The biggest occupational trend in the restructuring of the economy has been the newly minted entrepreneur. The media regales us with stories about the new startup incubators like Y Combinator, and the success stories of their progeny. All roads to developing a new business point to leveraging the Internet with some sort of social, commercial or mobile business model.

All new entrepreneurs face five hurdles in developing a new online business:

1. Business model. The first step is the hardest. You need to fix a problem, and it’s best to leverage your previous work experience to identify the problem and craft a solution.
2. Programming – what does the app look like and do? The second step is just as daunting as the first.
3. Creating the simple business plan and timeline. The faster to execution, the better.
4. Funding. How to bootstrap this? You won’t likely have a network set up to reach VCs and other institutional investors, but crowdfunding may be viable.
5. Go to market strategy. Execution of course is the most critical step to success.

1. Business model: Identifying the problem.

1. First timers should start local. It’s easier to build traction when focused on a small arena.
2. Building a service is easier than a product (but remember, VCs and investors generally shy away from service businesses because they are hard to scale). The most alluring aspect of building an online product like Instagram or Pinterest, is the potential to explode. Unless you have access to programming or funding, don’t try building a product. One exception is to clone a product idea for the local market using third party services that provide “plug and play” white label templates, like Chompon for building Daily Deals businesses.
3. Use your local network and past experience. For example, there is now a huge window of opportunity to help local businesses develop social marketing expertise on a turnkey basis. If you have established a local network, you can build this service business like Apsides Media Group and Socially Now by partnering with turnkey social media solutions providers. (Note: we help to build these kinds of businesses).

2. Programming

1. Chances are the new entrepreneur has no experience on the Internet beyond buying stuff at Amazon. Hiring a programmer is a major challenge because you don’t know how to create a spec, and it’s impossible to tell if the programmer is good and the price is right. The best way to build the web service is to teach yourself WordPress or use Tumblr to create a simple model of what you want. That’s your homework. I believe building the web service prototype yourself is important to understand how it will enable the business model.
2. The prototype can look clunky. It needs to reflect the business model, and you need to confirm with your peers and potential users/customers whether there is demand for your service. Iterate until it makes sense. Pivot if you’re going down the wrong track.

3. Create a simple business plan

1. The days of a 100-page business plan are over, unless you are the type who likes to do this. Business plans can be conceptually templated by taking hot or successful business models and applying them to new industries, geographies or service sectors. “Shared economy” or “collaborative consumption” business models are 2012′s buzz and can be implemented at a local level because most sharing requires physical proximity. Here’s a list of startups in this space. For example, if you know the hardware business, you could set up a city tool sharing model similar to Toolspinner.com.
2. One more great resource for new business models: The Unhyped New Areas in Internet and Mobile

5. Go to market strategy

1. Before launch, the web service will likely need some professional app development to make the user interface credible. It’s quite possible to continue to use WordPress, especially if you’re flexible to pivoting and plan to change messaging occasionally. By this stage, you should have developed a business plan that can potentially attract a team, including partners or co-founders who can help with technical development.
2. Your goal should be to prove that the business model is viable for a community. The execution stage is obviously critical, and in the next articles, we’ll look at various go to market strategies.

BreakingSFNews.com, BreakingLANews.com and BreakingNYCNews.com broadcast what is happening in each city in real time through a survey of local Twitter feeds and contributions from Twitterers who add tweets to the scrolling news feed using a specific #hashtag system.

The Advent of the Breaking News websites

We’re just beginning to see the development of “breaking news” sites that chronicle and monitor the Tweets and other conversations on a topical or geographical level. MuckRack, apparently launched yesterday, aggregates the Twitter feeds of prominent mainstream media journalists.

Genesis of Breaking News on a Hyperlocal Level

My company, Domus Consulting Group adopted the mission to provide regular folks who happen to be hubs of their community a way to gather their community into compelling online applications like BreakingSFNews. We were early advocates of Twitter and clearly understood how the micro-blogging (aka micro-networking) platforms can tie communities together in a big virtual neighborhood. We also recognized that Twitter’s unique function to facilitate citizen breaking news was compelling (just listen to the buzz today).

The Transparent Development Process

We don’t develop applications in stealth. We develop in iteration by explaining in this blog our concepts, create prototypes as necessary, listen to feedback, and improve the product or service. The chronology for develop BreakingSFNews is literally detailed from this blog’s timeline:

4/10/2009: Real Time Local Advertising – A New Business Model

4/05/2009: BreakingShoppingNews.com: Twitter for Local Advertising

1/10/2009: The New Web 2.5 Opportunity: Creating Media Hubs

12/10/2008: “Breaking News” is a Mass Media Play

12/04/2008: Incorporating Breaking News into Websites and Make Them Compelling Reads

The Give it Away Business Model

We developed the breaking news template that BreakingSFNews is built upon with the intent of giving it away free. We’ve discussed that sharing website development with the people is a new model for spurring adoption of a new marketing paradigm; Ning for DIY social network creation fits into this paradigm. We believe empowering individuals by providing them with plug and play web applications will become more common because it “shares the wealth” and will somewhat disrupt the old VC-based method of stealth website development (why try to build a “monopoly” web property when it can be replicated and given away free in the future?)

A lot of our consulting work so far has been in real estate and in media/advertising, industries that rely on hyperlocal networking for business. We’ve developed hyperlocal Breaking News sites so companies and individuals can tie their communities together with very little financial risk. We even develop the business model behind Breaking News (in progress) so it minimizes business risk as well. And we’ll fully disclose and share all new business models for the benefit of those who adopt Breaking News sites.

Why We Believe Hyperlocal Breaking News is Compelling – it’s in Local Advertising

We discussed this one week ago. Simply put, there is now a void in where local merchants can advertise. They are pulling out of print publications, Yellow Pages and Penny Savers, and can’t figure out how to reach their customer base online. With hyperlocal breaking news sites, local merchants can address their community using Twitter to publish their “daily deals”. Yesterday’s NY Times provided anecdotes on how effective this kind of “advertising” can be. As friend Roberta Murphy put it, “in a Breaking News site, the local merchants aren’t pushing obnoxious ads any more, they are sharing their deals and inviting conversation”. And guess what? It’s free!

(Caveat: Of course, local merchants will need to understand the protocols of social media so they don’t spam and generally act uncouth…)

Everybody is looking for a deal these days; the hope is Breaking News sites will connect local merchants with consumers on the watch for deals.

How You Can Participate

As discussed, the Breaking News template is free to use for anybody interested in building a Breaking News site for their city, i.e. OCBreakingNews.com, SantaBarbaraBreakingNews.com, etc. It literally took me only three hours to set up each of the Breaking News sites, and we teach how to do this.

Join us for a free webinar next Wednesday, April 22 at 10:30pdt/1:30edt and we’ll explain the methodology to get a Breaking News city site up and running. Register here: https://www2.gotomeeting.com/register/526096234.

Mark Cuban proposes his contribution to the Stimulus Plan by allowing entrepreneurs to post “business plans” as comments to his article Open Source Funding. His criteria in a nutshell – business plans are posted for all to see, comment, and steal if they want. Mark sends a non-negotiable contract for funding.

I’m glad Mark is using his media fame to push this financing model into the mainstream.

Stealth is no longer an efficient way to build a business model. In stealth, the world can’t provide feedback for the countless iterations required to fine tune any business model – funding, marketing, product development. In both my blogs Media Transparent and Transparent Real Estate, I propose new business models and strategies up front for feedback. This action does three things: 1) Like an academic publication, it brands the idea, 2) It provides feedback for iterative improvements, and 3) It attracts like minded thinkers who might be partners or supporters of the initiative.

Open source funding is the most efficient way to develop a business model because the most qualified entrepreneurs with the appropriate domain expertise will “rise to the top”. As Mark says:

If it’s a good idea and worth funding, we want it replicated elsewhere. The idea is not just to help you, but to figure out how to help the economy through hard work and ingenuity. If you come up with the idea and get funding, you have a head start. If you execute better than others, you could possibly make money at it.

I agree that in aggregation, the most efficient and productive business models (combined with the hard work) will create economic opportunities. That’s why stealth startups run by 24-year-olds based on an idea won’t work; their lack of domain expertise won’t ever get them funded for anything in an open source world. VCs can be just as guilty… they use stealth to keep ideas hidden among themselves so they may leverage negotiation power over entrepreneurs.

This transparency of business models should be extended across industry disciplines. Last summer, I created the Management Consulting 2.0 slideshow explaining our philosophy that consulting should be open source, not a closed book of research done behind McKinsey doors that can be charged out at $750/hour.

What makes the social media intriguing is its facility to provide instant interpretation of random ideas and acts. These acts, adhoc and experimental by nature, generate interest – controversial, amusement, alternative perspective – within a social sphere, which then extends the premise within hours. This kind of micro-media will filter the best ideas, extend them further, until they are “news”… or worth reporting by mass media. We’re all privy to the incubation of these ideas depending upon the networks we belong to or share.

Here’s the chronology of a simple idea that was proposed today by Jason Goldberg of SocialMedian:

Jason Goldberg – View full feed

posted a message on Twitter

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Ex-securities lawyer Michael Arrington then pipes in the fact that Twitter solicitations for financing is an SEC violation. Jason takes the post down, but it’s recorded at Friendfeed.
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Prompting a Micro-financing venture capital room at Friendfeed, which I join because I think the crowdsource and peer-to-peer investment model is promising.
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And finally chronicled by Mathew Ingram, tech writer at Globe & Mail -  Twitter – a Microfinancing Vehicle