ii) Form a partnership with two or more like-minded persons. Here, you will have to share profits, but you will also not have to bear all the responsibility yourself or do all the work yourself. The risk for each partner is also reduced as each only comes up with a portion of the capital and investments. Additionally, more heads can mean better management and greater creativity and ideas. However, there is always the possibility of disagreement and misunderstanding creeping up among partners that can ruin business relationships and affect the business. That can be a headache.
iii) Incorporate a Limited company. This, however, can complicate things as you may require a solicitor and an accountant to help overlook your accounts. You will also have to submit regular financial statements to specific regulating bodies. The capital of a Limited company is made up of shares of a fixed amount. As a Director of a Limited company you will not be personally responsible for debts incurred by the business. Neither can shareholders be held liable for debts incurred or loans taken by the company.
Before registering a company, work out a business plan in which you list down your goals for your business. A good business plan should comprise the following:
- A saleable idea for your business idea and your objectives in setting up - this business -- choose a business related to your core skill or interest. Core skills are the main skills you possess i.e. the skills at which you are best. This guarantees that you have the most important resources ready at hand.
- A marketplace you have targeted – research the market from every - angle, especially the competition and the pitfalls of being in such a market as well as how to escape or climb out of them. This ensures that you have a definite idea of what you are getting into and you will be up against.
- A category for your product or service that can find a place or niche in - the market you have targeted
- A strategy to market your product - be sure to consider price
- Financial assistance - look for ways to fund your business
- Miscellaneous details
Operating expenditure, cash flow and taxation
Running an online business involves many of the factors and provisions linked to running an offline business. Three of these that you must consider are operating expenditure, cash flow and taxation. Here are some matters related to these three extremely important considerations:
i) Location of retail outlet – Start small but find a good location that is easily accessible and unhindered by traffic congestion
ii) Staff – You may need to employ staff when your business grows to a level where you need help running it. In that case, take into account that you will have to pay salaries and certain benefits as well as provide certain benefits.
iii) Keep proper records of your transactions. Stay in control of your funds, and know how you are spending your money. You must be in control of the cash flow of your business.
iv) Keep track of taxation requirements such as income tax, value-added tax, goods and services tax, employee contributions etc.
v) You may keep a simple set of accounts as a sole trader, but when your company grows, book-keeping may become more complicated. Be sure to find out the taxation requirements of the different countries from which you may have customers.
vi) Learn about import and export procedure – this will include forwarding cost, sales tax, import and export tax duties etc. all of which are similar considerations in running an offline business too.
vii) Be aware that you will need to advertise your product, and that therefore, you will need to budget for advertising and marketing cost to produce publicity material such as brochures or to organize demonstrations, exhibitions, sales campaigns, site visits etc. Don’t forget to factor in travelling expenses as well.
As an online business entrepreneur, you must understand that setting up an online business involve e-commerce, and factors such as operating cost, cash flow and taxation are very important. You are best advised to adhere to the rules and regulations set by the Registrar of Companies and the Taxation Department.
When you have taken care of these preliminary but important considerations, you can sit back and enjoy the thought of the benefits that doing business online can bring you. But what exactly are those benefits?
Benefits of doing business online
1. An online business requires minimal start-up costs.
2. You can plan your hours of work and play each day, knowing that even while you are sleeping, the system, which is automated, will be working for you.
3. You can operate 24/7/365.
4. You have a global marketplace with the number of potential users running into the billions.
5. You have an automated processing system of payment and order taking.
6. You customers will have instant delivery for digital-based products.
7. There is no need for direct face-to-face dealing but you will always be prompt in your replies and service.
8. You do not have to pay rent for office space, and may never need to pay employee salaries.
9. You have recourse to new opportunities offered by similar entrepreneurs online, and you may consider partnerships, new Master re-sales or re-labeling etc.
10. You do not need to take inventory of stocks, and you will have no debtors to worry about.
11. Social networking tools allow easy networking with potential customers and friends. Enhances your marketing strategies with the social bookmarking tools
12. You will have plenty of opportunities to create passive income online by joining affiliate programs.
Low cost does not mean no cost
Yes, the cost of setting up and running an online business is low, but you will still need to come up with capital. Any venture needs some capital. You will need to invest in the right equipment and tools before you start. You may need to buy a notebook, a webdesign program or a blog design software. You will also need to register your online service as your domain and sign up for webhosting services. This may come up to a few thousands, but that is nothing compared to the capital of tens of thousands that you might need to set up an offline retail business.
I wish to suggest the following software for web design:
- Photoshop CS4 - this Adobe application is a key tool. It allows you to manipulate images and create graphics-like buttons. You can choose Photoshop Creative Suite 3.
- Dreamweaver - this is used to build the actual framework behind the page.
- Adobe Flash - this allows you to create rich media and interactive web content.
- Adobe Illustrator - this is a drawing application for creating web artwork and graphics.
For Blogging, the equipment needed to start