What you need to know when you start a small online business?

Many of my friends with small business started them as a hobby, something they had wanted to do for sometime during their lives but that for many reasons (marrying, having babies, having to contribute with the household income) they were unable so they started their business later in life.

Starting a business is not easy, it takes a lot of hard work, effort and determination. It may take time to get it going, but with the right plan it may grow to a be a profitable business and a rewarding experience.

Calculate your costs

Whether you are going to sell a service or product (making the product yourself or buying from a wholesaler) online, the first thing you need to do is, of course, prepare a list of the items you will sell. Then you need to come up with prices for each of the items in your list. To obtain the final price you need to figure out your costs and then add the margin. The margin is that amount you expect to make out by selling your product. Check what your competitors are charging for similar products to determine your final price.

The cost of your service or product must include all the expenses that go into getting ready to sell, this is called Cost of Goods Sold or COGS.

Cost of goods sold (COGS) refers to the direct costs of producing the goods sold by a company. This amount includes the cost of the materials and labor directly used to create the good. It excludes indirect expenses, such as distribution costs and sales force costs.

investopedia.com

If you are selling a product and you will include the cost of shipping and handling, add it to the cost of the product, whether you are paying to ship or you are delivering it yourself (if you are selling locally). That shall include gas, some percentage of your car use and your time.  Plan your deliveries if possible so you optimize the time it may take you to deliver it or the time to go to the post office. Some online shoppers prefer to see a final price and so it may be a good idea to include the shipping fee in it. Also if your order volume is low keeping shipping and handling in-house will make it cost effective. But when you reach a high order volume you may wan to consider outsourcing it.

When shipping your product, depending on the product you are selling, you may want to add a personal touch such as special wrapping (does not have to cost a lot), a thank you card, a card with a description of your product and how to take care of it, for example jewelry or a flower arrangement.

How to get paid?

For easier, faster and secure online-payment select an online payment service provider (PSP) to process the payments. To get started I recommend signing for a  PayPal business account, getting an account is free, they charge a transaction fee for each sale you make. Their transactions fees are low. Your customers do not need to have a paypal account (they can sign as guests) and they can choose to pay using a debit, credit card, directly form their bank account. You can also consider other services such as Square or Stripe if you plan to accept credit card payments.

Selling your product online

Now that you are ready to sell your product online, start selling on social media to your friends and family. Facebook and Instagram are a great way to get started. To be successful on these social media platforms you need to be constant and post and publish regularly, at least 3 times a week, and engage with those who comment on or share your content. The descriptions and the images of your products are key to the success of selling online. You can invest in a cell phone with a good camera (my iPhone 7 takes great pictures) and take your own photos, make sure the are not blurry and provide as many views of your products as possible.

Another platform is having your own online store, I use WordPress with the WooCommerce extension to build and host online stores for my clients. WooCommerce supports almost one third of online stores, but you can choose other website creation platforms.  Having your own store to sell online gives you credibility and makes you look professional. Also, you may want to look into selling on a marketplace like Etsy or eBay. You do not have to just choose one, you can sell your products using a combination of platforms, but make sure to check and factor the cost of each of them.


Home