Editor’s note: This article was first published in January 2011, during the economic crisis in Spain. Its forecast that the online market will overtake the offline one, and its description of investors only lately betting on internet businesses, reflect that moment.
As the months go by, it’s becoming ever clearer that, despite the crisis, the most profitable businesses are heading online. Investors are realising the advantages of starting a business on the internet, and lately they have been betting on it.
The advantages are clear: the investment needed to launch an online business is much lower than what it would cost to do the same in a physical shop. On top of that, you can reach customers all over the world, and running costs are certainly lower.
We’ve already seen that, of the good business ideas that have appeared online, some have succeeded and others have stalled, but as a general rule they haven’t lost large amounts of capital.
When you set up your business online, you should approach it as you would any other business. You need to draw up a business plan and a market strategy, and you should also know that it isn’t all advantages: some entrepreneurs have made mistakes simply through lack of knowledge.
Once you launch your business, one of two things can happen:
- You end up overstocked: Some online stores selling products built up a large stock of goods, and then the expected response never came. Sales took longer than usual to arrive, and the financial problems began.
- You run short of stock: The opposite case is the companies that didn’t stock up properly, so when orders for certain items started coming in, they had to request them from the factory in a hurry. Even so, delivery took longer than customers expected, so they gave poor service from the very start, and word of mouth took care of finishing off the business.
With an online business you need to start little by little, without rushing, and watch closely how the market evolves. At first you can offer just a few products and, as visits to your website increase, gradually add more items.
Reinvest part of your profits in advertising to bring in new visitors and, as we’ve said on many other occasions, be as active as possible on social networks, make yourself known as widely as you can and try to give good service. Service is everything, whatever you sell or offer.
The future is online, make no mistake about that. In fact, more and more companies agree that the share of their sales made over the internet grows every month. Over time, as users place more trust in online shopping, the online market will end up overtaking the offline one.
Banks and investors are listening to and analysing online business plans with growing interest, because they know that the biggest companies in existence today were created on the internet and nobody wanted to fund them. That’s why they now look at whether the project is innovative, whether it already exists, whether it’s likely to catch on, and so on.
Besides, the funding you’ll need for your online business project will be much smaller, since space on the internet is cheaper than a square metre of shop floor.
So we encourage you to step into this new era of online business. I’m sure you can come up with ideas that could be very well received online, and if your business idea seems absurd to you, just remember that social networks seemed even more absurd, and they are precisely what makes people less sociable face to face. Good luck.
Further reading
- Ways to make money with online businesses
- An online business opportunity for women
- The most profitable businesses of 2011–2012
- Business ideas built on social networks
- Social networks for professionals and specific market niches
Featured image: Nenad Stojković, CC BY 2.0, via Wikimedia Commons.
