It is estimated that more than 10,000 online businesses are created every month. Of course, some of these ventures will enjoy success while others are destined to remain in the doldrums of anonymity until their inevitable demise. There are many factors which can serve to determine each of these outcomes. One of the most pivotal involves liquidity. How can you leverage such an opportunity without emaciating your bank account? This is a deceptively complex question, as the answers are not always as clear as we would like them to be. Let us take a look at some of the most effective ways to start an online business if you have only a limited amount of funds.
Financial Management 101: Adapting to the Online Business Community
It is important to first return “back to the basics” in regards to reinforcing the correct financial techniques that should be embraced from the very beginning. Working within a limited budget will necessarily curtail some of the options that you would have enjoyed within a perfect world. This is why it is important to prioritise your efforts. You should take into account variables such as:
- Your current working capital.
- The potential to obtain personal loans or to secure third-party investors.
- Your monthly spending limits.
- The amount of income that you expect to generate through sales within a specific period of time.
These last two concepts should be addressed further. If your sales exceed your expenses, the business is operating with a surplus. Should your expenses supersede your revenue generation, the firm is said to be operating at a loss (or deficit). Obtaining a balance between each variable is key if you hope to remain afloat while superseding any potential volatility.
Any online business should place accounting and bookkeeping as two of its top priorities. It is wise to work with intuitive e-commerce software so that you can appreciate the results of your actions from both short- and long-term points of view. There are a number of extremely effective platforms that will provide you with such insight and clarity, so never be afraid to take advantage of their tools and utilities. This brings us to the next section. Are there any additional options which can save you money while allowing your business to thrive within the online marketplace?
Exploring a Host of Modern and Innovative Methods
Budding businesses will face a number of financial challenges. Some are easy to negotiate while others may appear nearly impossible to overcome. Stock and inventory control is a perfect example of how traditional methods can drain business capital. Assuming that you are producing a physical product, you will need to be concerned with such metrics as storage, shipping and returns. Not only can these quickly eat into limited funds, but they will often cause management to shift its focus away from critical competencies such as product marketing and sales pipeline analyses. A process known as drop shipping can help to eliminate these concerns.
Drop shipping involves the use of a third-party supplier to stock and deliver products to the customer. In some ways, this method can be thought of as employing a middleman during the sales process. Assuming that a client confirms a purchase, the drop shipping firm will immediately be notified. The product is sent to the end user and no action is required on the part of the seller. There are several advantages associated with this innovative approach:
- The seller is no longer concerned with complicated logistics.
- A host of intuitive software applications are provided so that all shipments can be tracked.
- The merchandise itself could be provided at a discount; encouraging future purchases.
- The transparency associated with drop shipping will increase client loyalty over time.
Still, this is not the only option that will allow online business owners to maximise their presence while dealing with limited funds.
Another possibility involves pay-per-click advertising. In this case, a banner advertisement is placed within a website. Should a visitor click on this banner, the website owner will receive a small profit. While such a method is not likely to generate a sustainable source of income, the ROI is worth the ad placement. Sites which receive thousands of visitors on a regular basis can benefit from this approach; particularly if the website is cross-linked to other portals such as social media pages.
Dealing with a limited amount of funds is an obstacle which countless entrepreneurs will need to overcome if they hope to enjoy success. The techniques mentioned above represent a handful of extremely useful tools to employ. While both time and effort will be required, the end result could very well be worth the initial commitment. The bottom line is that you should never allow limited funds to curtail your dreams of financial independence.