For budding entrepreneurs there has never been a better time in history to start your own internet business. The miracle of the internet allows those with the necessary courage, work-ethic and gumption, to set up shop without the crippling costs of finding, stocking and financing a physical premises.
But the online revolution has offered start-up businesses much more than just removing the need for expensive premises. Some of the many advantages of owning and operating an internet based business include:
- Low start up costs. Depending on the type of online business you plan to operate, initial costs can start from as little as a few hundred pounds (the cost of buying a domain name and building a website). If you are prepared to grow the business slowly and organically there is no need for bank loans or business grants; many entrepreneurs use their existing savings and keep their day jobs to fund their business in its initial stages.
- Control of stock. An under stocked shop is not going to inspire consumer confidence in your business. However, in the early days it can be heartbreaking to spend precious money on perishable stock that takes time to sell. An online business allows you to ‘make to order’ so you only have to buy what has already been paid for.
- Low cost marketing and advertising. The internet has completely revolutionised business marketing. Gone are the days when small businesses had to spend huge amounts of money on direct mail campaigns, advertising and leaflet drops. These days start-up business can harness the power of the internet to create online campaigns, social media presence and Google Adwords to get their brand in front of their customers all for a fraction of the cost of the previous forms of marketing mentioned. But be warned, as you will see below, marketing costs for an online start up business will always exceed your initial estimate.
If you still need convincing then here are some powerful statistics on the growth of online start-up businesses.
- Over 90,000 new businesses were started in the first half of last year in the UK.
- 49% of new businesses had set up costs of less than £2,000
- A fifth of mid-sized British companies are now classified as ‘high-growth’ according to the OECD’s definition.
So if you have a unique idea for an online business, what are you waiting for? To help you get started here are some things you need to consider when starting an internet business:
Decide The Type of Business You Want to Invest Your Time and Money In.
If you already have an idea for your start-up, great! However, if like many others, you have a strong desire to work for yourself but have no idea what kind of online business you want to run, then you have some thinking to do. There are many books available which can give you ideas on how to truly discover what your calling in life is. However, in case you have been seduced by the following entrepreneurial myths, let us set a few things straight about the nature of working for yourself.
- Myth 1 – Your hours will be flexible. Yes the hours you work can be flexible but you will work more of them than you ever did as an employee, if you want to see your online start-up business succeed.
- Myth 2 – You will not have a boss. Your customers are your bosses and they can be far more demanding than any manager.
- Myth 3 – You will be able to select the projects/stock/retail that interests you. But, not if you want to pay your mortgage and eat. It will take years for your business to be well-established enough that you can pick and choose your work.
Write a Thorough Business Plan
Your business plan is the most important document that you will write. Not only will writing it help solidify your ideas and plans for your online business but it will also be the document that potential investors will use to decide whether your venture is a worthwhile risk.
Make sure your plan stands out by ensuring the following:
- The plan must contain a solid executive statement which makes it easy for potential investors to grasp what the business is about.
- Put together a comprehensive financial forecast. It may seem like pulling figures out of thin air; after all, it is difficult to predict how many units of stock you will sell in year one, two and three of trading. However, it is vital that you make your forecasting as complete and accurate as possible. Not only will this help you focus on your financial objectives, it also assists potential investors to see the solid potential for a return on their money.
- Set out a marketing strategy. Although internet marketing is potentially cheaper than more traditional forms of marketing, it still requires some financial investment. Many people get caught out by budgeting too little, or worse, nothing at all, in marketing and advertising. But think about it. How are you going to get customers or clients if no one knows you exist and you have no money set aside to get your product in front of potential buyers? Social media works to an extent, however, you will still require a budget to boost posts on Facebook and Twitter to reach your audience. You will also need funds to advertise on trade industry websites and attend trade shows & networking events. Decide on how much you need to spend on marketing for the first year, double that figure (I’m serious, it will cost more than you think) and write out some SMART goals around marketing your new business.
- Include details on such matters as managing stock, hiring of employees and the type of premises and equipment you will need to be able to fill your first batch of orders.
Death and Taxes
Never were truer words spoken than when Benjamin Franklin uttered the famous axiom, “In this world nothing can be said to be certain, except death and taxes”. When you set up your online business you will need to consider both of these certainties in your initial planning.
If you have not already done so you will need to organise a Will which states how you want your business liabilities and assets to be dealt with when you take leave of this world. A lawyer will be able to advise you on how to structure your Will in a way that your wishes will be carried out after your death and all your obligations are taken care of.
There are many questions you will need to ask yourself at the beginning of your venture in order to set up your online venture in the most advantageous way possible when it comes to your tax obligations. For example, you will need to decide whether you wish to register with HMRC as self-employed, as a partnership or as a limited company. You will also need to obtain legal advice on whether you need to register for VAT and your tax obligations if you hire employees.
The internet has allowed budding entrepreneurs to take advantage of low start-up costs and a worldwide customer base.
“A journey of a thousand miles begins with a single step”.
Lao-tzu, The Way of Lao-tzu
Chinese philosopher (604 BC – 531 BC)
The only thing limiting you is your beliefs. Good luck!
Have you recently set up an online business? We would love to hear about your experiences. Please leave a comment in the section below.
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