Not even that long ago, businesses were largely restricted to the physical world, whether it be an accountant operating in the city or a brick-and-mortar clothes shop.
This presented a much larger risk to business owners who had to invest significant capital to get a place to operate, often having to commit to long lease agreements or buying outright.
Now, the Internet has shifted businesses online, and nearly anyone can start and scale a digital business.
But despite the lower barrier to entry, the risk is still there. Running a small business is no mean feat, and with every Tom, Dick, and Harry also jumping online, it takes a lot of hard work to get noticed in a saturated market.
This article will give you some tips on starting your online business so you, too, can be an online entrepreneur. It will also explain some of the risks to look out for and what you can do to safeguard your online business.
Why start an online business?
There are many reasons why you would want to start an online business rather than a brick-and-mortar store.
Firstly, it’s relatively inexpensive to get started. Many people want to start their own business, but they are discouraged by the amount of investment needed to get it off its feet. It is necessary to purchase inventory, rent a space and pay salaries. What happens if all your money is spent on your business and it fails to work out? This could lead to financial ruin.
All you need for an online business is:
- A computer. And the probability is you already have one.
- Domain name. Usually around $10/year
- Website builder: Monthly plans start at around $30/mo
Secondly, it has great potential for growth. Brick-and-mortar businesses must deal with the limitations in the “real world”. It is costly to rent in prime locations, and your customers also have a limited time to shop.
And even though it’s the greatest place on earth, living in New Zealand means you have a small population at the best of times, and even that depends on the weather and time of year.
These limitations are not applicable to an online business. No matter where you live, anyone can buy your products, and you can ship them to all corners of the globe.
Your potential customers grow with every passing year as more people get comfortable with online shopping. Ecommerce will represent 22% of global retail sales by 2023.
Plus, online businesses have the advantage of being open 24 hours a day, even during lockdowns or other disruptions.
- Develop a business plan
Creating a business plan for a new online business is an essential step in launching your new career as a small business owner. It should describe the scope and objectives of the business, its role in the market, and its benefits for customers. It could even include a detailed profile of your target audience and a description of your company’s core values.
A good business plan will be a key indicator of success. You want to analyse your opportunities and threats frequently to ensure you have a handle on where you currently sit within your market.
As such, it’s a good idea to keep your business plan flexible and fluid, as your business will evolve over time.
- Decide on your channel
Deciding on the channel that you will use to advertise and sell your business is a crucial decision in the world of e-commerce. From online platforms like Etsy or Shopify that allow you to easily develop your own store to websites like Amazon or eBay and even social media sites like Facebook and Instagram, there are plenty of channels to choose from.
Think about each platform’s ease of use, design flexibility, and tools and features when making your decision. You also want to find a medium that is a natural fit for your target audience, which is why defining your target audience in your business plan is especially important.
- Invest in marketing
Once you have decided on a channel to sell your product or service, the next step is to market your business. But before you start buying digital ads, you’ll need to ensure you have your brand down pat.
Your brand is your overall business image. Everything, from your business name to the web design and copy, should convey a consistent visual image. This applies to all aspects of your offline presence, including social media, email newsletters and packaging.
When you are creating your brand identity, be mindful of your:
- Colour scheme.
- Page layouts.
- Photos and graphics
All of these elements should work together to create your brand image. Once you have that, there are many different online avenues to market your business, from Google Ads to social media. Click here for a more detailed look into some marketing ideas for your New Zealand business.
- Manage your risks
While having an effective marketing strategy is important, ensuring you identify and mitigate the risks you may come up against is perhaps even more essential. Having small business insurance in place can help protect your online business from a number of risks.
A Public Liability policy is important for small business owners that operate and sell products online. It gives you peace of mind, protecting you against claims resulting from property damage and personal injury or death in circumstances that are not covered by the Accident Compensation Commission (ACC).
If you conduct an online service or your business involves providing professional advice, you have a duty of care to your clients. This is where a Professional Indemnity policy can come in handy, as it will pay for your legal and defence costs for claims resulting from your professional service.
Some examples of some professions that may require Professional Indemnity cover include health practitioners, IT contractors, management consultants, accountants and real estate agents, among many others.
BizCover provides multiple quotes from some of New Zealand’s most trusted insurers across a range of small business insurance products. If you are interested in sorting out your small business insurance before you start your business online, click here.
The bottom line
Living in a country with a small population like New Zealand can be hard to establish and scale a small business. Going online is an extremely effective way of overcoming the problems of operating a brick-and-mortar store. That being said, there are still many risks you will need to navigate online. Hopefully, this article has pushed you in the right direction and has given you some things to think about before you try and establish an online small business. This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. © 2022 BizCover Pty Limited, BizCover Limited is owned by BizCover Pty Ltd (ABN 68 127 707 975)