Setting up a new online store is quite a journey.
The amount of time and energy that goes into such a process is tremendous, and can often feel overwhelming to someone who hasn't undertaken that particular endeavour before.
Here are 10 ways to avoid risk when starting an online business.
There is a lot of risk inherent in starting an online business, and if your business does fail then you've spent hundreds of hours and likely thousands of dollars — not to mention the emotional investment — just to end up back where you started. And if you quit your day job to go out on your own with an online store, you might even be worse off.
This is why it's so important to know how to mitigate risk when you start a new online store. You should be on the lookout for any opportunity to improve your business' chance of success. If you are following your dreams, it just makes sense to do whatever you can to ensure those dreams become reality.
And if you pay attention to these ten ways to avoid risk when starting an online business, you are much more likely to be successful in your endeavours.
How to take the risk out of starting an Online Business
- Have a nest egg.
Simply put, don't spend all of your savings on the online store, because if it fails you will lose everything you invest. Even if you dip into your savings to some extent, make sure to leave enough to cover any unexpected emergencies.
- Lease, don't buy.
When acquiring your starting equipment, it is often much easier to lease than to purchase outright. Leasing could be more expensive over the long term, but the fact that it requires much less up-front capital and absolves you from maintenance costs makes leasing a more conducive approach to getting started.
- Keep initial spending low.
The less you spend on getting started, the more you'll have left over to support your business or yourself if things don't go as planned. Even if you feel that you can spend a certain amount initially without risk, saving money is never a bad thing, as you never know what circumstances you may have to deal with in the future.
- Keep your day job.
Quitting your job right away to start an online business may sound like an amazing fantasy, but real life is rarely that kind. If you quit and your business fails, you could end up in dire straits. It is far safer to keep working until your business shows stable growth. Depending on the nature of your online business, keeping your day job may not be possible, but it should certainly be a consideration.
- Find a niche.
The narrower your business' niche, the better. Online stores are a dime a dozen, and their potential customer base is everyone who uses the internet. You need to simultaneously narrow your target market and distinguish yourself from similar competitors, which involves branding yourself very specifically and staking a narrow yet populous niche.
- Sell the right items.
If your products are timeless and/or sentimental, your online store is much more likely to succeed. This is because your products will be much more likely to become obsolete, and you will always have some sort of market for them. Additionally, you can demand higher prices for things with emotional value.
- Find a partner.
If you can share the work and responsibility, your business will be much safer. Not only will you have help with the time, energy, and capital it takes to start your business, but there will also be someone to pick up the slack if you fall ill or need to take care of an emergency.
- Keep your website safe.
Online stores have an area of vulnerability that brick-and-mortar stores lack: a website. If your website gets hacked or is damaged by malware such as Trojans or viruses, you could lose quite a bit of business. It is often worth a bit of extra money to invest in good protective software.
- Practice good SEO.
Search Engine optimisation is key to attracting potential customers to your website. Without SEO, you are relying on word-of-mouth and paid advertising, which are either unreliable, slow, or expensive. SEO is free, easy, and reliable.
- Gather data.
The worst way to fail is by going with your intuition instead of using hard evidence. Everything you do should be data-oriented. Thinking of adding a new product to your store? How do similar products sell? Thinking of making changes to your website layout? How have past changes you've made affected your traffic? Make sure that any planned change is informed by past changes or market information.
If you incorporate these tips into how you approach your online store, you will be much more likely to succeed where many others have failed. Just remember that although reducing risk takes constant vigilance, it will all be worth it when your online business is up and running.