Starting an Online Business

By John Kim | March 31st, 2009

0
Response

It is so common for people to be tired of working for a company and for them to branch out on their own. From a statistics I pulled from the ‘Center for Ethics and Entrepreneurship‘, 2,356 people go into business for themselves every day, and 57.8% of those businesses start online. The reason why there is such a strong trend towards starting an online business is because it breaks traditional paradigms of starting a business. People can now work from the comfort of their own living room, they can start a business with relatively low investment, they are able to reach a global audience, and it’s easy money. While this is true for some very small percentage of people, this is, for the most part, a myth!

2 Paths to be a Instant Success Online
There are only 2 routes which a person can take to become a instant success when starting an online business:

1. Being a guru in programming, designing, and web marketing, and spending tons of man hours to promote and grow their business. This takes a smaller amount of investment, because they can do everything themselves, and they have the experience to back them up. They can hire cheap labor for all the manual tasks, but in the end they have complete control over the project.

2. Finding investors to invest tons of money into your idea, and then build a team of the finest and brightest to launch their site. This would be the best approach to gaining success for those with limited knowledge. What money buys you is the ability to build a really great enterprise level website, and launch an aggressive ad campaign. You will start to see instant traffic, and if your idea was really as great as you thought it was, then you will be bringing in millions in no time.

The problem is that 90% of people attempting to take their business online suffer from limited funds, and limited knowledge. Most people do not fit into number 1 and 2, and there is no such thing as being an instant online success. This industry isn’t like the “Field of Dreams”, just because you built it doesn’t mean they’ll come. It will take hard work and collaboration between you and your vendors, and most importantly, it will take time.

Questions to Ask yourself Before Staring an Online Business
Don’t let the previous section discourage you from creating a website that can bring you a nice profit. You just need the right tools to do the job, and here is the steps that you can take. If you have an idea, do plenty of research to see if it’s viable to create your website. Ask yourselves these questions.

1. What people do you think would be interested in your business?
2. Who are the competition?
3. If there is competition, then what can you bring to the table that will be vastly different from what they do?
4. What is the cost of creating such a site, whether it be time or money?
5. And finally, will you be committed to these costs?

Answering these questions should get you started on your game plan, but you should definitely ask your self more questions. If you are serious about this venture, than you should feel confident of what you are doing, otherwise walk away from it and do something else, like getting a job.

Starting the Project
Once your research is finished, and you are confident that you will make money from your idea, it will now be time to find your vendors. You will want the most professional site that you can get, so pick vendors with a great track record. You will probably need a marketer, a designer, and a programmer. All three of these vendors are equally important to your online success and here’s the reason why:

A designer will ensure that your website looks professional. All too often, people pick the cheapest designers that they can get, or do it themselves, which creates a design that is anything but professional. Your image is everything, so expect to pay at least $500-$1500 for a nice design layout. 50% of people will judge a website by how it looks, that’s half your business. The design is actually the least of your expense, but it gives you the most bang for your buck. click here to see the cost

A programmer will create all the functionality to your site, and will provide technical support which is everything for starting an online business. Unless you majored in computer science, you better hire a reliable programmer that will be there for you when your website crashes. Be very critical with finding your programmer, because many of them are posing as programmers but they actually only modify templates. These guys will be the first to wet their pants when something goes wrong, because they have no idea how to fix what’s broken. A good analogy would be to take a automechanic and an engineer. Who would know more about your car, the guy who built it from scratch or the guy who took some certificate courses in city college?

The cost of a programmer can vary, but developers can charge between $70-$120 an hour. And always ask for a list of their references so you know that they are as good as they claim. Or contact one of the people from their portfolio if you are critical of the reference list they gave you. Investigate them thoroughly, because your whole business will depend on this guy.

A marketer will be the person responsible for bringing you traffic. Traffic is like gold in the online world, and that’s where you can start making a profit. What’s the point of creating a website with a great look, and great functionality if no one knows about it? You need a marketer with a good history who can do the job that they claim. These guys can also be expensive, costing from $3000 to $18000 a month. A trust worthy marketer will also never claim that he will give you instant traffic. If his sales pitch has any kind of verbiage that implies he can give you instant traffic and ranking, then kick that guy to the curb. Real marketing will take time, unless you have millions of dollars to spend on your ad campaigns. But if you were a millionaire then why not retire?

So it can be a challenge to find the right people with a limited budget when starting an online business, but having an investment of $30,000 to $100,000 would be what you might need for your site to become a success. But the rule of thumb is if you have more to spend, you will have better results.

Conclusion
My challenge for my own business is to have people understand that a website is not easy money. If you decided to open up a Donut Shop, could you convince anyone to start you one for $1000? It’s true that you can get more online for a smaller investment, but not for an investment of $1000, or even $10,000. For that kind of money, you would probably make no more than $500 a month, and that’s considered pocket cash. You can’t support a family on that money. So I hope this article has been helpful in understanding what it takes to create a successful online business, and to pick the right people for your budget.