Starting an online business can be extremely daunting. However, with good preparation and planning, there is no reason your launch can’t be a success. This article will discuss some of the things you should be considering and doing before your big opening day!
How Much Will the Business Be Worth?
Before you start an online business, consider whether it will make you money as a future asset. Online businesses are valued differently because they don’t always have tangible assets. The linked guide offers some useful insights on this topic.
A SWOT analysis is a way of you mapping out your perceived strengths, weaknesses, opportunities, and threats. It is a very useful tool when pre-planning and allows you to really dial in areas where your business idea may need further planning or support.
An example would be identifying a strength that your product has a longer battery life than your competitors, and you can use this unique selling point in your marketing. Another example would be identifying a threat that there is a business with a very similar name and product. This would allow you to then adjust your branding accordingly before launch when it is more cost-effective to do so.
Doing a SWOT analysis gets all your thoughts down on one page and maps a clear path to success.
Choosing a Business Entity
Choosing a business entity is going to depend on a number of factors including, personal preference, how many people are involved in the business, and liability considerations.
There are 4 main types of business entities in the USA.
- Sole Proprietor: A sole proprietor is the simplest kind of business entity, it is controlled by one person and often used for simple business activities such as freelancing. This business entity is quick and cheap to form and has the most minimal paperwork. The downside of it is that the business owner is responsible for all liabilities, so if someone sues you, you are personally liable for that.
- Partnership: Essentially this is an agreement formed between two or more people, to share the profits, losses, and liabilities of the business. There are a couple of different types of partnership, with some options limiting liability for some partners within the business.
- LLC: A limited liability company is an organization that limits the liability of the stakeholders.
- Business Corporation: There are multiple corporation types, including business and not-for-profit. When a corporation is registered, it is essentially its own ‘person’, and owners are in fact employed by the company. It involves a lot more paperwork than other business entities but does have some tax benefits for shareholders.
If you have a business that is unlikely to be sued, then the simplicity of sole proprietorship is probably the fastest way to get started, however, it’s wise to seek the advice of an accountant before registering any kind of business entity and this is something you should do in advance of launch.
Having insurance is important in most businesses, if you are going to have premises, then public liability insurance is a must. However, even if you only sell online you should consider things like product liability insurance to protect you should one of your products cause injury or damage.
Marketing is the key component of any successful business; you should map out your marketing plan in advance and decide how you are going to reach your target audience.
Create social media channels and hire any experts such as ad managers in advance to ensure you have eyes on your product/service on your launch day.
When starting an online business, being organized is key. Having things like tax status and insurance sorted before launch will bring you peace of mind and allow you to focus on running your business.