Why start an online business rather than a traditional business?
That might have been a valid question ten, maybe fifteen years ago, but I believe the question today has become why would anyone start anything BUT an online business? Read on to learn more about the many advantages of online business, some obvious and some not so obvious over traditional brick and mortar business models.
Probably the most basic and obvious advantage an online business has over traditional is the lack of barriers to entry. Startups need capital just to get up and running but they also need capital to buy time to gain a presence in the market and get their name known. With the advent of the Internet and subsequently, home based & online businesses, we are now so far beyond what they used to call “hanging out your shingle”.
I learned a lot simply by doing it, but that was back in the 90’s when much of the information and advice you’ll find today hadn’t been written yet. I learned the old school way by making mistakes and quite often by simple trial and error – not the most efficient route, but happily you’ll have much better resources and advice to hand.
The biggest problem most people face today when they’re trying to figure out where to start is information overload. There’s so much and quite often it is conflicting or confusing at best, and at worst some can even be downright misleading. The endless barrage of “join this” or “buy that” quickly and understandably becomes overwhelming and newbies either simply give up or, even worse, step onto a never ending treadmill of (expensive and time consuming) over preparation.
Sticks and Bricks Business Model
The original business model was pretty much based on finding the best location, or at least the best location you could afford, setting up shop and hanging out a sign, or your shingle as it was often called back then, and waiting for Joe and Jane public to start coming by. The hope was that Joe or Jane would find your wares attractive and buy, over time your store would gain a reputation and others would come too. This worked quite well so long as there was no competition and typically stood to keep the local ‘merchant’ in a fine position within the community making a nice living thank you very much.
The downside was that the store needed to be manned and kept in good condition so overheads ate up a large percentage of profits. Merchants would find themselves raising prices to keep up with rising rents, cost of goods and payroll just to keep the doors open and the lights on. So the vicious circle continues and many business owners find themselves running like the proverbial hamster on a wheel, often getting nowhere or even worse just working to keep someone else in a ‘job’ – not a career just your basic J.O.B not typically anything even they are really all that invested in.
Home Based – Online Business Model
Home based & online business models lower the barriers to entry in several very important ways, not least of which is the initial start up cost. You can have an internet presence within days if not hours if you take advantage of the latest, highly affordable technology and software that is available to help you get started quickly and the right way.
It costs about $12 sometimes less, to register a domain and you can easily get your site hosted for less than $75 for a year. Using a website design template and customizing it as your starting point, means you no longer need to give up on having a professional looking site, and it definitely will help you get started much faster and at much lower cost.
You can avoid the cost of warehousing and carrying inventory by finding Drop Ship suppliers of quality products in your niche who will handle the pick, pack & ship elements of the business. If you produce or manufacture a product, you can choose to handle order processing and shipping yourself or you can outsource those tasks to a fulfillment house. Yes, this will mean you have to cover the cost of fulfillment, but a good fulfillment house will provide many services and benefits geared to address your specific needs. They can not only manufacture in some cases, but process orders, package, store and ship your product, many also offer customer service assistance and the good ones will provide excellent inventory management systems.
If you choose to sell digital products, you can deliver those by immediate automated download offer a physical CD backup disc by mail as an up-sell. Again you can have a fulfillment house handle the production and shipping of backup CD’s if you don’t want to do this yourself.
You can even sell other people’s products or services as an Affiliate or Associate seller and simply focus on marketing and driving traffic to the seller’s website and let them take care of the product creation, shipping and handling, collecting a commission once the sale is completed.
Monitoring and measuring the growth of any business is essential to understanding which products generate profits and where there is room for improvement. Online businesses have an incredible advantage over traditional models here because sales are made online almost all aspects of the business can be closely tracked. You can track exactly where your customers are coming from, how they find you, which pages they visit and how long they stay on site, you can even see which pages they visit immediately before they buy and which pages they leave your site from too.
All of this tracking can be done for FREE using basic tools provided by the search engines and freely available online. There is no excuse for any website not having traffic analytics and by far the most popular and comprehensive analytics program Google analytics is absolutely free, so there really is absolutely no excuse for not having traffic tracking on your site.
Once you have your supply chain and website in place it’s time to start letting people know you are open for business. Again there are many low cost or even free tools to help you get the word out and start driving traffic to your site. You can even “buy” traffic for your site by investing in Paid Search advertising, but you can also generate buzz about your site by issuing press releases, blogging and through the strategic use of social media such as FaceBook and Twitter, Pinterest, Tumblr and many others.
Buy or Build?
Some people enjoy the process and challenges of starting a home based or online business from scratch, others prefer to step into a business that already has at least some history behind it looking to add their skills and expertise to grow it from there.
You can experience great success either way, the most important thing is to have clearly defined goals and objectives that are both manageable and measurable. Start with a well defined plan with manageable, measurable interim objectives, then work the plan, review and evaluate your results, then it becomes as simple as rinse and repeat the things that work well and achieve the results you’re looking for.
Buying a Business
Check out our Post Category – Buyers for more posts with tips and information to help you identify the right business opportunity. You’d think it goes without saying, no one should ever buy a business without a clear picture of where they want to take it and how they’re going to get it there, so be sure to grab a copy of our Why Buy or Start An Online Business? to be sure you’re covering all the bases.
Selling a Business
At some point you may decide to sell your online business, and there are plenty of buyers out there looking for a good business opportunity to buy simply so they don’t have to re-invent the wheel. They prefer to find something that has a proven, sustainable history and build on it from there.
Check out the Post Category – Sellers where you’ll find lots of tips and advice on how to best position your business for sale and maximize the sales price you’re able to ask for when the time comes for you to sell.
If you follow the tips and advice on this site when buying and developing your online business, regardless if you buy or build, you’ll be well informed and therefore better positioned, to maximize revenue and profits while you own it and get top dollar if and when you ever come to sell.
Take Away Tip:
Subscribe to receive our Next-Gen-News emails straight to your inbox and bookmark our site now so you can find us easily when you’re looking for a tool or resource sometime down the road.
One last suggestion… join the conversation – comment on posts, always feel free to ask questions and follow me on Twitter @DebraLloydNGBT well that was more than one but hey, I love it when I can ‘under-promise & over-deliver’ 🙂