The year 2021 is a fantastic year to start an online business. If you have the drive, determination, and a brilliant business idea, becoming an entrepreneur is the way to go. The COVID-19 pandemic resulted in many brick-and-mortar companies closing down in 2020. Although many have reopened, most industries have noted a radical growth in online marketing’s benefits.
Statistics indicate that the year 2020 saw an atypical increase of 48% in the number of e-commerce platforms signing up with providers like GoDaddy. Setting up your new venture will likely require funding, but you need to prepare for the cut-throat competition. Having a robust financial plan is the best way to ensure that you have the sustainability to outlast other startups. Here are a few factors to keep in mind.
1. Estimate Startup Costs Carefully
Starting an online business does help you avoid the cost of setting up a brick-and-mortar store and the overheads you might incur. However, you must account for all other expenses starting with researching the market, preparing quarterly reports, evaluating your client base, manufacturing, building an inventory, dispatching orders, and providing customer service. The necessary cost you must factor in is social media and other marketing channels.
Digital ventures must work harder to gain elbow room and make their voice heard above the clamor of competing startups. Balance these costs against the bank credit and projected earnings in the first year. Creating a business plan will give a fair overview of the initial funds you’ll invest.
2. Location is a Critical Factor – Remember That!
Entrepreneurs setting up an online business assume that since they’ll sell products online, they can set up their company in any location. While that is entirely true, you would also want to register your business in a state with favorable laws and regulations for supporting your industry.
And, take advantage of the perks that some states offer up-and-coming enterprises. The top five states with the best business environment (in general) are Montana, Georgia, Texas, Utah, and Oklahoma. With the advice of your attorney, you may be able to register the startup in these states using remote online notarization.
3. Work Out Your Fundraising Strategies
Fundraising is easily one of the top financial issues that entrepreneurs must work out. Aside from targets like your savings, you’ll turn to friends and family. Looking to angel investors and venture capitalists is also a smart move. You’ll also want to explore options like crowdfunding, personal loans, microloans, and grants. Weigh the pros and cons of each target before you commit. Don’t overlook expected interest rates after estimating the profit margins you hope to earn.
5. You Can Serve Worldwide Customers
Since you intend to cater to a worldwide customer base through your website, you’ll need a secure method for receiving payments. Similar to most startups, you might have a less than perfect credit score, so you’ll need high-risk credit card processing services to set up an electronic gateway for receiving payments.
Look for services that boast advantages for a new venture, such as low or no setup fees, quick payments, and assistance with chargeback prevention. Although the processing fees may start high for a fledgling business higher, you can negotiate for economical rates as you continue conducting business. Most importantly, your company gets protection against the possibility of credit card fraud.
5. Work with a Tax Consultant for Information
Running a business attracts taxes, and when starting up the business, you must do the necessary research about the estimated IRS dues your company will pay. Determine your business structure according to the best tax-saving strategies out there—for instance, a sole proprietorship, incorporated company, LLC, or partnership.
Even if you opt to relocate to an offshore location like France, Mexico, or Germany, you can continue to run the online business. But, do take advantage of the exclusions available to ex-pat business owners running their company from abroad.
Setting up an online business in the intensely-competitive contemporary arena has a whole new set of challenges. Chances are that you’ll encounter new ones every day. But, having your financials sorted at the initial stages is a smart move to keep you going. Keep your goals in sight, and you’re sure to be successful.