There are many options when it comes to starting an online business. How do you know which of your business ideas is best? Each online business comes with a set of pros and cons. It is always important to learn the rules of each business. We will look into 5 types of online businesses which you can start and how to break the barrier in each one of them.
- Service based businesses: You don’t have to be involved in selling an actual product online. Service based internet businesses include offering consulting in your area of expertise or providing writing or web development services. You wouldn’t have to worry about the costs and complications that come with product shipping and manufacturing. The business is likely to have low startup and overhead costs.
- Product based businesses: It is still a valid business idea to sell products online. The best way to reduce the cost of starting a product based business is by partnering with the right people. You can partner with a company that has the items in stock to allow you to make orders on demand. This means you will only buy the items when your customers order and it will reduce overhead costs significantly.
- Blogging: It is hard to make money blogging but starting up a blog doesn’t cost much. If you choose this kind of business, know that it requires a ton of work. You need to be dedicated to the blog and be willing to follow the trends that will help your blog succeed.
- Freelancing: You can offer your set of skills to a number of clients online on a freelance basis. Sites like oDesk have so many people looking for freelancing tasks. This is an ideal internet business if you want upfront cash but it may not be a long term business plan. You should only use freelancing as a stepping stone to create bigger things.
- Affiliate marketing: This is a unique form of marketing where you generate leads for a specific product or service and then sell them to interested brands. For instance, you can start up a website and then build an email list which you can use to send emails which contain your affiliate link. It is a tricky online business but when done right, it is highly successful.
Before you settle on any type of internet business, it is a good idea to perform thorough research. Get to understand what customers are looking for and what other businesses are offering. Online businesses require a lot of marketing so you need to roll up your sleeves and start working.
Coming Up With Your Business Ideas
For many successful business people, the first step of coming up with a business idea is the hardest. Coming up with a business idea may not come natural to everyone. Some people have to train themselves to think creatively. The good thing is, the process of coming up with a business idea is likely to be the most fun part of starting your business. At this stage, allow your imagination to run wild. Remember that there is no perfect business idea. Every idea comes with its unique challenges. Start by considering the following questions.
5 key questions to help you find the right niche
What are you passionate about?
- One of the key rules to succeed in business is choosing a field that you are passionate about. Choose a business which you will be happy doing for the rest of your life. Do you have a hobby that you can turn into a business? If the answer is yes, this is probably the idea you should plan to execute.
What are you good at?
- If you have spent time building up skills or contacts in a certain industry then you may want to start a business using your expertise. Look for gaps in the market within the industry you are currently working in. Having your own business means you can do things differently in a field you have already developed skills and connections.
What can you afford?
- There are startups that may require up to $100,000 in order to be taken off the ground. It is important for an entrepreneur to consider what he/she can afford. In this wavering economy, you don’t want to invest a lot of money on a startup. You can choose to cut costs by working from home or in public spaces rather than renting an office when the business is still young.
What kind of owner do you want to be?
- How much time would you like to dedicate to this business? You can choose to be either an absentee owner or an owner-operator. An owner-operator will be actively involved in the business. It is actually a cheaper and smarter way to run your business especially in its initial stages. It keeps you motivated. Hands on owners are also a valuable asset to the brand because it helps to build brand integrity.
Is the business viable?
- As much as it is important for an entrepreneur to take risks, a smart move is going for a business which is viable. In this economy, it takes most businesses an average of 3 years to recover its investments. Consider a less risky business idea if you can. Look into issues like the marketability of the potential business as well as the competition. For instance, choose a home based business that doesn’t require you to invest in a 10 year lease and expensive equipment.
Looking for Inspiration
Do not be afraid to look at other people’s business ideas in order to get some inspiration. You can copy someone else’s business idea so long as you do something unique that distinguishes your business from the rest in the market. Remember that there are also some business ideas that are protected by copyright laws. Some of the places where you can get inspiration include:
- Social media sites: Look at what people are complaining about on social networks and provide a solution
- Magazines and newspapers
- Looking to improve other people’s ideas
- Speaking to people in order to get their opinion on certain issues
- Reading user comments on blog posts
- Think about any service or product that you once required that nobody else provides
- Learning a new skill
Following Your Personal Goals
A good business idea should be consistent with your personal goals. Everyone has their own personal reasons for starting out a business. If you’re main goal is to get more flexibility over working hours in order to spend more time with your family, choose a business that will help you accomplish this. You need to be fulfilled in business. It is easy to experience a sense of fulfillment and get motivated if the business works help you to accomplish your personal goals in life.
Your business idea must be in line with your expectations to maintain a work/life balance. Make sure you are ready to take time away from your personal life depending on the business you choose.
Sharing Your Idea with Others
When coming up with various business ideas, you may wish to discuss some of them with your friends and family and seek for advice or encouragement. Remember that once you put an idea in the public domain, it can be difficult to protect it unless you ask them to sign a non-disclosure agreement. This contract prevents any third party from sharing details of your idea with others. You can consider hiring a professional consultant to talk to regarding the business idea. Also talk to your solicitor regarding any concerns on how you will protect your intellectual property.
Is there a market for your business idea?
Once you got a business idea, you need to decide whether it could turn out into a successful venture. It is important to establish whether there is a market for your idea. To do this, you need to consider the following.
Does the business idea create or satisfy a market need?
As an entrepreneur, it is your responsibility to find out what the market really needs. What is it that customers need most? Fulfilling this need is the best way to develop with a winning product. In fact, you need to think of what the market needs even before you start developing your product or service. If you develop a product that doesn’t serve any need in reality, it has no chance of success in the business world. No one wants to spend money on a useless product.
There are those products which may fulfill a preexisting need others can fulfill a need that doesn’t even exist yet. Investing in such products may be difficult because it’s not easy convincing people that they will soon require that product. To best understand your customer needs:
- Get into your target client’s heads as much as you can
- Come up with cheap prototypes of the product
- Introduce the prototypes to your target market and listen to what they have to say.
- Be open-minded because the product may attract a market you never thought of originally.
Are you able to identify potential customers?
A good business idea should attract a certain type of customer. Whose needs would you want to meet? Would you want to offer a product that solves the needs of the developing world or just people with disabilities? Whether you are targeting the elderly, disabled or the general population, weigh this very carefully because it is going to shape your business.
You may be surprised to find out that the product entices a customer base you did not expect during the development stages. It is always important to be realistic when looking for potential customers. Don’t set very high expectations because you believe in your product. Think of the value that it is going to add or create to each group of customers.
Will the business survive passing trends?
A viable business idea will offer a product that is durable and timely. You can choose a business that is going to withstand different climates. If the business is targeting a certain trend, make sure it is able to capitalize on the trend until it passes away. You need the ability to think ahead and anticipate market trends that may affect your business.
There are industries such as information technology which are affected by passing trends. Many products have been outfaced by new technologies. You need to plan how you are going to handle such innovations when they come and how your business will adjust to avoid making losses.
Is the product unique or better than those offered by the competition?
Your business idea will have a very ready market if it offers a product that is better than what is already available in stores. Don’t think you can’t compete with multinational organizations which have been around for decades. In fact, research has shown that industry giants are welcoming small businesses more than any other type of venture into the industry. Smack firms have been seen to perform much better than larger firms that are just starting out.
Study your competition and know what they have on offer. Make sure the product you sell offers a very unique benefit. Online clients are always shopping around for the best deals. This doesn’t mean that you need to offer the cheapest product in the industry as this may make your business lose credibility. Other than using pricing, there are ways to make your product stand out from what is already in the market. Do your homework well and discover that unique selling point.
Is the product or service safe for public consumption?
Your business idea shouldn’t contradict any relevant legislation and regulations. This is why it is always important to make sure you seek legal advice when developing fresh ideas. Consult your lawyer to find out if the product or service is legal. Mistakes during this stage can lead to very costly consequences. Get as much information as you can in order to understand how your product fits in.
Will the market bear your prices?
Once you have obtained information about your target customer, find out if they can afford the product or service that is on your mind. A good business idea should be able to sell and generate profits. You should offer a reasonable price that people will agree on and still help you to gain profits. Coming up with a suitable pricing structure for your business may require some hard work. You may need professional assistance in order to obtain pricing information from your competition. In case the product or service you are offering is completely new, the task of identifying proper pricing becomes even tougher.