Part 1

The foundation

This first part of the book contains some seemingly arcane financial considerations. Originally, I'd planned to end with this material, as it is a disconcerting way to start a book and might put readers off. However, it soon became clear that the strategies described in the later chapters only make sense if the fundaments of finance and investment are taken into consideration.

It is only too easy to get carried away with exciting technological solutions when working in a vacuum. Too often, great new ideas flourish in the conceptual and design stages only to founder disastrously when they meet the harsh realities of the competitive world.

It may be a new economy, it may be an unprecedented technological revolution, but, this does not change the reality that success and progress is about doing things more efficiently. Creating clever solutions and highly sophisticated systems is nothing more than a waste of time, money and human resources – if the end product doesn't produce value for money.

For this reason, it seems worth while to tackle the financial considerations first. Ultimately, these will provide the practical restraints that guide an e-business to profitability. Without these restraints, technology can easily lead a business into a quagmire of irreconcilable cash flow problems – from which there is no escape.

Beginning with a little background, the first chapter explains that the object of the book is to go through the various thought processes that might be involved in the creation of an e-business.

It is not about techniques, methods or procedures. It is about acquiring a mind set that can use abstract models to cope with the rapidly changing, competitive environment of the Internet. In a world where there is too much information to absorb, it is essential to build up a varied group of useful contacts to overcome the problem of unavoidable knowledge gaps.

Chapter two looks at the lessons that can be learned from the pioneers of the Information Age. As the Internet is evolving so fast, there is little to gain from studying the winners to try to emulate their successes. The situations they found themselves in were quite different from what we would now expect to encounter in the newly emerging future. Instead, we need to learn from the mistakes of the failures, to make sure we don't fall into similar traps.

The new economy is totally unpredictable. There may be a boom or a recession ahead and we need to be able to cope with any extreme that emerges. The only way to do this is have a clear grasp of the fundamentals of business economics. For this purpose, chapter three provides a basic grounding in the essentials of funding and finance. Whichever way the Information Age takes us, it must always be based upon the pragmatic realities of shrewd financial decision making.