Planning a business on pen and paper and doing it in the actual world are two very different things. This is as much applicable to online businesses as it is to brick and mortar ones. And this is what a new entrepreneur is sure to find when he/she starts to work on an online store.
Managing finances often seems to be the most difficult task. Opening an online store seems to be easily affordable, but it’s not as simple as it appears.
Here are a few tips on how you can make an online business, and your life, a little less of a hassle and a lot more of a rewarding experience.
- Find out everything you need about your customers. A successful business knows its customers. An entrepreneur has two options – choose a niche to sell high-priced products or choose a mass market to sell average-priced products.
Whichever strategy you decide to use, a thorough market research is important. Who are your customers? Does the product address a specific need of them or does it add value in some way? How much is the customer willing to pay for it? Finding answers to these questions is essential before embarking on your venture.
- Make a note of all costs associated with the business. A common misconception is that an online business doesn’t involve much expense. Well, if you think so, it is time to give it a second thought. It is REALLY important to pay attention to the costs.
If you are planning to sell products from others, you may not have to bear the manufacturing costs; however, you will have to pay their price, which is a significant cost. You also have to manage the online portal, the secure payment gateway, and the shipping and delivery charges and so on.
- Acquire the financial resources you need to get off ground. An online business does require you to have adequate finances; thankfully, often it isn’t as much as you would need for a brick and mortar venture.
It is, however, necessary that you arrange for the finances. Whether you borrow money from your family and friends or convince an investor to get the money, you need to have adequate money to start off. Calculate the amount you need based on the belief that you are not going to earn profits for at least the first year.
- Question every expense before you make it. An expensive domain name doesn’t guarantee profits. However, it can seriously add oomph to your online business and attract people to it. Whether it converts to actual business is another thing!
Before you make any decision to spend a considerable sum on a particular aspect of your business, give it a good thought. Talk it over with a business mentor. If you can explain the expense to someone who knows and cares, it may be a justifiable expense. If you cannot do it, you had better let it go.
- Outsource tasks that you don’t feel comfortable doing on your own. An online business doesn’t imply setting up a website to sell products. You need to take care of licenses, taxes, accounts, advertising, marketing and many other things.
If you are capable of handling the technical aspect of online selling, you can handle the task of website designing on your own. However, if you are not quite tech-savvy, it is better to let a professional do it. Again, if you are not sure about managing the accounts, it is best to find an accountant as your outsourcing partner.
- Have adequate financial backup. Many businesses fail because they don’t realise one important thing – it takes time to achieve success. If you are lucky, you can break even in the first few months or the initial year.
Don’t expect to make profits from the day you start. If you are working on the online business part-time, you need to keep your job. If you are leaving your job to set up the business, it is best that you have adequate money to keep you afloat for at least a few months. You have to still pay the bills!
- Keep track of the entire supply chain. Focus on every element in the supply chain network. Is there any point where you can slash the cost? Analyse every aspect. If there is any such factor, you need to do it immediately.
When you choose the people in the supply chain network, make sure you find competent professionals who work at reasonable rates. It is a good idea to compare shop. This gives you the most convenient method to find supply chain partners who can aid in cutting costs. However, don’t focus on costs alone; quality has the same importance.
Take one step at a time when you are trying to establish an online business.
Consider every cost. Calculate every detail about income and expenditure. Only an aware individual can be a successful entrepreneur.
