Trials and Tribulations of Starting 3 Online E-Commerce Businesses
The economy is down, unemployment is fluctuating and advertisements for making big money from home are everywhere. How do you capitalize on this growing trend? Is it real or a scam? Do you buy into a “package†or develop your own? Should you seek financing or self finance your business? These are all very common and important questions that should be researched and answered. These are only some of the questions that one should answer before launching into a work from home business.
We would like to shed some light on some of these questions based on our recent experiences. We recently launched 3 online businesses, all with very different models and methods. At the end of the article we have include a brief summary of the three businesses that we launched and the effort, cost and learning curve associated with each business model. These will be discussed and used as examples throughout this article. These businesses are listed for reference purpose.
What type of business is right for you?
To answer this, consider the following:
Amount of time you have to dedicate to your endeavor.
It is important that you consider the amount of time that you have to commit to any type of business. Many online business opportunities†reference “Auto Pilot Profits” or something similar and provide numerous examples of successes through their program. What they do not mention is the number of people that are in their programs that have made little to no profits. Any business venture requires time, planning and effort to succeed. Or, you can rely on hope, but hope is not a strategy.
Your likes and dislikes
What do you like to do? People typically know a lot about the things that they like. If you can incorporate this into your business, you increase your chances of success. This happens for a number of reasons.
- You are more knowledgeable about key topics related to the business.
- Strategies and planning efforts will tend to be more on target.
- Learning curves are shorter leading to faster implementation and problem solving.
- More time will be spent on the business if it is something that you know and enjoy.
Personal abilities
What are you good at and what can you do? It is important that you consider your personal skills. If you are not a people person, don’t choose a business requiring a high amount of interaction with people, such as telemarketing. Proper alignment of your skills will help to improve your chances of success.
Technical ability
What are your technical skills? Technical skills are very important as well. Online businesses involve many of the following disciplines. This list is not complete.
- Word processing / spreadsheets / databases
- Website navigation
- Search engine familiarity
- E-mail correspondence
- Basic accounting
- Knowledge of government regulations
- W9 forms for example
- Payment processing
- Sales and marketing
To succeed, select a business that lends itself to your current technical capabilities. This shortens your learning curve and reduces your implementation costs.
Your financial situation
How much can you afford to invest before you generate income from your business? This is an important consideration. Remember the old adage,”It takes money to make money”? This still holds true for online businesses. The difference is that you may not need as much money and the money is used in different ways. For example:
- Location: Typically your home versus the old fashioned “brick and mortar”.
- Equipment: Home computer and internet.
- Staffing: No staffing requirements. You are a one person show. People are hired on a service by service basis as needed.
- Marketing:
- Conventional marketing
- Collateral materials, pamphlets, brochures
- Business cards
- Radio or TV adds
- Online marketing (Critical for ANY ONLINE BUSINESS)
- Viral marketing
- Organic marketing
- Social marketing
- Search engine optimization
- Conventional marketing
“Package†businesses provide some of these services, but not all of them. Services provided vary from business to business and cost different amounts. Ask questions. If you choose to develop your own business from scratch, be aware of all of the potential costs. For more information, see the examples provided below for some of these types of costs.
Work from Home “Package†Businesses
What are “Package†Businesses?
A “Package†business opportunity is what I consider to be the online version of a franchise. These companies offer a “guaranteed†process and all the tools needed to make money online. Often, there is some kind of up front fee required. These types of companies provide services such as:
- A proven method to succeed (be cautious)
- Customer lists (may cost extra)
- Other work from home businesses for you to join
- Products to represent
- Search engine optimization (may cost extra)
- Shopping cart utilities (may cost extra)
- Some form of training
- SSL (may cost extra)
- Weekly recommendations and tips or a “coachâ€
- Your own website of some kind
Services and tools such as these can all be very helpful and provide excellent earning opportunities. Some key things to consider are:
- Additional “upgrade†costs once you’ve bought in?
- Is there an established account base to start with?
- Recurring costs?
- Reputable business?
- Search page rankings of the sites being provided?
- Will your earnings be “traffic dependent�
- What is the conversion ratio of traffic to your site?
- How many people typically purchase something when they come to your site?
Be aware of common “strong arming†techniques used when speaking with “Package†businesses. These techniques can cause a lot of frustration and worry.
- Are you the sole decision maker for this business?
- They are ‘guiding’ you into a position to have to say yes.
- This offer is only good for the duration of this phone call. You must give me an answer now.
- If the deal is so good, it should be available tomorrow or next week. Take your time!!! It’s your money!!
- This special offer will expire soon! Order now!
- If you are interested, get in contact with the company listed on the website. Normally, the offer will still be valid. Don’t rush into anything.
Work from Home “Package†Business Examples (Alphabetical Order)
- Blogging
- Day care
- E-bay
- Entertainment related such as free chat webcam modeling.
- Facial and skin care products
- Legal Services
- Loans and mortgages
- Pet sitting
- Publishing articles for pay
- Quality auditors
- Sales & Marketing
- Information
- Products
- Services
- Shopping services
- Transcription
In general, if you are considering buying into a “package†business, weigh all of the information provided and ask questions. Once you’ve narrowed down the field a bit, do more research. There are a wide number of blogs and websites discussing these topics. Do your homework.
Develop Your Own Business
Self Development Options – Launching your own ideas.
Developing your own online work at home business model can be very exciting, rewarding and challenging. This option provides for the greatest degree of freedom and scope. It also requires a much greater amount of resources, thought and effort. Online work from home business development options run the entire gambit from a simple webpage with your product and a contact number to highly complex, high bandwidth dynamic website that allows total customer interaction.
Every type of website has its place. The difficult part is identifying what is needed and how to implement it in the timeframe required for the least amount of money. Consultants make very good livings helping people do just that. Here are a few things to consider when developing your own online work from home business.
Website development
When developing your own website, you will need to have some working knowledge of HTML and CSS. If you have not done this before, the “Dummies†series of books are a great place to start. They have good instructions and step by step examples. If you have never programmed before, I recommend that you find a friend or developer that understands web programming. Site templates provide a quick way to begin your development and jumpstart your design. There are a wide range of sites online that provide templates to fit your business model. Do a quick simple search for “website templates†or something similar for a list of possible resources. You can also do a quick search to find excellent freelance web developers that provide great value.
Software
As part of your website, you may need specific software applications or applets to be incorporated. If you are lucky, most of the software will be “out of the box†applications that can be incorporated directly into your web design by you or your developer. If not, you may need to research and hire a software development expert or company.
Implementation Rules of Thumb
Be aware of potential costs versus time needed to implement. Some rules of thumb:
- Expect it to take twice as long as you estimate. This allows you to plan accordingly.
- Plan for twice the cost of the initial development costs. This allows for changes, modification and tweaking.
- Be ready to be charged for major and minor changes. You may sometimes be charged for the quote and the “pre-engineering†time.
- Read every detail of a contract before signing. Do not assume that it matches verbal conversations.
- Launching does not mean you will start making money. It’s a long and winding road. This is just the starting point.
For our site, LavenderLive, we hired outside services to customize their “off the shelf†free chat webcam software package for us. The cost of the core software and customized options was approximately $10,000.00 so far and we have recently purchased $2,700.00 worth of engineering hours for a few additional changes that we have requested. We have been in process for nearly 4 months and have just recently launched, 6 weeks later than expected.
Site hosting
Now that you have your site development underway, the next step is to decide how and where you are going to host it. Where will your site reside? Will it reside on your home computer, not recommended, or on a server somewhere? Website hosting services vary in many different ways. You will need to select the host site that best fits your business model. Some things to think about are:
- Data rates allowed
- FTP services
- General security measures
- Maximum number of connections allowed
- Number of allowed sub domains
- Number of e-mail accounts
- Secured servers?
- Shared or dedicated? This impacts the amount of information that can be passed back and forth at one time and performance of your website. Our webcam site requires a huge amount of bandwidth to pass video and audio information.
- Software compatibility
- Storage limits
Online Sales and Commerce
If your website requires cash or credit card sales, you have many options and a major decision to make. The simplest option is to provide contact information and direct the customer to contact you directly to process the order and get the payment information. If you want to process credit card orders, you will need to have an account that allows you to process these transactions and the correct equipment to do so. This account is called a merchant account. There are some issues with this method though.
- Your transactions are delayed if you are not able to process the requests or if you are waiting for payments in the mail.
- This slows down the buying process. Customers may elect to continue searching versus contacting you.
- Increased order tracking and processing complexity.
- Your business accounting and tracking software is probably not incorporated directly into your site so it most likely needs to be updated manually.
Another option is to arrange for a payment gateway and merchant account. A payment gateway is the service that allows you to securely process credit card orders online and transfer the information between customers, merchants and payment processors. According to Wikipedia, a payment gateway is defined as:
“A payment gateway is an e-commerce application service provider service that authorizes payments for e-businesses, online retailers, bricks and clicks, or traditional brick and mortar. It is the equivalent of a physical point of sale terminal located in most retail outlets. Payment gateway protects credit cards details encrypting sensitive information, such as credit card numbers, to ensure that information passes securely between the customer and the merchant and also between merchant and payment processor.â€
The merchant account accepts the online payments from your site and your payment gateway. According to Wikipedia, a merchant account is defined as:
“A merchant account is a type of bank account that allows businesses to accept payments by debit or credit cards. A merchant account also serves as an agreement between a retailer, a merchant bank and payment processor for the settlement of credit card and/or debit card transactions.â€
Quite often, payment gateway and merchant account services are offered as an all in one service, but not always. A common solution is to employ services such as PayPal to handle these transactions. They provide an online payment gateway and merchant service. When selecting your payment gateway and merchant account services, you need to be aware of the costs associated. Each service provider should provide you with a complete list of their fees, terms and conditions. Some things to consider are:
- Up front application fees
- Fixed monthly fees
- Fixed transaction fees
- Variable transaction fees (or Discount Rate)
- Discount Rate
- Termination Fees
- Miscellaneous Fees
- Hold backs (or RMRF – Rolling Merchant Reserve Fund)
- Contract timeframe and requirements
- Visa and Mastercard registration fees.
Not all payment gateways and merchant accounts are created equal. Do your homework and analyze all options. To do this properly, you will need to estimate your average monthly transaction amount and your average number of transactions per month. This will help you to determine if a high fixed transaction fee is better or if you want to go with a higher “Discount Rateâ€. Keep in mind, payment gateway providers and merchant account providers, if separate companies, will have different fee schedules and bill you separately for the same transaction.
Website Traffic
So, you’ve got your site developed and you are ready to make some money. Unfortunately, it’s not usually that simple. First you need to get people to your site to see your products and services. This is where the SEO (Search Engine Optimization) comes in. I recommend that you consult with an expert on this topic to accelerate your web traffic and search engine standings. SEO involves a wide range of activities and techniques to increase the number of people visiting your website. The following is a partial list of SEO related techniques and activities:
- On page content
- Anchor tags
- Headlines
- Key words
- Meta tags
- Page titles
- Page text
- Quality content
- Organic Content
- Articles posted on other sites (news / magazines / commerce)
- Blogging
- Inbound links – these can be embedded in the articles and blogs.
- Viral / Social marketing
- Blogging
- Myspace
Search engine optimization is not something that you do just once. This must be done on a regular basis with new content, ideas and techniques to ensure a high search engine placement. This is a constant battle that never ends, but is well worth the effort.
Summary
An online work from home business can take on many forms and be implemented in what seems like an infinite number of ways. Some key things to remember:
- Be ready for obstacles, issues and challenges.
- Know your capabilities and goals
- Research, research and more research
- Select a site properly designed to facilitate search engine optimization
- Take your time in selecting your business and resources
Most of all, enjoy, have fun and good luck.
Real Live Work from Home Examples
- Affiliate Site (actual site not listed due to the nature of the content)
- Self developed affiliate or link website
- High amount of development and personal time needed to implement.
- Approximate Cost: $400.00
- Time in business: 6 months
- ROI: None
-
Today’s Unemployment
- Blogging site based on a “buy in†program through another company
- Minimal development or personal time needed to implement.
- Approximate Cost: $1,700.00
- Time in business: 4 months
- ROI – None
-
LavenderLive (Listed to show an example of a professional development project)
- 18 years or older only
- Free Chat Webcam Company utilizing outside development and consulting resources.
- Extremely high amount of development and personal time needed to implement.
- Approximate Cost: $15,000 (and still increasing…)
- Time in business: 1 month
- ROI: Too early to estimate. Still launching.
About the Author
Frank Melotte
Co-Owner of Omega Epsilon Investments and Omega Epsilon Productions TTF and www.lavenderlive.com