Monday, October 29, 2007

Residents Speak: Sol Columbia

While much of my new book, The Entrepreneur's Guide to Second Life, focuses on tips, tricks and tactics for building businesses in specific segments of the SL economy--fashion, real estate, building, etc.--I also included a chapter on business basics.

It's chapter 2, "Laying the foundation for your business," and while doing the research for it, I talked with Sol Columbia, one of the proprietors of the stylish fashion boutique, Luminosity.

I asked Sol for some suggestions of things newcomers to SL entrepreneurship should be sure to think about, and as with so many other experts I talked to for the book, she came up with some real gems.

One of the suggestions really stood out to me today when I was looking at them.

As Sol put it, "To do well in business in Second Life, pick a product that people will buy over and over, not just once, such as clothing, hair, skins and fashion in general. People don't buy a new couch very often, but they buy lots of clothes.

This is really good advice on lots of levels. To me, the one that matters the most is that this touches on one of the things about business in Second Life that is most important to remember, and which, even though I've mentioned it before, is well worth repeating: That SL is a micro-economy.

In other words, with a very small number of exceptions, the products you'll be selling, be they clothes or cars or toys or even couches, are going to cost a very small amount of money. Sure, it often feels expensive to shell out L$500 for something, but if you think about it, that's less than US$2 at the general exchange rate of L$270 or so to one US dollar.

Which means, as Sol suggests, you're going to need to sell a lot of product in SL if you want to make any real money.

And think about it. There are fashion designers, and others, who are making full-time incomes with their Second Life businesses. At US$2 or less per product, that's a whole lot of sales.

Which brings me back to Sol's suggestion: In order to make those large number of sales, you're going to need to be selling products that a lot of people are going to want to buy. Further, the best way to create repeat business is to regularly update your product line with new items that your customers won't be able to resist.

Fashion is a great example because, as Sol says, people buy a lot of clothes in SL. But there are plenty of things you could sell that would qualify.

And Sol's comment about couches notwithstanding, it's not to say that you can't make money selling furniture. Because you can. But probably not if you just offer one or two variations. Rather, you'd need to have a wide variety of pieces for sale, and you'd need to be constantly updating them, making sure that people looking to furnish their spaces have lots of choice.

Ultimately, this is common sense, but I think a lot of people wanting to be in business in SL overlook some of the more subtle elements of doing business here. And the fact that it's a micro-economy is perhaps number one on the list of things that you simply cannot afford to forget.

And, again, being a micro-economy, you have to service it if you have any hope of making money. And that means that you can never stop thinking about what new products you can create, and whether or not those products are the kinds of things that a lot of people will buy.

Because you can sell the most wonderful thing in the (virtual) world, and people can talk about it like it's the best thing they ever bought. But unless it's a whole lot of people talking about it like that, you're only going to be able to take a few dollars' worth of that good will with you to the bank.

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