center for Entrepreneurship at the University of North Carolina at Chapel Hill. The newsletter is sent using the IntelliContact Pro web based email marketing and list management software.

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“The only place where success comes before work is in the dictionary”
– Vidal Sassoon, entrepreneur