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Planning and research
Whether you are setting up a small business in the real world or doing so online, it is absolutely essential that you start off with a plan. As the saying has it, ‘if you fail to plan, you plan to fail’, which is definitely a saying that accurately applies to starting your own business.
If you are a starting a business online, you have a significant advantage in that all of the information you could ever need is available on the internet, and most of what you need to know is available at no cost.
As you would expect in the planning stage, you need to look at every aspect of your proposed business with a very critical eye because this is certainly no time for ‘rose tinted spectacles’. However much you might love to set up a business that panders to your passions, there is little point in doing so if that business has a very limited chance of achieving success even before you launch it. While you might have a passion for Mongolian nose flute playing, you are (unfortunately for you) in a very small, select group of people who are interested in the same topic, and it is extremely unlikely that you would be able to build a viable business around such a narrowly defined interest.
These are therefore the questions that you must ask as a way of establishing the initial viability of your idea.
Does this business idea work as an online business?
It is a fact that there are some e-commerce business ideas that are just going to work better than others, and if your idea falls into the category of ‘difficult to do profitably’, you might be better coming up with an alternative idea. If the business is apparently not suited to the internet and e-commerce, then you’re better dropping the idea from the beginning.
Think about any artificial limitations that might be applicable to your business as well. For example, if you are considering launching a business to supply heavy plant and machinery, that business immediately has a very limited geographical appeal because you cannot realistically deliver a crane or a dumper truck to the other side of the world at a reasonable cost. Consequently, by choosing this business model, you have immediately removed some of the major advantages of e-commerce, namely its ability to attract customers nationally or internationally and to do so in an economically attractive way.
There are some businesses like running sports clubs or bowling alleys, amusement parks and the like that are never going to work online.
While you could take bookings and sell sports and bowling equipment and clothing from an e-commerce web site, the basic idea of running something like this does not work online.
Think about your local electricity company. Although they can accept bill payments online, most of them already have perfectly acceptable home delivery systems in place, so there is no scope for expanding their business via the internet at the moment.
You need to adopt a practical approach to your ideas from the beginning. If whatever you want to do is unlikely to be successful, drop it before you waste any more time and effort.
Study the competition…
Most people who are planning to launch an e-commerce based business probably think that they have come up with a completely original idea, but in truth, it is highly likely that other people have got there before them no matter what your idea is.
However, you should not necessarily view competition as a bad thing, because without competition, you would not be able to establish what works and what doesn’t. The problem with being the first into a particular market, a pioneer, is that you are the person who is going to make all mistakes. On the other hand, if there are other people already on the market, they have made the mistakes for you, so you should be grateful for competition.
Competition also indicates that there is money being made in the business in which you are interested, and that is an extremely important consideration. While you do not want millions of competitors, because that might make entry into the market extremely difficult, if there are other people already doing what you plan to do, then you know that you are on the right lines, as there is money being made.
If you were to open a business in your local shopping mall, you would look at other competitors who are operating in the same local market, but if you want to start an online business you have to look at competition on a much wider scale. There are probably people in your business already operating all over the world, and you need to know what advantages and disadvantages each of those businesses has.
Research and analysis of what other people in your business are doing online is absolutely essential. While it might be a time-consuming process, it is necessary and time that is very well spent.
Imagine for example that you are thinking of starting a weight-loss industry business, so you want to research what other companies in the same sector are doing. You type the name of a well-known weight-loss product like ‘hoodia’ into Google to see how many web pages there are that feature this particular word:
There are 14 million web pages that feature ‘hoodia’, and while many of these will not be pages from companies who are supplying hoodia based products, many pages are. These companies represent direct competition in your market, so find those companies whose names come up most regularly, and study their websites.
Look at the product range that a potential customer can access through their site, the kind of prices they are able to offer, what delivery terms are available and whether they are running any specific promotions.
Take the domain name URL of the top rated companies in your market and search to see what other information is available about those companies. This might help you to find out how they operate, who their target audience is, whether people are happy about dealing with them and the like.
Remember that the internet is a largely democratic place where pe...
