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Setting up an Online Business

 

SETTING UP AN ONLINE BUSINESS
 
 
Since the crash of the ‘dotcom economy’ we’ve all heard the statistics - for every online business that succeeds hundreds, if not thousands, flounder. Nonetheless, thousands of new online businesses are born every year attracted by the unique marketplace the web has to offer. What is it that attracts entrepreneurs to the web and what does it take to build an online success?
 
Why Set up an Online Business?
 
Firstly it’s an inexpensive route into business. You can set up a basic site for as little as a few hundred pounds. It can require very few staff and can often be operated from home - up to 24 hours a day! As its virtually a borderless market your audience is potentially global.   With a website you can dispense with the need for expensive leaflets and mail shots and your product catalogue can be constantly and inexpensively updated.
 
Identifying a Product or Service
 
Finding the right product or service to sell takes dedicated research (see article on Getting the Idea). Find a product or service you feel genuinely enthusiastic about and ask yourself whether it has the potential for long-term growth and will realistically generate a suitable level of income. Avoid business products or trends that are fashionable or appear to be get rich quick schemes. Yes they may have some short-term life but they may rapidly lose momentum in the longer term and you may have to compete pretty fiercely in the shorter term. If you can, network with others who own online businesses. Learn from their experiences.
 
Research Your Market

 Once you’ve identified a product or service, thoroughly research your market. Find out what your potential customers need and want and work out whether you can meet those needs at a profit. (see article ’Knowing Your Customers’) Many people launch into an online business with absolutely no sales experience. While it’s still possible to make a success of it, bear in mind you’ll be learning the ropes while competitors forge ahead. You may be still be experimenting with pricing and timing after much of your investment capital and room for manoeuvre is gone!   Consider starting your own line business slowly, perhaps dedicating a little time each week or month. Build stable relationships with your customers over time and establish a decent sales history. Once you have a proven track record, have established the level of demand and are maintaining constant sales at a profit level that both returns your investment and gives you an income, then that might be the time to think about giving up your paid job. If you can, track at least six months activity in your chosen market before committing. 
 
Protect Yourself and Your Customers

If customers will be paying for your product or services actually on your site (ie you have an e-commerce site) you need to protect yourself and them from the threat of identity theft and hackers. Should someone target your internet business then every personal detail and all the credit card information that you’ve processed is at risk. Always spend as much as you can afford on a secure and encrypted system. Many customers simply won’t buy until they see this.
 
Affiliate Programmes
 

Even sites that aren’t e-commerce enabled (ie. don’t retail anything) can generate income through affiliate programmes.    If you have a site that’s of interest to other online businesses they may be willing to pay you to drive visitors to their site. How? By placing their link - for example in the form of a banner - on your site. If the click-through results in a sale, you’ll earn commission - typically anything from 1-15%. Particularly generous schemes even allow you to gain commission on sales for up to two weeks after your visitors click on the link. Many leading online retailers claim that up to 20% of their revenue comes from affiliate links! It’s worth being cautious, however, about who you choose to link to. A bad experience at an affiliate site will reflect badly on your online business too. And don’t make the mistake of making affiliate links the greater part of your content. There’s nothing more infuriating than sites that are awash with little other than banners. Also bear in mind that when a visitor clicks on an affiliate’s link they are leaving your site. Ask yourself - is it worth the risk? Would you earn more by keeping the visitor on your own site? 
 
Using Auction Sites
 
Consider posting items for sale on major auction sites such as eBay. Although technically you aren’t allowed to have a direct link through to your own site businesses constantly find ways of getting around this ,identifying themselves yourself and bringing in traffic from people seeking additional information about their product or service. It’s worth posting a few items then tracking the resulting traffic. Even if you sell the items at a loss you may feel the additional traffic is worth the punt!   Online classified ads e.g. in Yahoo, can be another inexpensive way to boost traffic to your online business. Many sites will even let you list for free.
 
Direct emailing
 
For many online businesses direct emailing is a cheap tool for traffic building. No-one wants spam but sensitively customised e-mails can generate substantial response rates - sometimes as high as 30% Respect your visitors - always use ’opt-in’ sign-ups ie ask the customer if they want to receive emails from you. One way of encouraging this is to offer something in return e.g. a free draw or a monthly newsletter. Of course if you’re offering a newsletter you need to give the customer really valuable information! Keep it brief and to the point. Mix information on interesting trends in your industry with more specific details of your product or service offerings. Include hyperlinks so visitors can go directly to your site to find out more. Don’t forget, though, that maintaining a list can be time-intensive. Some servers require breaking your master list into a series of mini-lists before they can be sent - sometimes with as few as 30 at a time! Alternatively you could use a mailing service (e.g. www.topica.com). 
 
OK they’ll include a little third-party advertisement but they’ll maintain your list for you and send out your mailings. Don’t forget to give those on your list an easy way to opt-out. If someone asks to be removed do so as soon as possible. 
 
Trading Overseas
 
Once your site is established then you’re - technically - available for round-the-world business 24 hours a day.   However whenever you trade abroad you enter the complex world of other country’s laws and customs regulations. You need to make international customers aware that they may require to pay customs duties in addition to the cost of the items. Also some countries charge a national sales or value added tax. 
 
Mailing/shipping costs can be expensive and can eat into your profits. Getting authorisation on foreign credit cards can be complex and risky. If - even with these additional hurdles - you still feel your product or service can compete with home-grown offerings and that you’ll make sufficient profit on the sales, you need to make your site foreigner-friendly. Offer multiple languages and currency converters. If you can’t afford (or can’t be bothered!) to offer multiple translations of your content, you could always post a link to AltaVista’s Babel Fish (http://babelfish.AltaVista.com). Bear in mind, however, that although translations are generally good they can be variable, so check what happens when visitors click through.
 
A World of Opportunity!
 
The brave new universe of online trading - with all it’s talk of search engines, e-commerce, affiliate schemes, web hosting and domains - can be confusing for the uninitiated. Nonetheless starting a business online can allow the well prepared start-up entrepreneur to punch at a level well beyond his size. It’s a virtual world of opportunity!     

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