Starting An Online Business

A Straightforward Guide

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• Publisher: Straightforward Publishing Digital
• Year: 2014
• Print ISBN: 9781847164438
• eBook ISBN: 9781847164919
• Topic: Business
• Subtopic: E-Commerce
• Index: Business

This second edition of the Straightforward Guide to Starting an Online Business is a clear and comprehensive introduction to setting up and running a successful online business. More and more people are shopping online and more and more businesses are moving their activities online to compliment traditional models. However, just like traditional businesses, specific skills are needed to ensure that the business is a success. This book provides an ideal introduction to all the essential steps in the process.

Ch. 1

Introduction to Online Business

Without a doubt, the ascendancy of online businesses, internet based businesses, has taken the business world by storm over the last ten years or so. Indeed, more and more people are purchasing their goods online, to the overall detriment of the high street.

At the outset, there was a proliferation of such businesses that culminated in the celebrated dot.com boom. During this period, investors behaved as people do during a housing market surge, or some other spiral, they became irrational and threw their money at anything with a dot.com beside it.

What happened after that is a mirror image of what happens after every economic bubble bursts, many of them went to the wall. A few lucky survivors, such as lastminute.com trimmed their sails and are still around.

This book will show you how your online business can work by successful planning at the outset. The book covers the following:

• Planning and financing your business

• Setting up the business online

• Maximizing revenue from other sources

• Setting up your suppliers

• Marketing your online business

• Managing customers

The absolute key to any online business, as it is with any type of business, online or not, is the development of a clear and straightforward plan, one that will carry you through all the steps from inception to completion. The identification of your business, what it is you are supplying, goods or services and how you are going to supply them, how you are going to finance the business and how you are going to get paid, this is the bread and butter and must be clear at the outset.

You also need to remember that your online business, because it is internet based, will cross boundaries and may not necessarily be restricted to the UK. This will depend very much on what you are offering for sale.

Is now the time to start a business?

Capitalism is a perpetual cycle. It goes through booms and, inevitably, no matter what politicians might say, it also goes through busts. There will always be good and bad times. Right now, we are climbing out of one of the worst times ever experienced. Banks are still very cautious about who they lend to. There are lenders around but they tend to closely scrutinize business plans, which isn’t always a bad thing, and lend money at higher rates.

A depressed economy can provide opportunities in that the goods and services that you require can often be obtained more cheaply, sellers will lower their prices, stock can be picked up from liquidated businesses and so on. A final point is that people will always be looking to lower their costs and online business should be in a position to offer cheaper goods or services, simply because the overheads are lower. So, even though we are still in a recession, there is always an opening for business, particularly online business.

Online v traditional business

There are a number of advantages to setting up an online business as opposed to a traditional business:

• Online is relatively inexpensive to create and maintain a presence

• There is an opportunity, because of the worldwide nature of the web, to attract a wider audience and a geographically targeted audience.

However, all of the ingredients necessary for a traditional business are also necessary for an online business, there are just fundamental differences.

Starting the business-choosing a partner

As with many businesses, there are advantages and disadvantages to working with a partner. It’s good to work with someone else, sharing the workload and the ups and downs and provide each other with ideas and energy. The positive aspects of running a business with someone else are that you can share the same ethic and also know each others strengths and weaknesses, you can also minimize the time that you personally spend on the business, enabling you to spend more time with family and friends.

Having identified the positives, there are well known pitfalls to working with a business partner, and you need to be aware of these before committing yourself to a business relationship. Whether the person is a friend or a business partner who is not necessarily a friend, problems with the business can affect relationships. In addition, as the business develops, personal commitments can change and these changes can expose differences.

In short, pick your business partner(s) carefully, make sure that you share the same ethic, try to visualize the future and what this/these other people will be like and don’t rush into anything. Don’t let your initial enthusiasm blind you to the nature of your future partner(s). For sure, there is always an element of gamble here, always has been, but in many cases problems can be avoided by careful thought prior to entering into a business.

Once you have chosen your business partners(s) formalize the relationship right at the beginning. Too many people run into trouble because they have embarked on a business based on ideas on the back of an envelope. This is not good enough. To not plan the relationship at the outset is a lazy way of proceeding and can also be based on peoples reluctance to commit formally, to be bound by rules. This will cost you eventually.

You should list respective roles and responsibilities, investment requirements, i.e. who is going to initially put in what, the split of ownership, who gets paid what and, on the downside, what should happen if the business fails. Don’t commence your business without these basic ground rules in place. Don’t trust anyone who tries to avoid setting the basics in stone.

Defining your business-identifying Unique Selling Points (USP’s)

Essentially, as the owner of a business, you will be selling products or services online. The products or services that you offer are, usually, already available in a traditional form, on the high street, in one way or another. You can be offering books, holidays, furniture, plumbing supplies, white goods, building services, you name it, the list is endless. You have chosen to sell your product or service online. You will need a good website, which is your shop front, excellent sales and marketing and excellent customer service. However, how you define your business as being different to all other businesses, particularly online businesses, in the shape of Unique Selling Points, is what will ultimately give your business the edge over competition.

Even if there are hundreds of competitors selling the same or similar product, and even if they are more established than you and have built up a brand recognition, your business will gain customers if you can clearly identify the USP’s that differentiate your business from the rest.

An example of Unique Selling Points may be:

• You offer the product cheaper than the rest or offer free postage, some aspect that can immediately draw in the customer. Price isn’t everything but it does help

• Generous payment terms for customers

• Money back guarantee

• Experienced staff

• Many years experience of business before selling online

Whatever your USP this needs to be clearly identified and advertised. It could be that your USP’s are not immediately apparent at the outset of your business but, as time goes on, and you study the competition more will become apparent.

Understanding business and how it works

It might seem obvious, but there are basic things that you need to know about a business and how it works. The business world is a graveyard of failures started on enthusiasm and little else. Its true that we learn by our mistakes, but mistakes can be costly so better be informed at the outset.

Briefly, there are a whole host of external agencies that can provide help and assistance to start up business, particularly now when the government is looking to stimulate the economy. We will be covering finance in more depth further on in the book.

Every business will require an understanding of the following:

Sales, marketing and public relations

Selling your product is fundamental to your business survival and growth. As a service provider you need to find your customer, communicate what it is you are offering and then close the sale. Either you or another member of your team will need this expertise. Following on from this basic skill is the need to let people know that your product exists, both through online and offline strategies. This is basic marketing, reaching people through whatever medium that you have identified. Potential customers will want a wide variety of information, the price of the product, an image (remember the web is your shop front) shipping information and guarantees. You will need to analyze your strengths and weaknesses in the field of marketing and PR.

The technical side

As an online business, your web presence is of vital importance. This requires creating and maintaining the site. This will involve front-end development, i.e. creating the shop front online, database development, systems administration and general administration.

You, or someone that you are working with, will require the skills to maintain the shopping portal, the website. If you don’t have the requisite skills then you will need to hire them in. This costs money so it is vitally important that you have a clear brief for the experts to work from. It is also vitally important that you own the final product and remain in control. In short, develop a clear and unambiguous relationship with the web designers and systems administrators. If you get the design of your site wrong and it doesn’t attract customers then there is no real future. The technical aspects of setting up an online business are discussed in more depth in Section 2.

The legal aspects of an online business

As with every operation there are legal implications for you and your business. This impacts on what you sell and where you sell it. You should seek legal advice when embarking on an online business, as although the law may appear straightforward it sometimes isn’t.

As a bare minimum you need to display website terms and conditions and also your privacy policy. If you intend to sell products outside of the United Kingdom then you need to be aware of any government restrictions, by the way of embargoes and also any licenses you may need depending on territories that you want to sell in, particularly in relation to consumer electronics and entertainment or media products. Don’t just go entering these markets without researching requirements. Take legal advice. It might cost you but it is money well spent and should be treated as a start-up cost.

Controlling the financial process

It is vitally important that you are on top of this area, effective management and reporting of financial aspects of your business. You should be in a position to accurately forecast cashflow needs and also income. If you set up a limited company you will be obliged to submit annual accounts and also register for VAT if your turnover exceeds a certain amount (£79,000 as at 2014). You sho...

Table of contents

• Cover
• Title
• Copyright
• Contents
• Ch. 1. Introduction to Online Business
• Ch. 2. Getting your Business off the Ground-Business planning and finance
• Ch. 3. The Legal Structure of your Business
• Ch. 4. General Factors
• Ch. 5. Financial Control
• Ch. 6. Setting up your Online Business
• Ch. 7. Exploiting your Sites Potential
• Ch. 8. The Supply Chain
• Ch. 9. Marketing
• Ch. 10. Internet Marketing
• Ch. 11. Keeping the Customer Happy
• Conclusion
• Useful addresses websites
• Index