There was never a better time to start your own business than the present day. With the internet boom and all the various avenues it has brought with it, would be entrepreneurs are spoilt for choice.
It’s even better for retail entrepreneurs. No more shelling out big bucks for your retail store. No unnecessary expenses on utilities, rent and overheads. No need to employ large sales teams on the shop floor to assist shoppers. Last, but most importantly, no more being limited by the population of a locality to grow your business.
With the birth of Amazon and eBay in 1994, e-commerce in the form we know it today was born. It has evolved to a nearly unrecognizable level from its humble beginnings, but the basic idea remains the same – get customers to visit your website, let them browse around for the things that interest them, allow them to make a purchase and pay for items that they finally settle upon; all online.
So if you have a bright idea for the next Amazon in the making, put on your listening ears. Here’s a step by step roadmap to launch a successful e-commerce startup.
1. Think Through Your Idea. Do concept testing.
The one thing that gives a startup a definite edge over competition is an innovative concept. While established businesses can afford to buy market share by spending huge money on marketing, a great idea often attracts attention by pure word of mouth and can be the USP of the business.
If you think you have hit upon such a game-changing idea, get more opinions on it. Test your idea with your target audience and see if they are equally gung-ho about it. Use survey tools like SurveyMonkey or Qualtrics to do your concept testing by yourself before you unleash your business idea on the world.
2. Figure Out Source of Funding
Before you can plunge headlong into building your business, figure out where the money for the venture is going to come from. Today, startups have a variety of choices when it comes to getting funding for their business.
- Bank Loans: There’s always the tried and tested route of taking a bank loan to get started. The amounts are often not very large, but it’s a lot easier to obtain than a lot of other funding options.
- Venture Capitalists: Approach venture capitalists or angel investors for seed funding for your e-commerce startup. Even Google started small with VC funds and grew into the internet behemoth it is today. You will need to come up with a clear business plan, an airtight revenue model, timelines for when your business will breakeven besides loads of enthusiasm to make a pitch to a potential VC and secure your funding.
- Crowdfunding: Another option you should consider is crowdfunding. With this option, you present your business case to the public at large through a crowdfunding site and invite the public to contribute funds towards your business idea. In return the donors or investors get a share of equity in your business, a fixed return on their investment or even a special gift as a thank you for their donation. Pick from sites like Angels Den, Crowd Cube or Indiegogo to get your business idea off the ground.
3. Legal Eagle – Get Your Paperwork Done Correctly
There’s some level of paperwork involved while setting up any new business. An e-commerce venture is no different. While the intricacies of the legal requirements may vary from country to country, largely you will need to take care of these three priorities:
- Copyright: Once you have established that your business idea is one worth pursuing, you need to take measures to prevent someone else from copying it and getting to market before you. If it is a never before seen product or service idea, copyright it to protect it from me-too copycats. This step however, is a matter of choice, not necessity.
- Registration and Ownership Structure: Next you need to register the business as a legal entity and get your taxation details set up. Since you have figured out your funding sources already, spell out the ownership structure of your business (sole proprietorship, partnership, public limited company etc.) right at the beginning in order to prevent problems later on.
- Domain name and Web Hosting: Every startup, especially and e-commerce startup needs a place on the web to host its website. Buy a domain name and get a web hosting service for your business from any of the hundreds of services out there. Take your pick from HostGator, GoDaddy or FatCow to build your website on. Make sure the domain name you buy is unique, relevant and is the same as or matches your brand name.
4. Pick A Good Platform To Build Your Site
Shop around, do your research, speak to existing e-commerce business owners and understand which platform will be best suited to build your e-commerce venture on. Spend some time and effort in this process, as the platform you build your website on, will decide how stable your website is, how fast you can process transactions, how versatile and multi-functional you can make your site and more.
You have multiple options to pick from. There are the free to use, open source options like WordPress, Drupal or the e-commerce favorite – Magento, or you can choose to go with plug and play e-commerce platforms such as ShopIntegrator.
Your final choice depends upon how flexible you want your site to be, what your budgets are, and the extent of e-commerce functionality you’re looking to offer over the long run.
5. Use Conversion Optimization Principles For Your Website At The Design And Development Stage
A lot of e-commerce sites get into optimizing their conversions retroactively – after they see sales slumping or traffic bouncing off at alarming rates.
Avoid this situation altogether by building your site from the ground up using the best conversion optimization and SEO guidelines in the book. Some conversion optimization fundamentals that you must keep in mind at the time of developing your site are:
- Good Copy: Invest in good writing and functional copy that engages readers while it communicates facts. Pay special attention to headlines. A great headline captures users’ attention and also tells search spiders exactly what the page is about to raise your page rank on SERPs.
- Page Meta Data: Take care to include accurate and descriptive title tags, meta descriptions and alt tags on images for each page on your site. Each of these help search engines discover your site more easily and improve your page rankings
- Clear Navigation and Site Structure: A clear breadcrumbs based navigation structure, intuitive categories and sub-categories and logical link architecture helps not just search engines but also allows users to find products on your site with ease. Better showcasing of products = better chance of a sale.
- Call to Action: Every page out to have a clear call to action that stands out from the rest of the page. Use contrasting colors, arrows or ample white space around the CTA to make it jump out at the visitor.
- Social sharing: Include social sharing icons alongside every product listed on your e-commerce site. People like to share interesting things they find online with their friends. Play into this need and get your pages to become more popular online
- Quick and Easy Checkout Process: This is of prime importance for e-commerce sites. Make sure your customer does not get distracted by other interruptions on your site once they add items to their shopping carts. Create a simple, linear checkout flow with minimal steps to avoid shopping cart abandonment and improve conversions. Take a look at some of ShopIntegrator’s shopping cart and checkout options for inspiration.
Here’s a great guide to conversion optimization best practices for further reading at your leisure.
6. Keep Costs Low
As you start out on your journey towards a new business, it is important to keep your expenses under control. Technology now allows you to use free or low cost apps for doing stuff that large organizations employ teams of people to do.
Some free / cheap apps that you can consider to get your everyday business done for free are:
- Dropbox for Storing Data that can be accessed anywhere. You get 2 GB of free storage post which you can pick from one of their paid plans based on your storage needs.
- Asana for Project Management and collaborating with your team on projects smoothly. They have a free option for teams under 15 members. For bigger teams you’ll have to go paid.
- Free Conference Call for using Conference Services for absolutely free
- MailChimp for Email Marketing offers a great free account that can be upgraded eventually as your email database grows bigger.
- Natural HR is a free Human Resource Management tool that you can consider for recruiting, onboarding, training and payroll management.
- Streak a free CRM tool that works from right inside your email inbox.
- Shop Integrator is a complete Store Management & Shopping Cart solution with a free online retailing option where payments can be made by PayPal or offline checkout. The free version also supports 7 storefront languages and includes a tax manager.
- Free Press Release allows you to submit press releases for free that get distributed to news sites, blogs, search engines and social media.
7. Hire Good Talent
A big mistake that a lot of entrepreneurs make is taking too much onto their plates and getting burnt out eventually. While it helps to have a business partner or involve your family in the business to keep costs down, it is not a long-term fix. Do what you are naturally good and delegate the rest.
Hire talented people who share your vision and can help take the startup forward.
Check out LinkedIn profiles of professionals who work for your competitors and reach out to them with interesting offers. That’s a free and effective way of hiring capable talent. Another free avenue is to tap into your college network for references of talented professionals whom you can approach.
Only once you have exhausted your free options and networks should you venture into paid recruiting platforms that cater to your particular industry. LinkedIn offers job posts by industry, so do leading career portals like Monster and CareerBuilder.
8. Manage Your Cash Flows
Managing money is often the Achilles Heel for many new startups. Multiple expenses are a given in a newly set up business. Besides capital expenses, there are running expenses like payroll, tax payments, utilities, business travel, business entertaining and more.
Keeping track of each expense often becomes too cumbersome and things quickly spiral out of control.
Stop spending from personal accounts, and open a dedicated bank account for your business. Get a corporate credit card that can be swiped for everyday business expenses. Invest in an accounting software that will link your bank account, credit cards and all expenses together and keep the paperwork sorted in one place. Apart from managing income and expenses, most expense management tools also take care of invoicing and payment receipts from clients, payroll and taxation as well as overall book-keeping for future records.
You can use a free app like Wave Accounting for this, or if you want to go bigger, you can upgrade to apps like Xero or QuickBooks.
Setting up and running a business was never easy. But with technology on our side, we can now predict our performance and correct our course before it’s too late. Even when mistakes occur, it is easier to bounce back on an e-commerce platform than a real world retail set up.
So go ahead, take these fundamentals of building an e-commerce startup, add your own creative flair to them and create your dream enterprise to rival the e-commerce behemoths of the day.