Congratulations on deciding to become an online entrepreneur! You have a great idea and you can’t wait to get your product or service out there on the web. But, there are a lot of steps to take before opening your eCommerce business.
After all, you can’t just jump into business without having any idea what you’re doing. That could be a recipe for failure.
Thankfully, we’ve got you covered. We’re going to give you the what, why, and how of starting an eCommerce business. We’re going to help you think through every facet of building your business.
After all, thousands of businesses fail each year, and one of the primary reasons they fail is being unprepared. Here’s what you need to know.
Research The Competition
Begin by researching other eCommerce businesses out there that are similar to yours. Making sure you have a marketable product or service is the first step to building a successful online business. Make notes about your main competitors: What marketing strategies do they use? What is their social media footprint? What are their annual sales?
Consider how you will distinguish yourself. Will you offer a better product? Will it be cheaper? Will it be unique in some way.
First and foremost, you need to know what will make your business succeed. You need a sense of how you will stand out from your competitors. If you can’t make your business stand out, why would customers want to purchase from you?
How Do You Find A Good Niche?
There are numerous ways to find the best niche for your eCommerce business. Surf different eCommerce sites and learn what is out there. Try to get a sense of what is performing well and what niches might be on their way out.
You can also choose your niche by interviewing friends and family to see what they wish was out there, or you can even send an online survey out through a free survey site like www.surveymonkey.com. These survey sites allow you to create free surveys and give you a unique link to your survey that you can post on social media or send to everyone on your email list.
A third way is by evaluating hot products on auction sites like eBay. What is selling well? What is showing up for various searches? What would the profit margin be like on these products. It’s always crucial to evaluate your profit margin. If you can’t make a solid margin, you’ll end up losing a lot of money.
What is most important to remember about identifying your niche is that you are looking to start a business that fills an unmet need in consumer goods or services. Don’t start a business that simply seems cool. Don’t start a business based on something you love unless a need for that business exists.
If there’s no need for your business, it will fail.
How Do You Start An Online Store?
Once, you’ve determined your niche, you need to begin building out your online store. Obviously, the first step is to build a website from which you’ll sell all your products. There are several ways you can do:
- Use a platform like Shopify, which is specifically designed for creating online stores
- Create your own website, using a system like WordPress
- Sell on an already existing platform, such as eBay or Etsy
Your choice will depend on how much effort you want to expend and how much customization you want to do. Options like eBay and Etsy are easy to set up but don’t offer much customization. WordPress requires much more work but is highly customizable. Shopify sits in a happy middle between the two.
The second step is to determine if you will need any staff on a regular basis. Some entrepreneurs run successful businesses out of their home offices. However, if your business is product based, you will need to think about logistics, such as:
- Where the product will come from
- How much will raw materials cost
- Where will you store your materials and products
- What type of packaging will you need
- Additional labor needed
After these steps, you need to consider start-up costs. It’s not difficult to obtain a website and domain name; however, you need to decide ahead of time if you want to use a web hosting service like GoDaddy or HostGator, or if you will host your own site (which is very time consuming and expensive, but allows you more control).
Once that decision is made, you must determine if you will use the templates offered by a hosting service as the background for your eCommerce platform or if you will hire a web designer to ensure a professional looking site.
Next, come up with a marketing plan. A marketing plan will help you determine who is in your customer base and where you can most easily reach them. You should definitely plan to spend a large sum on your initial marketing campaign.
While marketing through social media is certainly inexpensive compared to traditional marketing (radio, television, print ads, flyers), there are still customers out there who prefer the “old school” methods of marketing. It wouldn’t hurt to consider one or two of the traditional marketing strategies in your initial launch of the business.
It is also good to check out business plan creator software that is available for entrepreneurs. The software available will take you step by step through the process of creating a business plan that will work for your idea. You may also be able to find free online business plan software that will help you in building your business plan.
What Mistakes Do You Need To Avoid?
As in any business venture, building and launching a successful online business means avoiding pitfalls and mistakes. One mistake is thinking it will be easy – it will not. The planning and set up for an online business takes months.
Another mistake is thinking it will be cheap. You must be prepared to put in not only a lot of time, but a significant financial investment as well. The old adage “It takes money to make money” is verifiably and undoubtedly true. Though starting an online business is significantly cheaper than a brick and mortar business, it still takes money to start one.
Below are the top 10 mistakes that new business builders make when starting their eCommerce business:
1. Waiting too long to launch a product/service
When you start blogging or podcasting to build an audience, it’s easy to get stuck on the content “hamster wheel” for months or years without ever offering something for sale. There are a few reasons this happens. Some people are waiting for some magic audience size “1,000 subscribers” or maybe “10,000 visitors” or whatever your number might be. Some people simply talk themselves out of creating a product because they’re afraid no one will buy it.
They don’t want to fail after putting in so much time creating content. If you’re building a business, you need to address the biggest risk head-on. The biggest risk you’ll face as a business is in creating something no one will pay for.
2. Solving an unimportant problem
If the problem your business solves is important enough, you won’t even have to look for customers. Imagine if you had a cure for cancer, for example. Businesses fail all the time because they try to solve a problem nobody really cares about. If you put your product or idea out there and nobody buys it, there’s a good chance you should look for a more important problem, not a bigger audience.
3. Not really listening to customers
How do you know if the problem you solve is important enough? Listen to your customers. Really listen to them. Don’t just listen to the customers who provide validation. Listen to the ones who ask for refunds or buy your product but don’t use it. Listen to the people who tell you they won’t buy, and find out why.
4. Not being different enough
In most markets, customers have different options to choose from. If your business has competition, you have to give your potential customers a reason to choose your offering over another. But think about it from the reader or customer perspective. If they find your blog, they’ll be asking themselves “why is this blog worth spending any time on?” You have to answer that question quickly and clearly, before they click the back button.
You can’t expect to grow an audience by being an inferior version of some other better known site. Even if your site or product is arguably better than the competition, “better” is subjective.
Instead of simply trying to be better, you need to be different. Then, when someone asks why your site or product is worth her attention, your answer will be objective and easy to understand.
5. Choosing a topic you don’t care about
Whatever you choose to focus your business on, you’re going to need deep subject knowledge, fresh creativity, and unwavering stamina. There will be competition who cares more about the topic than you do. How can you compete if the gap between your love of a topic and your competitors’ is wide?
6. Starting with vastly wrong expectations
Building a successful business is a massive undertaking. You probably can’t do it while traveling the world. If you have a full-time job, it will be much, much harder. If your plan involves four-hour workweeks, or if your timeline is measured in weeks or months, you will probably fail.
These are the hard truths that people rarely talk about. Overnight successes don’t exist. Your original plan will probably have to be completely re-written, maybe multiple times.
Talk to some entrepreneurs who have achieved something close to what you want to achieve. Ask them what it really took. Ask them about stress and timelines and giving up. Ask them not to sugarcoat it. Really listen. Then ask yourself if you’re prepared for your own version of that.
7. Spending too much time thinking and not enough doing
If your ratio of thinking-to-doing is anything less than 80% doing, think again do more.
As Chase likes to say, entrepreneurs have two modes, CEO mode and worker-bee mode. In a one-person business, you have to be both.
8. Going it alone
No one can succeed in business alone. You need people to make it work. Your customers are people, your suppliers are people, and your service providers are people.
Most importantly, you need support from other entrepreneurs who are at similar stages as you are, and from others with more experience. The more connected you become with other entrepreneurs, the more normal your quest becomes. You’ll no longer feel crazy or alone, and you’ll realize that we all face obstacles just like you’re facing.
9. Confusing “blog” with “business”
A blog is an incredible platform for sharing your ideas, connecting with people, and growing an audience. The same is true of podcasting, YouTubing, or any other place you might publish content for free. Giving away free content isn’t a business. It’s a tool for building influence. Don’t count on turning that influence into sponsorships or advertising dollars. You’ll need a more direct plan for earning an income if you want your blog or podcast to pay off.
10. Not starting at all
This is perhaps the biggest mistake of all. Don’t be that friend who talks and talks about starting a business for years and never does anything thing about it. It’s easy to get so worried about all the possible mistakes that you never get started at all. But that’s the only way to guarantee failure. Starting a business isn’t a sure thing — it takes guts and intelligence and heart and hustle — but you will get better over time ONLY if you start.
How Can You Create A Business Plan for eCommerce Stores
A business plan gives you a roadmap – a guiding document of sorts – to keep you on track. If you hope to get any financing for your business, you’ll certainly need a business plan.
Every business plan should have at least the following elements.
Executive Summary – While it’s the last thing you will write, it’s the first part of the business plan. This part summarizes the main highlights of the rest of the sections.
Company Description – This is a high level overview of your company, products or services, types of consumers, and competitive advantages. Ultimately, think of it like what you would tell someone in an elevator ride about your business if you wanted them to invest in it.
Market Analysis – This is your research about your industry and target market. If you haven’t formally defined your target customer, this will help you do so.
Operational Plan – This covers the day to day operations of your business, from location and hours to inventory and accounting. As you go through this, you can make sure that each of the vital processes in your business are running as smoothly and efficiently as possible.
Organization & Management – This tells people about the main players in your business – who owns it, who manages it, etc. It will help you define all parties involved with the foundation of your business so everyone has a clear understanding of where they fit and who does what.
Products & Services – This is where you describe the products and services offered by your business. You should think about them from your customer’s perspective. It will help you to better sell your products and services once you’ve defined them using this approach.
Marketing & Sales – This is where you layout how you will reach your target market, identify prospects, and sell your products and services. While composing this section, creative marketing and sales strategies might emerge.
Financial Projections – This is where you really dig in and figure out how much your business will make over the next five years. As an established business, you will include historical data and be able to make your predictions based off of that. Coming up with these numbers could be a huge motivation boost and keep you working towards a specific goal as opposed to just seeing what happens.
Funding Request – This is the part of the plan where you define your outside funding needs and exactly how you plan on using those funds as well as pay them back. Even if you’re just investing your own money into your business, this can help you really focus your spending so it is all allocated and documented properly.
Fortunately, there are also a lot of great resources on the web that you can use to make the business plan writing easier. Best of all, many of them are free. Here are just a few:
SBA Create Your Business Plan – This guide walks you through each section of your business plan with all of the details you need to craft them. They also have a Business Plan Tool that will walk you through the process, step by step.
SCORE Business Plan & Financial Statements Templates
Sample Business Plans – Over 500 sample business plans for various industries including restaurants, retail, medical, health, services, fitness, pet services, and many more.
The Time to Start is Now!
Don’t make the mistake of quitting before you begin because you are afraid of failure. Find your niche. Do your research. Write your business plan. Invest your time and money. And most of all, believe in your idea, your product, and your plan.
The future is yours to create. Create the business, and the future, that you long for.
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