Friday, January 4, 2008

Benefits and risks or running an online business

So you see all these work at home, start your own online business ads. You think, "Hey there must be some thing to this. I would like to stay at home and make lots of money just like all these ads say I can." Before you leap you need to find out what are the benefits and risks of running an online business.

There are a lot of benefits for running an online business.

You are your own boss. This way you control what you do, how you do it, and when. So if you are a stay at home parent, you can work around your kids. If this is a second source of income, then you can work around your regular job. I like being able to spend time with my kids and work when they are asleep.

There are a lot of different types of online businesses you can get into. It is easy to diversify by having several different online businesses at the same time. It is quite possible to have multiple streams of income with the same business.

The potential income is often only limited by the time and money you choose to invest. Once you have your online business set up most of your time and money is going to be spent on getting people to find your site, also known as online marketing. This will be done through a high rank on search engines, links, ads, word of mouth and any other way you can think of. How well you did your work setting up your site will determine if they buy from you, or sign up or click what every ad system your using. When your site is successful you may be busy shipping, restocking and putting new product on the site. However, no matter what you will always need to invest in bringing new, and old customers back to your site. You never stop your online marketing.

There are online businesses that are almost self-sustaining with only a little work or money from you. You set up the site, maintain it, and keep it online, and away you go. A lot of this type of business is in partnership with drop-shippers, some who will even set up the site and maintain it for you. There are always already established online businesses up for sale. You just have to get people to go to it. The real work of anyone with an online business is getting people to come to their site.

There are a lot of risks to running an online business.

Getting scammed is a big risk for those who do not do their research or go for the get rich quick schemes. There are a lot of online businesses out there that only make the seller rich.

Not cost effective. You invest your money and time and make a little money but nothing like you expect. The competition online is great. It is not like you are the only supplier of product "widget" in a small town. Your competition can already be well-established selling "Widgets", "Wedgets" and any other type of "ets". It’s an uphill battle getting people to find you and then buy from you instead of company ABC or XYZ. You could have the greatest product, best price and service but if people don’t know you are out there, they are not going to be looking for you. How much do you have to spend in time and money to become established and get the sales you need to break even? Is it cost effective in the long run, or throwing good money after bad. You can be doing every thing right and still not succeed.

It always cost more then expected, in money and time. You may find yourself spending all your time on click exchanges trying to build up hits in the hopes of making some money.

Your email and web site becomes a prime target for spammers. You end up with 100’s of spam emails a day if not more. Most of them seem to want to sell you an online business or get you to pay them to do online marketing for you.

Having to spend lots of money to keep your computer system upto speed with the needs of the anti virus programs. The anti virus programs out there are not going to be compatible with older systems soon. Can you afford to upgrade your computer system to the newest technology so your system can support the newest anti virus programs? Can you leave your computer system vulnerable with out the most up to date anti virus programs?

I have an online business; it is an extension of our already existing business. Online businesses are completely different then off line businesses. I like what I do, but it has been hard and I had to learn a lot, and am still learning. We have a retail site and we don’t use drop-shippers so we have been able to avoid a lot of the pitfalls of running a retail site. But the amount of established competition can be very daunting at times. And new sites show up every day. I some times have to question our expectations for our web site and the time lines we have set for it to be cost effective. I think it is going to take more time and money then we first thought simply because marketing online is very different then marketing offline. An online business can be great and successful, but only if you go into with your eyes open. As with any and all business ventures do your research.


KnitWitch said...

Some sound advice! Do your research and lookout for "to good to be true" pitfalls.

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Anonymous said...

Often we forget the little guy, the SMB, in our discussions of the comings and goings of the Internet marketing industry. Sure there are times like this when a report surfaces talking about their issues and concerns but, for the most part, we like to talk about big brands and how they do the Internet marketing thing well or not so well.