Because the Internet is known as the “unknown” wild west at times when it comes to determining legal obligations and potential for lawsuits and legal trouble, it is strongly recommended that every website have legal terms and conditions governing privacy, the use of information, the use of the site and the sale of any services and products.

Many online entrepreneurs balk at having “legalese” on their sites in fear that it will reduce sales on their site.  This is definitely a legitimate concern.  In marketing, you do not want to add anything in your sales process that will cause a prospect to be confused, feel overwhelmed and “legalese” can overwhelm most anyone.

However, is it worth risking potentially significant liability?  I can tell you that after representing many clients in dealing with potential lawsuits and problems, the stress, uncertainty and the amount you can lose makes it most certainly not work it.

Plus, if you speak to any successful online entrepreneur (ones doing over a million dollars in annual sales) you will likely hear a story or two about some legal problems faced in their businesses.  And, they will likely emphasize to you the importance of having your legal agreements in place. In other words, if you plan on running an online business for the long term, you MUST have legal and risk planning as part of your business.  Do not wait until you are making hundreds of thousands of dollars to be shocked by risks and problems that could have been avoided.

When it comes to legal protection v. sales and marketing- there is a balance.  Keep your legal terms on a separate page and just link to them in the sales process. One really effective method used is to start your legal terms with a statement like “There are the terms that our attorneys require we include. . . ”

In your terms and conditions, avoid using unknown and legalese terms- have you lawyer write them so that they are easy to read and understand.

In your regular marketing copy, you can use the persuasive techniques taught by successful copywriters but be sure you are truthful and never deceptive.

I started learning about how to make money via Internet Marketing back in 2004. A good friend of mine also started learning with me.  However, we both chose totally different online paths.

I stuck with the traditional method of finding a market need, building a site to build relationships and provide value and to sell both my own products and products of others which I tested and felt comfortable recommending.

My friend chose the “black hat” route which consisted of launching websites, finding loop holes in the different web site places where you can get traffic and sometimes even exploiting aggressive marketing and technology methods to earn income.

I must admit I was amazed at what black hat marketers come up with and do- They truly are extremely creative and innovative when it comes to finding effective search placement and marketing methods.

In our first year in business, I made very little money from my online ventures but my friend was making pretty good money.  He would find ways to promote something and it sometimes brought in thousands of dollars with just a few hours or work and dollars in investment.  In addition, his activity was limited to being an anonymous conduit for other marketers which meant he did not have to deal with customer service or product support issues, etc.

He grew his black hat business into quite an operation which involved setting up thousands of email accounts and web pages.  But a few years ago, something started happening.  The Internet companies started to combat against black hat methods.  Many of his web pages were shut down overnight.  Sites like Google and Craigslist came up with ways to find and nullify black hat marketers.  And his income stream became very unwieldy.

Even recently, Google came up with a cell phone verification for setting up gmail accounts and Twitter implemented some anti-spam measures. So, my friend is once again trying to stay ahead and work with his black hat buddies to find new black hat ways- they love this stuff and sometimes thrive on the challenges that come up.

But, what is happening is that his income has hit a plateau and sometimes he loses a lot of it overnight.  He needs to keep coming up with a new bag of tricks which might or might not work.

In the last two years, my online properties have become more established using traditional marketing methods and I now have significant income coming in every month that for the most part I can rely on (in business, you can never ever rely on anything 100%).  In the meantime, I am developing brands that can only build more value and create more income streams over time.

So, I think the decision really depends on your personality but I personally feel that the long standing internet businesses apply the same success principles as any business.  Focus on providing REAL VALUE to their customers and developing relationships over time.

The Internet is evolving into a social media format where transparency and relationships will prove to be most profitable for online business owners.  I think black hat methods and other similar forms of internet marketing that proved extremely profitable before will become less effective as the technology to identify these methods advance and the customers who use the internet become more educated about them.

Social networking websites have become the latest rage on the Internet. Many traditional websites have been surpassed in traffic by social sites such as Facebook, YouTube and MySpace.

While viable business models behind the social networking sites themselves are still playing out, the benefit of social media to any business is definitely proving itself.

The fundamental premise behind social networking is nothing new- it allows people to connect with and communicate with each other. The reason for the incredible growth of social networking on the Internet is the result of a combination between (i) the evolving technology that allows the average person to post content easily and instantly; and (ii) the viral nature of these networks.

Just as the need to have an Internet presence with a static website became a necessity for any business (offline or online) in the past decade, the clear benefits of having social interaction on business websites are becoming the next step for any business to leverage the Internet to do more business.

So now, there are bowling alleys using Flickr to allow customers to show off their bowling skills and interact with other customers.  And then you have your local Mexican restaurant owner wanting to add social features to their sites where customers can review their food or atmosphere.  And some services based businesses are even going so far as to enable a chat amongst visitors on their sites and in their forums to discuss the company.

Social media really comes down to “user generated content” which can come in many forms such as customer or user reviews, blogs, instant messaging, comments, videos, and any other communications taking place on your site.

First, adding a social element to your site does have some business risk because the medium allows comments that can both help and hurt your business.  Social media gives power back to the people but this also means that competitors, unscrupulous customers and anyone else can use it to your detriment.

Second, by allowing user generated content on a site that you own, a myriad of legal issues come into play including privacy and intellectual property laws.

Given the unbelievable developments in technlogy (which will only continue) and the nature of the Internet where any content can spread like wildfire, the laws will never be able to keep up.

So, it is important that your terms of service or user policies be well drafted to give you the business flexibility and ownership over content to address both the business issues and the legal issues that may come up.

There will always be some risk to using social media elements in your business but the rewards will likely far outweigh the risks.  Even so, there is a lot you can do to minimize these risks by having well drafted terms of use, user policies and privacy policies governing any user generated content contributed to your website.

It still amazes me the percentage return on investment that is possible with an Internet business. For myself, I have several online businesses which each required about a $1,000 on average to launch and get to a point where they were bringing in revenue. This includes everything from all the infrastructure, web design, keyword research, and marketing. These sites are now each bringing in between $ 80 to $+5,000 in net income a month. 

At the low end, a site that costs $1,000 and brings in $80 a month in passive income is close to a 100% ROI return annually.  Now, $80 a month is not a lot of money but it can be if you rinse and repeat. And the sites that are bringing in $5,000 profit a month create a whopping 6000% ROI return annually. 

Nothing can beat these returns especially when the time to get to these returns is usually a few months to a year.  And, they can keep improving as you optimize each online website. Now, I have had some unsuccessful sites, but the most I have ever risked on a website before finding out it will not be profitable enough for me is about $1000 a site.  This is not a bad stop loss.

Just to compare- I also invest in residential real estate where typically I need to put up (or borrow) capital of about $150,000 in order to make $15,0000-$30,000 in profit. This ROI for the deal is 20% and there is a lot more capital at stake if things do not work out.

Also, I have several clients that have put up hundreds of thousands of dollars to launch a business which will take several years to possibly pay off by creating a consistent revenue stream or a business that may be lucrative to a potential acquirer.  This is a lot of risk to take. 

Now, these companies are exciting to work on and for the smart entrepreneur, it is worth the capital, risk and toil, but from a straight risk and ROI perspective, it seems like the traditional Internet marketing based business model is more attractive to the average person thinking of starting a small business.

Currently, it is a perfect time for anyone to start an Internet business.  While we are in the midst of a struggling economy and the real estate market is horrible, the percent of transactions being transacted on the Internet is growing.  More people are going online and more companies are advertising online.  Once you add in the revenue potential and the minimal amount of capital, any person thinking of starting a business (part-time or otherwise) should strongly consider an Internet based business.