Starting up a business sounds like an easy way to work and earn money from home. However, it isn’t quite as easy as you may believe. There are a lot of financial implications to consider first.
Keep reading to learn the most important things when starting a business online.
The Cost Of Running A Business
Most people know that starting up and running a business can be costly, but don’t always understand the full costs. There are a lot of hidden fees out there that make it very complicated to factor in the total cost.
Here are some of the costs that a lot of people overlook when starting a business:
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- These can change depending on what you need a license for, and where you are located. Some states only require a few dollars, while others can cost upwards of a hundred. Research the permits and licenses your business will need and the average cost in your area.
- If you choose to purchase your own domain name or have to with the platform you chose to work with, you can expect anything from a dollar a month to a dollar a day in fees.
- Spreading the word. Unfortunately, to get your product out there costs money as well. Most people recommend setting aside about 7% of your total money coming in towards marketing. While there are some free options, as you start growing, paying for some advertisements can help you reach a wider audience
- Payment fees. No matter what you use, there are fees associated with paying online. Depending on if your platform included these fees in their payment or not is something to look at. Usually, you can expect to pay about 3% of any purchase towards fees. Sometimes, there is also an additional flat fee added on top as well.
- Depending on the software and platform you want to have available, your costs can be anywhere from $10 to $300 per month. While it might seem a good idea to go with the cheaper option, those more expensive ones can help you bring in more customers, and requires less work from you.
- Whether you are personally keeping a stock of your products somewhere, or your manufacturer is sending them directly is something you need to consider. This area is generally your largest fee, as you will have shipping manufacturing, and storage costs to consider. Estimating this depends a lot on your manufacturer. For example, if you are making a physical product, you need to know the cost of manufacturing them. An easy way to do this is to look up suppliers for fixings and fasteners so that you can get an idea of the cost.
Choosing a Niche
You may want to just jump into your online business and make whatever you think the world needs. However, it is important to first pick a niche. There are certain questions you need to ask yourself first to help you figure out your target audience.
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- Do you want to sell physical or digital products?
- If physical, how will your products be made?
- How will your customers get their goods?
- What is the competition like in your field?
- Are you offering single products, bundles, or subscriptions?
Knowing these questions will not only help you make a goal for your company but will let you know how to promote your products so that your potential customers can find you.
Picking the Right Legal Structure For Your Business
Picking the right legal structure is essential to make sure your taxes and legal guidelines are correct. Though it is an extra cost, consulting a legal professional in this area can help you learn the pros and cons of each option so you can pick the best one for your business.
For Ecommerce businesses, the most common legal structures are:
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- Sole proprietorship
- General partnership
- LLC
- Corporation
Make Sure You Have Proper Permits and Licenses
When starting a new business, there are a lot of legal hurdles to jump. If you do decide to contact a legal professional about your legal structure, also try and talk to them about the permits and licenses you need to start your business.
Try to get the information for the area you will be operating in specifically, as every town, county, and state has different guidelines. Filing these improperly can cause you to pay large fees, have to pause working, or even have to shut down your business, so you must take the time to do this part properly.
Some examples of permits and licenses that you may need include:
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- Home occupation permit
- Building/constructing permits
- General operating license
- Sales tax permits
- Professional license
- Signage permits
- Trade license
- Local operating license
- Health, environment, and safety permits
Read More:
Profitable online business: How to make money with a tight budget
