The Six Startup Rules for Launching an Internet Business

In recent years, there has been a significant increase in the number of people using the Internet. The increase in internet users is due in large part to the availability and popularity of new Internet-capable devices, such as smartphones and tablets. By using these devices to connect to the Internet, consumers can obtain information about products and make purchases with great ease and convenience. The popularity of the Internet as a shopping tool is good news for existing and aspiring online business owners because it means that they will have access to a seemingly unlimited pool of potential customers. Moreover, the cost of starting an online business has become much lower over the past few years. It is now possible to get a good web hosting plan at a negligible fee, as well as a wide range of free apps that provide excellent support for a startup business. In the past, some technical knowledge or expertise is required to set up a website, but now, most web hosting solutions are very easy to implement. It is possible for business owners to get their new websites or online stores up and running in a very short time, without the assistance of a software engineer. While many things have changed over the years, the principles of online business success have remained the same. If you are planning to start a business on the Internet, it is important that you build a solid foundation for growth and success. You may be able to count yourself among the successful with a bit of luck, a lot of hard work, and if you follow the guidelines below.

Rule No. 1 – Your Business Must Offer Solutions to Your Customers’ Problems

Consumers purchase products or services because they expect their purchases save time or solve a problem. Whether your customers are buying essential medications to treat their health problems or just getting fashion accessories to enhance their appearances, they want your product to work. Before you start your online business, you need to ask yourself whether or not your products or services can help your customers solve their problems. What is it about your products, services, or business that can convince or compel your customers to part with their money? By answering this question, you are actually defining your business values and goals. Some companies focus on making as much profit as possible, without dedicating enough effort to satisfying their customers’ needs. In an endeavor to make a quick profit, they may neglect the quality of their products and services. While they may rake in good profits in the early stages of their operations, it is likely that their profit will diminish over time. These businesses lose money because they overlook the importance of keeping their customers satisfied with effective solutions.  By providing practical solutions and excellent support for your customers, you can gain their trust and establish reliable long-term relationships with them. Long term customer retention can lead to recurring purchases and referred customers, giving you a steady stream of revenue.

Rule No. 2 – Understand the Strengths and Weaknesses of Your Competitors 

After you have determined the values and goals of your online business, you should start thinking about your competitors.  The increase in the number of online shoppers has generated a lot of opportunities for businesses, but it also means stiffer competition (have you heard of a little startup called Amazon?). More and more business owners are taking advantage of the online shopping trend to sell their products both locally and internationally, and they collectively offer almost any product or service of which you can think. If you do some research, you will find that many businesses are selling the same goods and solving the same problems as you. Don’t let this demotivate you! Seeing competition in the marketplace means people are making money doing what you want to do. If that does not give you confidence, just remember that Domino’s did not invent the pizza, and look at them now. It is important to know your competitors, and you have to know their strengths and weaknesses to build a successful online business. Overcoming competition can be daunting for a new online business owner. Some of your competitors may already have substantial customer bases, and defeating them may seem like an impossible task. However, you have to know that every business has their strengths and weaknesses, and you need to learn from their strengths and capitalize on their weaknesses to succeed. For instance, if your competitors are strong in social media marketing, you have to find out more about their social media practices and apply them to your business. If possible, you should also invest more time and effort in social media marketing to try to beat them at their own game. If your competitors are not doing well in the area of customer service, you should take advantage of their shortcomings and focus on providing better customer service to win over their customers. It is important to continuously track your competitors’ online activities and take the necessary measures to stay one step ahead of them. Furthermore, the larger and more established a business becomes, the less agile it tends to be. If you are competing against a big business that seldom changes and continues to lead the pack in your industry, take a look at what the big business’ customers want but are unable to receive from their product or service. You can carve out a niche within the market by solving a problem that isn’t big enough for them to account for, but it could give you a big enough customer base to get your business going strong.

Rule No. 3 – Know Your Customers and Their Buying Behaviors

To make your business more appealing to your clients, you have to be able to identify your target consumers correctly. Just targeting consumers according to location and age group is not enough. You also have to take into consideration factors such as income, occupation, marital status, education level, ethnicity, interests, hobbies, and personalities. If you can narrow down your target market to a very specific group of consumers, you will be able to develop highly-targeted strategies to make your business especially appealing to your customers. Creating clear “buyer personas” may not help you gain a large number of customers at first, but it will give you high-quality customers who can stay faithful to your business for a longer time. By concentrating on a very specific group of customers, you will also set yourself apart from your competitors. Other than identifying your target consumers, you also need to have a profound understanding of their buying behaviors. It is important to know the factors that influence their purchasing decisions. Do they buy your products or services because your prices are competitive? Are they more concerned about the quality and effectiveness of your products? Do they read reviews of your products or similar products before they buy? Does customer service play a major role in influencing their purchasing decisions? By knowing the exact reasons why your customers buy your products, you can implement the right business strategies to appeal to their specific needs and preferences. For instance, if many of your customers are attracted to your products or services because of your low prices, you can offer price-based incentives, such as discounts, coupons, and promotions, to entice them to buy more.

Rule No. 4 – Create a Solid Budget Plan

If you are flying an airplane, you need to know how much fuel your plane is required to reach your destination.  Some business owners find themselves in financial trouble because they only calculate their startup costs when they start their businesses.  In many cases, start-up businesses only start to become substantially profitable after months or even years of operation, and it is important for business owners to have a budget plan for sustaining their businesses until they see real profits. Failure to budget properly can result in a lack of funds for necessary business activities, which can blunt your competitive edge and even force your business to shut down. A well-prepared budget can serve two functions simultaneously. Firstly, it allows you to keep track of your business income and expenses so that you will have enough cash available to keep your business running. Also, it can be a tool for estimating your business income and expenses in the future. These two functions are imperative to a startup business’ success. A good budget plan prevents you from getting into situations that can jeopardize the effectiveness and profitability of your business, such as the inability to pay your suppliers or fulfill orders, and lack of funds to execute marketing plans. Such situations can also undermine the professional reputation of your business, which can make it more difficult for you to secure extra funding in the future.

Rule No. 5 – Develop a Revenue Model

After you have created a good budget plan, you should have a clearer idea of the amount of revenue needed to sustain your business. The next thing to do is to develop a revenue model to estimate the number of sales you need to make on a monthly basis to break even. This can be done by estimating the average revenue you will make from each sale and subtracting all external costs, which will give you the gross profit for each sale. Then, divide your monthly operating expenses by the per-unit gross profit. The result of this equation can be astonishing for many startup business owners. For instance – you may think that you can break even with 200 sales a month, but your revenue model shows that you may find you need to generate 400 sales. If your revenue model does not add up, you can find yourself in a lot of trouble in the future. One thing you have to bear in mind is that your revenue model is constantly evolving, and you need to refine your model and forecast continually. It is important to have an accurate revenue model because it is an effective way to ensure that your business will be financially healthy. Your revenue model will give you a better understanding of your cash flow and expenses, enabling you to have a clear plan for earning revenue and maximizing your profitability. Not only does it help you build financial confidence; it can also improve your ability to get funding from investors or financial institutions.

Rule No. 6 – You Need to Be Passionate About Your Business

Running a business is not an easy task. From inventory management to marketing, you have to perform a broad range of duties to keep your business operating smoothly and efficiently. Problems and obstacles can also arise from time to time to test your resilience and resolve, and you will most likely give up if you treat your business activities merely as duties. You need to have a positive attitude and a strong inner drive to achieve business success. These qualities come from your passion for your business. If you are passionate about your business, challenges and obstacles that are supposed to discourage you will become a source of motivation. Think of these obstacles as opportunities for you to test your business skills and determination, and know that you will be stronger and more confident if you succeed in overcoming them. Likewise, competition should not scare you; instead, it should be your lifeblood. As a passionate business owner, you will constantly think of ways to improve your business. You will always be looking out for new products, technologies, methods, and ideas to keep your business up-to-date, so that you can always stay ahead of your competitors. Most importantly, if you have a great passion for your business, you will be more ambitious when setting your business goals, and you will have the extra dedication needed to achieve them, even if you experience many setbacks along the way. Overall, the difference between a passionate business owner and an ordinary business owner is that the former is willing to go the extra mile, or many extra miles, to achieve business success. Passion is the quality that distinguishes great entrepreneurs from good ones.

In Conclusion

Achieving success in today’s online business world can be a very challenging task, considering that there is so much competition on the internet. Many aspiring business owners are attracted to the idea of starting an online business because they think that it is an excellent way to make fast profits. Some of them neglect the importance of building a strong foundation, and they see their businesses crumble over time. While the Internet offers almost limitless potential for business success and growth, you need to put in your fair share of effort to take full advantage of online opportunities. Following the rules mentioned above will help you start your online business on the right foot and prepare you for all the challenges that you may face in the future.