10 Things To Consider Before Starting Your Own E-Commerce Business
For entrepreneurs who want to start their own e-commerce businesses, here are some things they need to know. Starting your own e-commerce business might be just the ticket, but there are many things to consider first before jumping in headfirst. One thing is for sure - it requires a lot of hard work and dedication from all angles; without it, you'll soon find yourself out of business in no time. To help aspiring entrepreneurs avoid falling into these common pitfalls, here are 10 things every budding entrepreneur needs to know about how to succeed at running an e-commerce business!
1) What type of products will you sell?
What products you sell can affect the viability of your business the most. For example, will you be selling services? What type of goods? Both. When you first start a business, you'll need to decide whether it fits into a category, or if you'll be starting new product lines in the future. Figure out how much time and money will be required to maintain these new lines of business. To illustrate, clothing items can be more expensive than books because they require more investment up front and have higher operating costs such as inventory storage in a warehouse. In a similar fashion, if you choose to either have an online or offline business, it can change from things like storage needs to hiring employees. If you want to sell merchandise, think about how customers will buy it - by phone or in person. Digital marketplace or not, purchasing from mail-order catalogs is outdated.
2) How much can you invest?
Not all eCommerce ventures can start out with a $1 million investment. Startups have to strike a balance between capital invested and runway—the amount of time your business has before it runs out of money. The lower you invest, sometimes the longer you’ll need to keep your venture afloat until revenues grow and profits roll in. An easy way to calculate how much cash you'll need is to determine how much revenue (total sales) needs to come in each month just to cover costs. Subtract that figure from whatever initial investment you put into your company, then subtract 50% or so for marketing expenses, office supplies, etc. This is your break-even number; it's how much total sales you need just to get back what you initially invested. Once you've determined how much actual revenue your company will need to generate per month, divide that by 30 (or 60, depending on whether you pay yourself on a monthly or weekly basis). That tells you approximately how many customers you'll need to acquire every day. Some entrepreneurs begin bootstrapping their startup by selling online as side gigs while working full-time jobs; others work full-time themselves but at other jobs they don't like nearly as well as running their own businesses. Either option requires patience and perseverance--it could take months before earnings go up significantly. However long it takes though, keeping at it without giving up will mean your chances of success are better than ever!
3) What is your marketing plan?
Although business ideas vary widely, many successful businesses have similar characteristics. They solve a problem for people and offer a solution that makes life easier or more fun. If you’re launching an e-commerce business, marketing is essential to your success. When you start an e-commerce business from scratch, it can be daunting to come up with a game plan for getting customers to notice you online. Instead of working in a vacuum, come up with answers to these questions before you launch: Where are my customers? How can I reach them? What are they looking for when they shop online? Why should they choose me instead of competitors? And then... how will I convince them they want what I’m selling? There are no hard and fast rules about answering these questions – but by taking the time up front to think about where you'll focus your energy, you’ll stand a better chance of making progress toward finding answers as quickly as possible.
Where are my customers? This question is all about understanding who buys products like yours, where they live, and why they buy. Are there certain sites where your target market hangs out? Do those sites draw traffic based on location or demographics like age or gender?
4) Do you have time?
Running an eCommerce business is not a side gig or a hobby. It takes time, dedication, and hard work to build a successful eCommerce business that can support you and your family. Are you ready to devote yourself entirely to your new endeavor? If not, then don’t start an eCommerce business. Running an eCommerce store will consume every waking moment of your life (and some sleeping moments) for at least 5 years if you want it to be successful. Don’t put all of your eggs in one basket by trying to become a jack-of-all-trades when it comes to hobbies. Pick up one thing at a time and master it before moving on. The only exception here would be if you already have multiple passions that can all somehow tie into running an eCommerce store. In those cases, good luck! There aren't many examples of people who are passionate about two things who've been able to make money off both simultaneously. One day you might get lucky!
5) Are you willing to hire help?
If you’re not an expert in a given field and/or aren’t confident that you can handle doing it all yourself, hiring a freelancer or another company to help with parts of your business is a good idea. With something like selling products online, for example, there are many aspects involved and each one could require special expertise—product photos, marketing copywriting, shipping logistics, etc. You don’t want to bite off more than you can chew. And I say bite off more than you can chew not just because it’s catchy but because it also accurately describes what will happen if you try to take on everything at once without having backup resources available when problems inevitably arise. More on that later. Are you comfortable working long hours?: Running your own business isn’t easy and it might not even be very fun much of the time. The early days especially will involve long workdays (think 10 am - 11 pm), late nights spent staring at a computer screen, lots of trial-and-error experiments, tons of self-doubt, and countless other obstacles standing between you and success (if any). The amount of time required to start a new venture is directly correlated with how much dedication you have to seeing things through; most people who succeed have no other choice. Are you willing to commit? If so, skip ahead.
6) Have you priced it out?
If you’re planning to start an e-commerce business from scratch, it’s important to figure out what it will cost up front. Most often, you'll need somewhere between $200 and $300 for just one domain name. But that's not all: You'll also need a merchant account, fulfillment software, and a shopping cart program like Magento or Shopify—and that can run upwards of $100 per month per item. From there, you'll want to decide on your pricing model (do you want free shipping? Should customers pay any sales tax?), figure out where exactly you're going to sell your products (Etsy? Amazon?) and start pricing out each product. This is tedious, but if you don't do some homework upfront you may end up losing thousands before even making a dime. Once again, research every single step along the way—no shortcuts!
It’s important to note that there are costs involved with starting an e-commerce business that are independent of online selling costs. For example, many startup businesses require two salaries for their owners before bringing in revenue; additionally, most businesses do not break even due to start-up expenses until approximately 3 years after inception.
7) How long do you want this business to run for?
Remember, starting a business is a long-term thing. Once you’ve decided that now is when you’re going to make it happen, how do you plan on funding it? Is there enough money in your bank account for 6 months? Do you want to give up your day job in exchange for startup funds? Or are you going to run a side hustle during your spare time until it’s big enough to take over your hours entirely? You need to decide how long you want your e-commerce business to last—and what sacrifices (if any) are worth making. Do I have an audience?: As we said above, before launching a new site or brand, figure out if people actually want whatever it is you’re selling. Do you have experience or relationships with bloggers or other influencers who might be interested in featuring your work? Did you build some momentum with content prior to starting your store (blogging about things similar to what will be sold)? Talk with everyone and anyone about whether or not they think there would be market demand for your idea! Remember: at first, no one knows who you are and they're often just as clueless as they can be helpful! It's totally okay if people tell you no - just try again later down the road when things look more promising...or move onto something else altogether.
8) If it all fails...do you have a backup plan?
Before starting a business, make sure you have a backup plan. Not having one can be extremely risky and stressful. Imagine how it would feel to quit your day job without something else lined up for you. If things go wrong, at least you won't find yourself in dire straits. Think of your backup plan as a safety net, even if it's just having an extra month or two's worth of savings to fall back on. It can't hurt to be prepared for every eventuality so that you feel confident about taking the plunge into self-employment. You'll get some idea of what works (and what doesn't) when you start working from home and become your own boss—just don't be surprised if some unexpected hiccups pop up along the way. You may find yourself having to retrain after a few years, take night classes, or do an internship within your field before finding full-time work again. And these detours shouldn't deter you from pursuing work that aligns with your skills—they should prepare you for new challenges instead! It is impossible to live without failing at something, according to American writer Truman Capote.
9) Do you need a separate bank account for your business?
Many entrepreneurs choose to open a business bank account separate from their personal one. Having a separate bank account for your business ensures you’re always able to keep your business finances separated from your personal ones. While there are some compelling reasons for keeping them separate, there are also times when it makes sense to open a joint account. Opening a business bank account as soon as you launch can be helpful because you'll need funds right away and there's no guarantee that you'll have enough cash flow yet to maintain your own account balance. For more information on whether or not you should consider opening an individual or corporate account, talk with a banker who can help guide you in making an informed decision. Think about how much time you're willing to dedicate: Starting an e-commerce store is like having another full-time job—but without getting paid. It takes hard work and long hours.
10) Will you make use of social media for your business pages?
Facebook, Twitter, Pinterest, Google+, Instagram, TikTok, and Snapchat are all great ways to connect with your customers and grow your business. However, it’s important to remember that not every platform is right for every business. While some companies can make use of social media very effectively, others may find that it doesn’t fit with their brand image. If you think social media might work for you and your company but aren’t sure where to start, reach out to a marketing professional for advice on which platforms would be most effective for your business. And don’t forget about using social media in more traditional ways as well—posting regular updates on Facebook or keeping followers informed through Twitter could help build a buzz around your company long before you launch. In regards to SEO, will you make use of white hat techniques: SEO stands for search engine optimization. It involves improving how a website ranks in search engines such as Google and Bing by structuring content in such a way that both humans and computers alike understand what is being communicated. Some SEO tactics require manipulation of the HTML code that powers websites; these are considered black hat techniques because they create spammy content while also running afoul of search engine guidelines. Black hat SEO has been known to produce short-term results but almost always ends up damaging a website's reputation over time; when done correctly, white hat SEO creates quality content while bolstering reputation across multiple mediums at once.
Like starting any business, starting an e-commerce company involves making a lot of decisions. Some of these are personal, such as how you want to work and where you want to locate your company. Other decisions will have a financial impact, such as whether or not you should incorporate and if so, where your company should be incorporated. Regardless of what type of e-commerce business you choose to run, there are two important things every entrepreneur needs before launching a new venture: knowledge and planning.