This may well be the best time in history to start an online business, and those who have developed a hobby that has turned into much more than a hobby might want to seriously consider their own online business. After all, the requirements for an online business—a computer, an internet connection, and, for those with older cell phones, perhaps a decent camera—are extremely doable for most. While many people choose to keep their day job until they see if their online business can be financially lucrative, others may choose to jump in with both feet.
Despite the ease of starting an online business, success can sometimes be an elusive thing. While you may have all the items necessary to start an online business, there are many things to consider. An online business requires dedication, hard work, and diligence to be successful. Online businesses do take business know-how, along with an understanding of the strategies which are most likely to bring success. Done right, however, your online business could become more than a dream, more than a side job, and more, even, than a successful small business. Ask yourself the following questions before you decide to start an online business:
- Do you have a niche? Before you jump in with both feet, make an honest assessment of your product or service. If you are struggling to identify your particular niche, first take an assessment of your interests and passions. Because any business can be difficult, if your online business is in an area you really don’t care about, your odds of success decrease significantly. While you may not find a perfect fit, you do want to feel passionate about some aspect of your proposed business. Sometimes finding your niche involves identifying a problem you can successfully solve.
- Have you evaluated the viability of your online market? Once you have some ideas in mind, research your competition. While competition is not always a bad thing—it can show you’ve hit on a profitable niche—you still need to determine whether you can stand out from the crowd. You must figure out how to differentiate yourself from the competition, creating a unique product or service.
- Have you conducted market research? Once you find your particular niche, you want to next determine your probability for financial success. Browse top products or services in your chosen category. The goal is to find enough, but not an overabundance of products or services. Make a note of price points as you browse—this will be useful information as you proceed. Complete keyword research and evaluate trends, then find out what’s working—and what’s not working—among your largest competitors.
- Are you up-to-speed regarding online business laws for your state—and nationwide? There are a number of things that can make or break your online business and that are incredibly important to know and understand prior to starting an online business, including:
- Do you have information regarding state, county, and country taxes? If you are shipping a product internationally, it is crucial that you understand your target market’s taxes and seek tax advice from a professional. Two examples of tax issues that could derail your profits: In Australia, shoppers are used to seeing all-inclusive prices rather than tax added on at the end. If you are in California or you will be shipping to California, it is important to know that any item sold in a plastic bottle incurs a 0.11 cent recycling fee on top of taxes. If you are unaware of issues like this, it could cripple your online business.
- Are you aware of any trademarks, patents, or copyrights you require or could be infringing on? A trademark is a word, phrase, symbol, or design that would potentially distinguish your services or products from others. A patent is used for an invention, and copyright protects intellectual property, such as music, works of art, and writing. Whether or not you choose to apply for a trademark, patent, or copyright, you should make sure you are not infringing on other trademarks, patents, or copyrights with your product or service.
- Are there any shipping restrictions on your particular product? If you are planning to ship a product, you not only need to factor in the cost of shipping, you also need to know what you are allowed to ship. There is likely to be a variance in shipping restrictions from one carrier to another, so if USPS tells you an item cannot be shipped, try UPS and FedEx. Generally speaking, there can be restrictions on shipping alcohol, ammunition, animals, aerosols, dry ice, cigarettes, explosives, perfumes, poison, perishables, nail polish, hazardous materials and, in some cases, fresh fruits and vegetables.
- Have you looked into business insurance? Your online business may require general liability, product liability, professional liability, home-based, or commercial liability insurance. If you have a local insurance provider, reach out to him or her to determine the best type of insurance for your online business. If you are selling a product like CBD, which is considered “high-risk,” you should consider product liability insurance.
- Do you understand—or have someone who understands—online website development, content, and payment gateways? Unlike a brick and mortar business where your store, you, and your employees provide the first impressions, an online business requires your business website to be up-to-date, visually appealing, easy to navigate, and mobile-friendly. You will also need to choose a payment gateway for eCommerce. This can be an anxiety-producing experience if you have no experience in this area and can really benefit from having a professional help you set up your website and choose your payment gateway. Some payment gateways are hosted, others are non-hosted, some include anti-fraud features, some require setup fees, monthly fees, termination fees, and transaction fees.
- Do you have a clear, organized inventory plan? First, if your business will require substantial inventory, make sure to check your zoning codes to determine whether there are any prohibitions on running your business from home. It is possible you could benefit from renting a warehouse or storage building to store your inventory. Depending on your product, you might also consider a partnership with a shipping and fulfillment company that specializes in drop-shipping.
Once you have carefully considered the basic tenets of online business, it just might be time to take the leap you’ve been dreaming of for months—or years—and start your own business.
