Article provided by PayFast
With the opportunities of the Internet, entrepreneurship has never before been as widely embraced as it is today. A global business can virtually pop up overnight.
However, the decision to start an online business can be daunting. With so much information about making money online, working from home, and living a digital lifestyle, it becomes a challenge to distinguish between “information” and “misinformation”. It’s easy to feel totally overwhelmed and demotivated by everything you think you need to learn.
This blog post is aimed at helping you make informed decisions about your online business. If you’re considering starting an online business, here are five necessary questions to ask to ensure you’re heading in the right direction.
1. Do you already have a product to sell?
The product you’re selling could be a physical product, a service, or a digital product, such as an e-book, software, music, membership, photographs, a video, or a song. With the Internet removing the limitations of physical location and logistics, there is no limit to what can be sold, or how your skills can be converted into a sellable product. If you don’t have a product, the beauty of the digital age is that you don’t need to create one. There are thousands of product creators who are eager for you to sell their products as an affiliate or a reseller.
With an affiliate model, product creators provide you with links to their products. For every sale that gets generated through your affiliate link, you get an agreed-upon commission. A good way of maximising the benefits of the affiliate model is to choose a topic that you’re knowledgeable of—or would like to learn more about—and create a website targeted at that niche. As you educate others on this topic, offer links to affiliate sites that complement your articles.
The reseller model is similar to the affiliate model, except that product creators offer you their products at a reduced price and you’re allowed to sell it as if it is your own. You would probably need to discuss with the product owner beforehand the minimum and maximum amount you’re allowed to sell their products at so that it remains within industry prices.
If you’re dealing with physical products, consider the effort and costs involved with the management and delivery of stock from the buyer to the seller. Are there minimum order quantities involved when placing an order from the seller? How will you be collecting, storing, and delivering these products? You need to consider these costs when deciding which products you would like to resell. The affiliate model and the reseller model are two of the ways in which a new business can pop up overnight. Just be sure of their terms and conditions before you plunge ahead.
2. What are your strengths?
What do you know you’re good at? Selling your own products, being an affiliate, and reselling someone else’s products each comes with its own set of advantages and disadvantages that will highlight your strengths and your weaknesses.
Advantages and disadvantages of selling your own products:
As a product owner, you have complete control of pricing and delivery, but it takes time and effort to develop the product so it will take time before you start seeing profits. The profitability of the business would also depend on how fast you can create new products and whether you can keep up with the demand.
Advantages and disadvantages of being an affiliate:
As an affiliate, you have an instant product and you don’t have logistics costs, but the product itself will never be unique because there are other affiliates selling the same. You’re also relinquishing control of when and how products are delivered to your buyers.
Advantages and disadvantages of being a reseller:
One of the benefits of being a reseller is that you have greater control over pricing and branding than you do as an affiliate. Products are instant, but you are responsible for rebranding/branding and delivery, which could incur additional costs. If orders are broken, missing, or held up due to seller issues or customs clearance, you are the one having to answer to your buyers. How will you handle refunds and returns? Can online shoppers outside of South Africa place orders? It’s best to consider these before you open shop.
3. What is the primary role you would like to play within your business?
When you consider the advantages and disadvantages of each business model, it may make sense to choose a model based on your strengths and interests. For example:
- If you love creating your own products, it would make sense to sell your own products.
- If you enjoy marketing, you may prefer to stay away from product creation and instead opt for the affiliate model where the focus is on getting new clients.
- Maybe you enjoy crunching numbers. The reseller model would be the perfect challenge for you to optimally manage profit margins for maximum return on your online business investments.
4. How will you market your online business?
A first step for many soon-to-be online business owners is to set up a website without first considering how they plan on bringing visitors to their new website. If you’re selling your own products, you have the choice of taking on the selling role yourself, or recruiting affiliates or resellers to sell products on your behalf. Or a combination of the three. If you’re selling someone else’s products, there is some additional work to be done upfront: do the necessary research to understand your potential customers. Once you understand your potential customers, where they hang out, and what they’re interested in, the next step is to develop a strategy for:
- Getting the right information in front of them, for example, Facebook posts or LinkedIn articles.
- Directing them to your website where they read more about your business or product offering.
- Encouraging them to either buy your product or provide their contact details for you to contact them through with a newsletter or a phone call.
Part of the marketing strategy development process includes deciding where you’re selling your product geographically. For example, will you be targeting local businesses or international end-users?
5. What marketing tasks will you outsource?
Once you’ve honed down your business model, identified your target market, and developed your marketing strategy, the next step is implementation.
The biggest challenge that online entrepreneurs face is taking on everything by themselves instead of focusing on what they’re already good at. While the Internet makes it easy for businesses to pop up overnight, it’s easy to forget that marketing requires the same process in the small one-owner business as it does in the large online retail stores.
Marketing roles within a large online retailer typically include:
- Web designers who ensure that the design of your website will serve both your business and your customer needs. Graphic designers and writers who are responsible for producing the content.
- Media buyers and planners, who schedule and negotiate prices and placement of marketing campaigns as per the media planning schedules.
- Campaign managers and analysts who implement, manage, and report on campaign performance.
Each of these roles require specific knowledge and skills in order for it to be executed effectively.
Yes, it is possible to find an online course for absolutely anything you’d like to learn about marketing, but would you really want to? Wouldn’t you rather do the things you already know you do well and outsource the rest? As a business owner, your time becomes an expensive resource. When deciding whether or not to outsource a specific task, ask yourself if it would be of greater benefit to spend hours learning a new skill than paying a professional to do it in a fraction of the time.
These five crucial questions will help you build a solid foundation for your online business. The next step is to bring your dream alive by taking action. If you’re selling your own product either directly, through affiliates, or through resellers, PayFast can help you set up a seamless business from start to finish. Not just a secure payment processor, we have partnered with leading vendors in the online industry with proven track records of online success.