Every entrepreneur comes from a different place when they start a business online. Sometimes there’s funding galore, but more likely you are working with a tight budget. So how do you build your business with limited cash reserves?
There are a ton of different ways to save money as you start a business online, and, as always, we would love to hear about your experience and hacks in the comments! To start the conversation, here are three tricks you can use to save money as you build your online empire.
Quick Take: 3 Tricks to Start a Business Online With Limited Funds
Figure out the total cost of your product
Build repeat business and fight churn
Sell in the right place
1) Figure out the total cost of your product
One of the first questions you’ll want to ask yourself when you start a business online is: am I factoring in everything that goes into the final cost of the product? The cost of shipping, a website, my time? Knowing these details will help you put together a budget and see where your money is going.
From this point, you can find areas to cut back and save. You may be able to negotiate with vendors to cut back costs where possible. Whether you are dropshipping shoes or working with a web designer to get just the right look for your site, you can bet your vendor has some wiggle room on that price they just quoted you. Don’t be afraid to ask for a better price. This includes small costs that can add up over time, such as fees for credit card processing. Even something as seemingly insignificant as a 0.5% reduction in credit card processing fees could end up being a major money saver for your business.
Think about the value that you bring to your vendors. If they recognize the importance of your business to theirs, they will likely be willing to work with you to find a mutually beneficial deal. Pro tip: Return incorrect product and do not pay for bad service. It can be hard, but you will save massively in the long run if you’re willing to confront issues early on.
2) Build repeat business and fight churn
It is significantly cheaper to work with an existing client or customer than it is to bring in new business. Not only that, but 40% of online sales come from repeat business. So how do you build customer relationships while selling online?
First, build your email list and regularly send out quality content, discounts, special deals, etc. By establishing value for your customers beyond the specific product, you create a direct channel for sales and broader communication. Post-purchase redirects are a quick way to connect with customers after a transaction. Think of ways to “hook” them and establish a conversation that continues after they have left your site.
Alternately, let’s say you are starting a coaching business or running an educational course. Recurring revenue is key to your business, and this is where churn comes in. Churn is the loss of subscribers from your service base. Maintaining existing customers is significantly cheaper than replacing them, so you’ll need to find ways to continue and deepen these relationships.
Just as you will be working with vendors to ensure a mutually beneficial transaction, fighting churn often involves a degree of negotiation. Frustrated customer? Whether they are thinking of leaving (or have recently left) your service, offer a discount on their next order, or an inexpensive “freebie” for their frustrations. Consider negotiating price individually at times. Remember that the short term loss in profits can be quickly made up if they stay on with you.
3) Sell in the right place
One of the first decisions for many online entrepreneurs is between selling on a marketplace or via a unique store on an eCommerce platform. Here at FounderU we’ve covered why selling on Etsy can limit your growth, the ways that using a marketplace can mean a significantly lower cut of the profits, and we’ve even put together the ultimate resource for choosing between eCommerce platforms.
As you’re deciding where to host your products, look at both the cost of the platform and the cost of each transaction. While it’s tempting to focus exclusively on the cost of the overall package, as you sell more, processing and transaction fees can add up. Selling eBooks on Amazon, for example, generally means that you’ll be receiving 70% of the royalties from each sale- not necessarily a bad margin, but significantly lower than selling from your own store.
Look out for added costs for extra hosting, bandwidth, and products. Choose a platform that will grow with you, not charge you for being successful.
Selz is seriously simple to use, affordable, and built for selling physical products, digital products, and services. State-of-the-art themes make it so easy to build a professional stylish site, while the free SSL certificate and bank-grade checkout security establish trust with your customers.
And there you have it! Three tips for building a business on a budget. What do you do to keep costs down? Let us know in the comments.