You’ve come up with an awesome new product idea. Of course, it happened in the shower and you scrambled to jot it down. After rambling about the details to your friends and family, you’ve finally mustered up the courage to build a prototype.
Once again, your family and friends give you the thumbs up, but you’re still far from launching an online business. Everything about it sounds intimidating. You’ve watched far too many episodes of Shark Tank to the point that you’re scared about financing, building a website, and keeping up with marketing.
It seems strange to think about it at such an early stage, but saving money for your online business is often priority number one. Why is this the case? Because chances are you don’t have that much start-up capital and most successful businesses pinch pennies in the early stages regardless.
This gets you thinking about some of the statements you’ve heard about managing your costs, some of them coming from Shark Tank, but most of them coming from naysayer friends or people you’ve met at social events.
Here’s a tip: Forget about all of those statements, because chances are they’re myths. Your business plan is better without them, but it’s also important to realize which of them are myths in order to decide on which you should brush aside.
You’re in luck, because we’ve compiled some of the more misleading myths about the costs of starting an online business. Go and grab your pen (or bookmark this page,) because you may find some surprising insights.
Myth 1: You Can Start an Online Business for Free (Or A Small Amount of Money)
You’ve all seen the ads that tell you about certain online website building platforms that provide free services (or close to free) online shop creators. In addition, there’s always that self-employed friend that’s telling you how inexpensive it is to get started online.
Although the ideal online store building solutions are fairly inexpensive, you can’t possibly expect to spend less than at least $500 per year on just your website. After all, this is your storefront. It’s the primary way you’re going to make money, and if you plan on expanding that business, it’s going to require investments.
The free (or close to free) online business is a marketing ploy to prompt you into buying. That doesn’t mean you have to spend $10,000 your first year developing a site, but it’s prudent to budget for more, rather than nothing.
Myth 2: You Can Only Start an Online Business With Lots of Startup Capital
On the opposite side of the spectrum, the days of spending ten or twenty thousand dollars on a web developer or marketing person are over.
Yes, development is often the most expensive part of building a new website, but tools like Shopify, Bigcommerce, and even WIX provide you ready-made tools for launching your site and expanding it to a powerhouse. You don’t need a huge donation from your dad, so leave him alone already.
Myth 3: Many People Who Work Online Work Part-Time Hours but Make Full-Time Wages
Sure, you could go with a low cost business idea, like arts and crafts or selling your freelance services, but people who partake in these endeavors still put in the work to bring in clients and run their businesses just like anyone else.
In fact, one could argue that the traditional 40 hour job is impossible while running an online business, since you’re more likely to spend 80 hours per week nurturing your own company.
Myth 4: Social Media is a Costless Marketing and Money Making Outlet
Anyone who has made significant conversions through Facebook, Twitter, or Pinterest can explain that social media marketing is far from free. Not only do effective advertisements cost money, but your strategy also requires loads of time and effort. In addition, you may end up hiring a social media person to manage the whole ordeal.
Myth 5: You Can Automate Everything When Selling Online to Cut Down on Labor Costs
Young business owners are prone to look for solutions that can completely automate their selling process. This ties into the fact that so many people crave the 4-hour workweek, but it also coincides with the numerous different apps and tools that have come out to automate processes.
Let’s break it down.
You can’t completely automate your customer support. You can’t completely automate your social media. You can’t completely automate your receipts and promotions and returns. Labor costs are required, because people run businesses. It’s essential to keep this in mind for your budget.
Myth 6: A Large Promotional and Advertising Budget is the Key to Success
Mark Cuban repeatedly talks about how pouring money into a promotional budget is the last thing you want to focus on with a young company. This comes as a surprise, but you probably can’t even get an investment or SBA grant unless you can already prove that your business functions without the need for a huge marketing budget.
Myth 7: Processing Payments is Going to Break the Bank
Although it may be true that payment processing fees are going to pile up, putting in quality research to locate the most cost efficient solution can cut those processing costs and keep your company afloat for quite some time.
In fact, it’s imperative to locate the right payment gateway company for your brand, because 1% or 2% extra on each transaction can add up quickly.
Myth 8: All Tasks Must be Completed by You or You Must Hire Someone Full-Time to Do Them
Online business owners frequently feel like every task must be completed in-house, whether it’s with their own sweat and blood or by hiring a full-time partner who can assist them with tasks such as web development, graphic design, social media, and email marketing.
Nothing is further from the truth, because nowadays freelancers are your friends. Hundreds of sites provide gathering spots for graphic designers, writers, social media workers, and even data entry freelancers – all of whom are poised to work for you for reasonable rates. There’s no reason to hire a graphic designer and put them on your payroll when you can turn to a trusty freelancer on an as-needed basis.
Over to You…
The various myths about small businesses frequently change, so continue doing your research to ensure that you don’t fall behind the times. Think about it. Some of the myths outlined above may very well have been true a while back; however, times change. Flexibility and awareness are key components in your entrepreneurship arsenal.
Can you think of any other cost myths that hold back online businesses?
Featured photo credit: Computer/Wild Zontar via flickr.com