Everyone's seen those reports on TV or the Internet about people who make a pile of money running a YouTube channel. Or who make stuff at home and sell it online for a nice sum. As you sit in commuter traffic or get yelled at by the boss, those daydreams of owning your own online business probably rise up again. How hard is it really, and how much would you make?
While it's difficult to come up with solid numbers on Internet-based solo entrepreneurs, tax data shows that rising numbers of one-person businesses are making pretty decent money. About 2.4 million of them generate at least $100,000 a year in income [source: Census.gov]. Forbes reporter Elaine Rofeldt, who's been covering the phenomenon, ascribes a lot of that growth to Internet-based retail's ability to pull in customers from far and wide, not just in one town, and she expects that growth will continue.
OK, that sounds pretty good. But even so, if you're going to tap into the Internet's potential for making money, there are certain skills you'll need. Some are the same ones you would have needed to start your own shop in the pre-Internet era — good planning, effective execution and people skills, as well as having a desirable product. But there are other required skills directly related to running an online enterprise. The good news, though, is that the Internet itself provides you most of the tools and information to be successful.
Here are 10 skills that would be very useful for running an online business solo.
Creating a Business Plan
You're a would-be digital mogul, you've got an insanely great idea, and you can start a business with just a few keystrokes, without changing out of your pajamas even. So you might think that a business plan — a written document that describes your business concept, market potential, strategy for growth, potential risks and capital needs — is as obsolete as paper ledgers and accordion files.
The truth is, though, in the undisciplined, disorganized online world, being disciplined and organized is all the more crucial for turning that idea of yours into a viable business model. Otherwise, when you suddenly discover that everybody wants your revolutionary new widget, you may have no idea how to scale up to meet the demand, and you'll end up losing the market opportunity.
But don't worry — you don't need an MBA from Wharton to write a good basic blueprint for success. The U.S. Small Business Administration's website provides an easy-to-follow, step-by-step guide. Additionally, Google searches are likely to turn up sample plans for your business sector, which you can adapt to suit your needs [source: Ngai].
Raising (at Least a Little) Capital
Unless you're building sculptures out of trash and selling them on eBay, you're going to need some money to get started. This cash will cover the cost of purchasing inventory or raw materials to make your products, as well as necessities like online ads. So develop a realistic estimate of how much money you'll need until revenue starts flowing. You may be able to sock away enough bucks from your day job, since according to a recent Intuit survey, 40 percent of all small businesses started with less than $5,000 in seed money, and 65 percent with less than $10,000 [source: McCarny].
But if you have a more expensive dream business and no wealthy Uncle Ned, don't despair. These days, you may be able to turn to a crowdfunding site such as Fundable, which proclaims that it's raised money for more than 377,000 startups. Your ability to write persuasive copy to sell others on your business idea will come in handy for this site, as well as for applying for any bank or SBA loans.
Designing a Website
If you had a store on a city street, you'd want to show an attractive sign and window display to pull in passers-by. The online world is pretty much the same, except that your passers-by are passing by a lot faster. Entrepreneur magazine estimates that you have about five seconds to get and keep someone's attention, so you better make that exposure count [source: Shandrow].
The good news is that you can learn to design a beautiful website by using resources such as Lifehacker.com's free "night school" for web design. Once you've mastered HTML and CSS (the codes your browser reads to determine the look of your site), you can design your website from scratch. Or cheat a little by using a website template with the design already in place. All you have to do is customize it.
In addition to a website that looks good on computers, you need one that will display well on tablets and smartphones. A 2014 analysis by Shopify, an ecommerce shop builder, found that more than half of the traffic going to online stores that use its platform now comes from mobile hand-held devices [source: Lutke].
So make sure your website has a responsive design, one that can accommodate both big-screen and small-screen customers. There are websites (like Mofuse) that help you create mobile versions of existing websites.
Sourcing Your Product
The Internet might be just a bunch of electrons moving through space, but you've got to have something a bit more substantial to sell. Unless you're a consultant offering services or an artisan who makes his or her own products, you have to find a source to provide you with inventory. That might mean scouring flea markets and thrift stores for vintage stuff that you can fix up and sell on eBay, a strategy that Nasty Gal founder Sophia Amoruso used to create a company with $24 million in annual revenue in just four years [source: Patel].
You also can arrange to have your product manufactured to your specifications by an overseas manufacturer, through a Web portal such as Alibaba or IndiaMart. One downside is that the expense of a minimum order could run into the thousands of dollars. Finally, there's also the option of dropshipping, in which you basically serve as the user interface for a manufacturer who not only makes the product but handles shipping as well. You can find such a partner through one of several dropshipping aggregators on the Web, such as WorldWide Brands. Be aware that margins on this type of enterprise are thin [source: Shopify].
Gathering Business Intelligence
The word "intelligence" has an ominous cloak-and-dagger sound to it, but we're not talking about espionage or stealing trade secrets. Instead, think of it as doing research to understand what challenges you face from competitors and the marketplace itself, so that you can devise ways to overcome them and become successful. If you were planning to open a gourmet hamburger stand, you'd be foolish not to look around and see how close your location is the nearest Five Guys or BurgerFi.
Similarly, you'll want to use Google to identify competitors to your online store, and study their websites to figure out how you might stack up against them. Look at what sort of prices they offer, what their shipping options are and whether they are using tools such as email lists and mobile optimization. If you want to dig deeper, you can use paid services such as SpyFu and Opensite Explorer to study the opposition's use of keywords and search engine optimization, and how well it's been working for them. Hopefully all that information will enable you to find things that you can do better than they do, which will give you a competitive advantage [source: Hayes].
Advertising and Marketing
"If you build it, they will come" might have worked for the baseball-playing ghosts in the movie "Field of Dreams," but it's not a very successful e-commerce strategy. You can have a great business idea, develop a fantastic product, and build a great website, but unless people find out that you're out there and are persuaded to buy, you're unlikely to make very much money. On the other hand, if you're able to develop a well-thought-out, methodical marketing and advertising strategy to get attention and build brand recognition, you'll optimize your chances of success.
The first element is coming up with a brand name that will help people to distinguish you from the sea of competitors online, and then registering or buying the domain name for yourself. You also need to be able to figure out the mysteries of search engine optimization, or SEO — a fancy term for using keywords that consumers are likely to search for, as well as adding links and titles to your web pages [source: Pozin]. (You can learn more about this topic through articles like this one).
Invest in paid advertising such as Google AdWords, which has the advantage of charging a fee only when people click the ads and go to your website. Those ads are more likely to be effective if you've got great copywriting skills to entice those consumers, so try to tap your inner Don Draper.
Building a Social Media Buzz
Free social media — Facebook, Twitter, Instagram, LinkedIn, and whatever new sites popped up last week — are great ways to promote your online business and develop a brand identity without spending a lot of bucks. The big strength of social media is that it enables you to actually engage both potential and existing customers and interact with them, as if you were the old-time corner grocer or clothing salesman who chatted up whoever walked in the door.
But building an effective presence on social media isn't necessarily easy. First off, you've got to create content about your business area — whether it's stereo headphones, skydiving gear or collectible troll dolls — that's both interesting and authoritative enough to draw people in and keep them coming back. You've got to have the deftness to do it without too conspicuously touting your own wares. You've also got to be gregarious enough to engage people in conversations. Ideally, some of those people should be online influencers — bloggers or Twitter users with big audiences, for example — with whom you can develop reciprocal relationships, in which they link to your content and vice versa [source: Gunelius].
In conventional retail, your customer picks the merchandise up off the shelf, or else you go into the back storeroom and get what he or she wants, and conclude the deal at the counter. With e-commerce, of course, you don't have a counter, or possibly even a back storeroom, and the customer pays for the product first. But you've still got to get the goods into his or her hands by shipping it. That part is called fulfillment, and if your startup business is really small, you'll do most of the work yourself, by hauling your goods to the post office or UPS store.
As your operation gets bigger, though, you'll eventually need to outsource the fulfillment. One way to do that is to work with a manufacturer who offers dropshipping, which we described earlier. Another option is to use an e-commerce fulfillment provider such as Shipwire. Basically, you send your inventory to them, they store it in a big warehouse and pack and ship it whenever you get an order. Not only do you save yourself the trouble of doing the legwork, but you may actually lower your costs, since these providers are able to negotiate bulk shipping rates [source: Hawkins].
If you're selling shoes at a department store in a mall, your people skills obviously are an invaluable asset — not just for making sales, but for making your customers feel so satisfied with their purchases that they'll come back to you the next time that they need another pair of wingtips or pumps.
It might seem as if that sort of charm and attentiveness doesn't matter online, when you're selling your wares to a lot of people you'll never meet face to face. But don't be fooled. Look to the example of successful online shoe and clothing retailer Zappos, which focused on customer service — including easy returns — to differentiate itself from the competition [source: Rampton].
One way to further a friendly customer experience is to fill your website with good self-service tools, such as an easy-to-navigate user interface, plenty of detailed product information and images, and a good search function so people can find what they need. But it's also important to provide people with options for contacting and interacting with you to solve problems — whether it's through Twitter or a toll-free phone number [source: Frei].
Knowing When to Go Omni-channel
You might think that e-commerce is a big wave that's going to wipe out brick-and-mortar retail, and that inevitably, shopping malls are destined to be turned into skateboard parks or golf courses. But don't count on that. According to a recent report by the business research and consulting firm A.T. Kearney, about 90 percent of retail sales still occur inside the walls of physical stores, and if you include transactions done by physical retailers with an online presence — such as stuff that's ordered online but held at a store for pickup — the share increases to 95 percent.
As a result, some online-only retailers, such as beauty products seller Birchbox and eyeglass boutique Warby Parker, have actually opened physical storefronts. Even online retail giant Amazon has experimented with "pop-up" temporary stores where customers can actually touch and feel some of the products before buying them [source: Collins]. This trend seems to be just starting, but it may be that in the future, you'll need to judge whether you should also sell your wares in physical locations, becoming a true "omnichannel" retailer.
Starting a bank requires a good business plan, raising capital and going through a complex regulatory process.
Author's Note: 10 Skills That You Need to Run an Online Business by Yourself
This was an interesting assignment for me, because I'm old enough to remember how things were bought and sold before the Web and e-commerce existed. When I was a kid in the mid-1960s, it was a big thrill to get the Sears catalog in the mail. I'd eagerly peruse the pages full of pictures of exotic toys and gadgets that I didn't know even existed, and wish for the day when I had a checking account and enough money in it to order them. When I was a slightly less penniless teenager, I joined a mail-order record club, mostly to get the 15 free records they offered a premium. That was how I got my vinyl copy of the Rolling Stones' "Exile on Main Street," which I still have someplace.
More Great Links
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