Plenty of business owners don’t really know what it takes to start a business. While a lot of things get sorted out once the company starts gaining momentum and revenue, some things you need to figure out before your ecommerce business gets off the ground.
This includes meticulous planning and preparation for all eventualities. It’s the groundwork that can mean the difference between success and failure and it requires some consideration. And because it comes with its own problems and difficulties, here are a few things you should do before you start an online business.
5 Things to Complete Before You Start Your Online Business
1 - Plan way ahead
The first year of business is the hardest, but consider creating a business plan for year one and a long-term strategy until year five.
The common misconception is that businesses fail in their first few years. However, according to the Small Business Association, only 30% of new companies fail in year one and two, while 50% close shop during the first five.
The plans for your first and second year can be detailed outlines of what is required to make a positive balance, like successfully achieving quarterly revenue goals. Your five-year plan should include big annual investments but remain open to revision once you get your business off the ground.
2 - Take initial action steps
Although planning is important for the success of your company, timing and action is everything in business. If you get stuck in the planning phase too much, you might get caught up in the details and continue planning with no end in sight.
Take clear, actionable steps that don’t allow you to be hesitant and that move your plans forward. For instance, take steps to register a company and business name, and then use that momentum to purchase a domain name. After that, you need to find a hosting provider, and then start building your website. And so on.
Each action makes evident what you need to do next, although you can always stop and return to your plans. This simplified strategy allows you to get some initial things done and go in the right direction.
3 - Plan your online marketing strategy
Investing in marketing is essential for startups. How else can you expect customers to hear about what you are selling?
Create a marketing strategy that encompasses all available channels, like social media, paid advertising and PPC, and SEO. This allows you to figure out the consumer psychology of your target audience and where you are likely to find them, which will give you an edge in retail.
Additionally, a marketing strategy gives you a good estimate of the marketing budget, and how much money you will need to raise to realize those efforts.
4 - Acquire funding for startup and operations
Starting any business requires funding. And while it might require a lot less for a company that does most of its business online, you still need to create a financial plan and acquire the funds to start.
Create a cost estimate. Include initial expenses like tech purchases and web design, to monthly overhead like software subscriptions, fees, and salaries. Make it as conservative as you want, to maximize expectations and lower your risk.
Once you crunch the numbers, you can forecast how much revenue you will need to achieve a sound financial balance. Not to mention, you will have a better understanding of what your price plan should be.
Only when you have created a sound financial plan can you go in search of funding and know the path to secure them, be it a bank loan or taking money out of your savings account.
5 - Start with services then develop the product
Consider starting your business by selling a service, and then slowly move towards the product. Services generally require a lot less investment and take less time to develop than product-centered businesses.
Once business owners make it past the first couple of years, they tend to forget about improving upon their business model and scaling their company accordingly.
By planning for both service and product, you ensure that you initially don’t exhaust your resources too quickly, nor your future investment options further down the line.
Conclusion – The importance of action in a successful online business
Although some of these steps might seem illogical at first, following them ensures that you don’t miss something. Being meticulous about your planning allows you to know what to look for, especially when it comes to the financial aspects of opening a business, not to mention avoiding the initial business process mistakes.
Once you get all of these things off the checklist, the real work begins. It’s time to put your plans into action and sell to your first wave of customers. As you start moving forward, you can come back to these first steps, make corrections, and add new things that will put your company in the elite group of successful online businesses.
Our guest author Raul Harman is editor-in-chief at the Technivorz blog.
He has a lot to say about innovations in all aspects of digital technology and online marketing.
You can reach him on Twitter.