Starting a Business

How to Start a Profitable Business Online

Having your own business can be a dream come true or a living nightmare. A lot depends on how accurately you’ve calculated your business’s start-up costs and how well you’ve anticipated running and sundry expenses for the first three to five years. Unless you’re exceptionally lucky you’re unlikely to generate massive profits within the first two or three years. You need to have a large enough financial cushion – or plans B, C, D and E – to weather the rough patches.

There are ways in which you can minimise your riskand improve your chances of long-term (perhaps even short-term) success.

Go online

Home-based online businesses have fewer start-up costs because you don’t have any bricks-and-mortar-related costs; for example, rent, furnishing the premises, buying business contents insurance, and monthly utilities. By going online, you can save yourself something like £25,000 in the first year alone.

This doesn’t mean you can skip financial planning. You will still have start-up costs, monthly expenses, yearly expenses, and sundry expenses.

As an online business owner, you need to consider:

Website design costs

You can hire a professional designer to create your website if you’re going to be dealing in exclusive and expensive goods and services. You’re not going to attract much business for your bespoke jewellery if it looks like your 10-year-old niece designed your website using Paint.

There are several DIY design platforms that make it easy to create a simple website. This is perfectly ok if you’re a freelance writer, consultant, and tutor or if you’re an agent for a product, act as a middleman, or are selling homemade goods.

The DIY option is far more affordable but you will have to subscribe to the platform to access extra features; for example, logo design assistance and site analytics. There is also monthly hosting fee.

Another website-related cost is content creation. This includes webpage writing, images, videos, and image and video editing services – if applicable.

You can write your own content but online writing is a skill that blends quality writing with business promotion without making it come across as an ad on theshopping channel. It also requires knowledge of search engine best practices, which includes strategic keyword use without stuffing in as many keywordsas possible to the detriment of the quality.

If in doubt, hire an online marketing company or engage the services of an experienced freelancer.

Advertising and marketing costs

There are several free advertising options online, including some industry-related business networks and, obviously, social media platforms. It’s a good idea to build a presence on as many different social media platforms as possible – provided they are relevant to your business.

It’s also a good idea to take advantage of sponsored advertising opportunities to increase your exposure. You don’t have to do this every month, but it can be a worthwhile investment once a quarter or so.

You can purchase advertising space on relevant lifestyle sites or ‘piggy-back’ on sites that have a similar target market. For example, if you make and sell vegan cupcakes you have a fairly niche target market.

You can increase visibility and attract attention if you advertise on popular baking websites. You can also propose an advertorial so you can introduce yourself to the market in your own words.

Don’t underestimate the value of business cards and flyers which you can leave with related businesses. Taking the vegan cupcake example again, you could get permission to put up a flyer in a baking supply store or an organic produce store.

Production costs

As a vegan baker, you will need to use ingredients that aren’t readily commercially available, like coconut or tapioca flour. You need egg and dairy substitutes. All of which tend to be more expensive than the non-vegan options.

You also need to think of production volume. How many cupcakes can you bake in one day; do you have a place to safely and hygienically store unsold cupcakes; how many cupcakes do you actually sell in one day; do you make to order? You don’t want to be stuck with dozens of unsold cupcakes getting staler by the hour. That’s a waste of ingredients and gas/electricity, fridge space, and time and money.

You need to take all of this into consideration when determining your selling prices.

Insurance

It doesn’t matter if you work from home, you still need business insurance. If your kitchen accidentally burns down while you’re baking a batch to sell, your home insurance is unlikely to pay your claim. In fact, it could cancel your entire policy because you concealed important information.

You also need cover in case you’re sued by someone with a coconut allergy who ends up in hospital after eating your chocolate cupcakes made with coconut flour.

Choose a business that is in-demand

Veganism is growing in popularity and getting increasingly mainstream, so you have a good shot at being successful – and generating a healthy profit.

However, if you choose something too niche, like writing dictionaries for the alien languages in Star Trek, your market simply isn’t big enough to support you.

On the other hand, you don’t want to be one more drop in an ocean of common ideas for a saturated market.

Popular and ‘safe’ business ideas include:

  • Consulting: If you have any areas of expertise or special interest you can set yourself up as a consultant. You really do need to know your stuff, so you can provide unique insights and advice that will make a positive difference to your clients. Popular fields include: SEO, Social Media Marketing, Business Success, and various fields in finance.
  • Web design and Web development: There are several online courses available that will teach you all you need to know to set yourself up as a professional designer or developer. You can target small business owners while you establish a reputation; but don’t make them your guinea pigs. They are paying for a professional service.
  • Tutor: High school students, university students, foreign students; they could all benefit from tutoring in a variety of subjects, from maths and science to English and medieval history. This is where your special interest could come in handy.
  • Freelance writer: If you have a good grip on language and also have a specific skillset you can set yourself up as a freelance writer offering specialist services that include technical writing, press releases, resume and cover letter writing, SEO writing, and ghost writing, and transcription and translation services.
  • Virtual assistant: Not everyone can afford a fulltime PA, but that doesn’t mean they don’t occasionally require an assistant to manage certain aspects of their business. Virtual assistants can fill the gap, taking on miscellaneous activities that include correspondence, data entry, and specialist ad hoc requirements, like event organisation and project management.
  • Handmade craft seller: The vegan cupcake baker or other artisanal crafter, for example, a potter, knitter, and glassmaker.
  • Affiliate marketer
  • Dealer in collectibles, including books and art
  • Bookkeeping
  • Stock photographer

Quick tips

Don’t underestimate the importance of a business plan.

Research your target market.

It’s ok to fail, provided you learn from the mistake.

Use contracts.

Don’t under-charge your or under-value your services.

Keep proper financial records, even if it’s just accurate bookkeeping.

Register your business as either a sole trader or limited company. Each has its advantages and disadvantages. Talk to an advisor if you’re unsure which best suits your needs.