Thinking About Starting a Small Business Online?

Is starting a small online business different to starting any other business? Yes, but only in terms of the tools you use to research your market and the tools used to promote the business!

What is your Business Model?

The only real difference between developing a business model online is the method of promotion and how your make your sales. You still need to find a sound business idea and investigate the demand for what you can offer.

For more information on developing a viable business model, go to the page on Business Models, and work your way through the process.

Researching the Online Market

This is where the process of researching your business model becomes significantly different. Your potential customers will be online, and that is where you need to do your research.

Your Online Business Identity

Your online business identity is defined by your domain name and the value proposition you present to the outside world through your pages.

Researching Your Online Business ‘Premises’

When you are starting a small business online, your ‘premises’ equates to how you choose to host your website. Some businesses decide to buy a web server and do their own hosting, but most, particularly embryonic small businesses, use the hosting services offered by web hosting companies.

The choices in terms of cost are virtually limitless depending on the level of service you require. There are some companies that provide free hosting for simple template based websites, for example a google search for the phrase “free web hosting” returns over returns over 16 million results!

Alternatively, if you require more than a free service can offer (i.e. more space, better support, training, or the use of the companies tools) you can choose to pay for fully supported hosting. The cost can vary from as low as $4.95 per month to $299 per month (perhaps maybe even more) depending on the additional services the host is providing.

It pays to work out what you need for your online business, before you start searching for a hosting company. If you are new to this ‘online stuff’ the technical jargon can be rather confusing!

Dealing with the Search Engines and Directories

No matter how much care and effort you put into building your website, unless people can find you on the net, your online business will end up being an expensive dud.

One of the best or most cost effective ways to get the word out is to have your site indexed by the major search engines.  Free organic traffic is much more cost effective for an online business than any other form of advertising!

Another Option

Does all this sound hard or difficult? Don’t fool yourself, it is. If you are trying to build an online business yourself with limited knowledge or experience, it is going to be extremely difficult and very time consuming.

Do you need some help starting a small online business? I know I did! If you would like to know how I managed to put this site (and a couple of others) please feel free to read about my experiences with SBI.

Or if you would like to see an example of a small online business take a look at Knitting Naturally. This site is one of my online businesses, it has been live for six months and is beginning to pay it’s own way!

Ready to move on to the next step with your Small Business SWOT Analysis?

Now that you have analyzed your strengths and your weaknesses, and identified all of the opportunities and threats in the market, it is time to put your swot analysis together.

By now, you should have quite a list of actions on your action sheet.

Sort through them and identify any that are similar or that would impact on a particular area of your operations, and look at them again.

At this point your SWOT Analysis is virtually done, and the resulting action list will feed into the development of your strategies and objectives for your business plan.

Re-Assessing Your Business Model

Now that you have your SWOT analysis and actions, it is time to take another look at your business models and the assumptions you made at the beginning of the process.

Given your strengths and weaknesses, are you going to be able to achieve your business model or does it need to be adjusted?

Have you identified any opportunities that could allow you to expand your product offerings, or maybe you should change direction all together.

Do any of the threats that you identified change your thinking about your business model?

If you answered yes to any of these questions, you will need to take another look at your small business model before you move onto the next step.

By analyzing your small business weaknesses, you will be able to identify any problems, deficiencies or limitations that put the business at a disadvantage, and may cause the business to perform poorly.

The weaknesses may or may not make the business vulnerable, depending on how attractive the missing skills; capability or resource is in the market.

The internal weaknesses represent competitive liabilities, and might include:

• No clear direction,
• Old or obsolete equipment,
• Missing skills or core competencies,
• Internal operating problems,
• Shortage of working capital or under-financed operations,
• High costs, etc.

Again, being brutally honest, list all of the weaknesses you can identify in the weaknesses section of the SWOT Analysis Template.

How to Analyze your Weaknesses

Follow the same procedure for your weaknesses. Does the fact that you are weak in one or more areas of your operations give you competitors, your suppliers, or your customers an advantage over you? Which weaknesses are the most critical or damaging to your position within the industry?

Rank your weaknesses the same way you did your strengths, and focus on the top three or four. Now look at each one and work out what you can do to minimize or eliminate the weaknesses.

The greater the advantage your weaknesses give to others, the more urgent corrective action is.

Do you need to write procedures, provide training to other members of staff, backup data on your systems, hire new staff, invest in new technology, find new sources of financing, improve your processes, re-focus on or re-visit your business concept or …?

What ever it is that you identify by analyzing your small business weaknesses, write it down on the SWOT Analysis Action Sheet before you move on to your ]]> http://businessblog.how-to-start-a-small-business.com/?feed=rss2&p=81 http://businessblog.how-to-start-a-small-business.com/?p=78 http://businessblog.how-to-start-a-small-business.com/?p=78#comments Sat, 25 Oct 2008 23:50:38 +0000 deb4614 http://businessblog.how-to-start-a-small-business.com/?p=78

While you are undertaking your SWOT Analysis, analyzing your business strengths will help you to identify all the attributes of the business, the things that it will be good at, or characteristics that gives it an important capability.

It might be important expertise, a valuable or scarce resource, a skill or a capability that gives the business a competitive advantage.

The internal strengths represent competitive assets and might include:

• Core competencies,
• Adequate financial support,
• Economies of scale,
• Cost advantages,
• Proven management,
• Manufacturing capability,
• Innovative product design,
• Innovative delivery systems, etc.

Take a good hard look at your business proposal and your skills and knowledge, and list all of the strengths in the strengths section of the SWOT Analysis Template. A word of caution - be honest about your strengths. If you cheat on your SWOT, you will only be hurting yourself.

How to analyze your Strengths

Look at your list of strengths and consider which ones really do give you a competitive advantage. If you have any on strengths on the list that do not give you an advantage, cross them off, but only if they would not be a weakness if they were missing completely. These strengths might be nice to have, but they are not critical, so leave them for now.

Which of your strengths is your most important? Rank your strengths from 1 - ? (Depending on the total number on your list), with 1 being the strength that creates your greatest competitive advantage.

The top three or four on your ranking are the ones you need to maintain or protect. Do any of them represent a single point of failure? If you lose a particular employee, or a system crashes, or for some reason you need to take a break from your business, have you suddenly lost that competitive advantage?

If so, you really need to work out what you can to minimize the risk to your business.

People do get sick or leave and systems do crash, so you can count on it happening at some point in time, and you can’t expect your competitors or your customers to ease up on you just because you are having a bad day (or days).

Do you need to write procedures, provide training to other members of staff, backup data on your systems, hire new staff, and invest in new technology or …?

What ever it is that you have identified while you have been analyzing your small business strengths, write it down on the SWOT Analysis Action Sheet before you move on to your business weaknesses.

Threats might include:

• Entry of new competitors into the market,
• A stagnant or declining market,
• Government intervention into the market,
• Recession,
• Changes to customer needs, etc

Using the information you gathered while undertaking your market analysis, and your own knowledge about the industry, list all of the potential threats you can identify in the Threats section of the SWOT Analysis Template.

Threats – Working Out How to Respond

For threats you need to take a slightly different approach to the one you took with the opportunities. Opportunities that you decide are outside your reach can usually be safely left alone. It might be a bit upsetting to let one go, but it will not have the same impact on your business as a threat that is ignored!

Again, you should rank your threats from most damaging to least damaging, and although you should spend most of your time addressing the most critical threats (the top three or four), you cannot just ignore the rest. If you do, you may just find yourself standing back and watching the liquidators putting a padlock on your office door one day!

Some threats you may be able to eliminate altogether, by gaining new internal capabilities, investing in new technology or finding a more sustainable funding model etc., but for some others, the best you can expect to do is minimize the impact on your business.

For example if the government decides that it would be a good idea to intervene in your industry, it is highly unlikely that you will be able to talk them out if it, so you will need to work out how you will adapt to the changed industry conditions.

Likewise, if the economy takes a nose-dive and people stop spending there is very little you can do to eliminate the threat. But you can determine how your business will respond.

• Do you move into another related industry?
• Or do you reposition within your own industry?
• Do you look at selling in another offshore market that is still in a growth curve?
• Could you cut back on production and try to wait it out?
• Do you look at cutting your operating costs so that you can lower prices?

Look at each of the threats on your list one by one. Do you have any existing internal capabilities that would enable you to counter the threat? Are there any internal capabilities that you do not have, that you will need to create to survive the threat?

If so, what do you need to do to make it happen?

Once again, document your findings on business threats on the SWOT Analysis Action Sheet before you move on to look at putting all of your analysis together.

What are Business Opportunities?

Opportunities are conditions (or emerging conditions) within the market that could enable the business to generate profitable business growth, give the business an advantage over their competitors, or enable the company to cover an external threat.

Opportunities might include:

• An opening in a new market segment,
• Ways to improve or expand the product line,
• Falling trade barriers,
• New technology, etc.

Using the information you gathered while undertaking your market analysis, and your own knowledge about the industry, list all of the potential opportunities for you business in the opportunities section of the SWOT Analysis Template.

When is an Opportunity really an Opportunity?

Have a look at everything you added to your opportunities list. Which opportunities are most likely to bring you the most benefit?

Again, rank the opportunities as you did your strengths and weaknesses, and concentrate on the top three or four.

At this point you need to take a bit of a step back from your own business model and try to look at each of the opportunities as objectively as possible.

Ignoring your own internal capabilities and structure for the moment, consider what a business (another business) would need to ‘look like’ to be able to grab that opportunity and take advantage of it.

• What kind of structure would they need?
• What skills or expertise would they require?
• What production or distribution systems?
• Marketing methods?
• Financing?
• Partnerships?
• Suppliers?
• Technology?

Once you have a clear picture of the ‘ideal opportunity grabbing business’, compare its profile to your own.

Have a look at your strengths, do you have all of them or would you need to develop new ones? How would you go about it and how long would it take? Can you realistically see your business being able to gear up to take advantage of the opportunity you have identified? If so, what do you need to do to make it happen?

Document your finding on your business opportunities on the SWOT Analysis Action Sheet before you move on to look at your business threats.

What Business Name Will You Choose?

Choosing a business name is one of the legal or administrative tasks you will have to complete before you open your doors for business. Unless you are planning on operating as a sole trader using your own name, you will have to select and register a business name for your business.

In many jurisdictions, carrying on a business without a registered name is a criminal offense.

Choosing a business name will be an important part of defining your business identity and needs to be chosen with care.

Using Your Own Name

It is relatively common for people to use their own names or initials as a business name. This method of naming your business enables your customers and your suppliers to readily identify the owner of the business and may lead to more personal relationships with the people who can have a long term impact on your business.

In Australia, if you are trading under your own name (as a sole trader) you do not need to register a business name but it might be advisable to do so anyway. A registered business name can come in handy when you are trying to open a business bank account, register for an Australian Business Number (ABN) or trying to source debt funding.

There at least one serious limitation to consider if you use your own name though. Businesses which are named for the founder may be difficult to grow or to sell because of the brand association with the founder. It may also be difficult for potential customers to work out just what your products or services are without additional information.

Examples of businesses named for their founder include McDonalds and RM Williams.

Descriptive Business Names

Generic descriptive names may make it easier for potential customers to work out what your business does but may not be all that attractive (i.e. they don’t stand out from the crowd).

Examples of business with descriptive business names include International Business Machines (IBM) and Kentucky Fried Chicken (KFC).

Combined Founder and Descriptive Business Names

To overcome the disadvantages of founder or descriptive business names you can combine the two. This allows you to be identified as the business owner and to describe what your business does all I one name.

Examples of combined business names include Dell Computers and Ford Motor Company.

Brand-able or Cute Business Names

If you want to create a brand around your business name you can choose a name that currently has no recognizable meaning (a nonsense word) or select a descriptive synonym of what your business is or does. For example using Debits & Credits as the name for a bookkeeping service.

Examples of nonsense names that now have a recognizable brand include, Google and Amazon.

Whats Next?

Choosing a business name is not a process that you want to rush through as if you make a mistake or decide later that the name is not appropriate it can be quite expensive to change it.

Once you have a short list of possible business names you will need to check if the names are available in your jurisdiction and whether there are any issues with registered trademarks. A short list is a good idea, just in case the name is already being used by another business or if the name is the same or similar to an existing trademark.

If you get the all clear from your research you can go ahead and register the your chosen name.

Published by: Wiley Publishing Inc
ISBN: 0 7645 7652 6

Business Plans For Dummies

As the title indicates, Business Plans for Dummies is from the ‘For Dummies’ series of books.

The information presented in six sections as follows:

• knowing where you want to go,
• describing your marketplace,
• weighing your company’s prospects,
• looking into the future,
• putting the business plan into action, and
• the part of the tens.

Not all of the section titles give you a clear idea of what is included so I will summarize them for you!

Knowing where you want to go

This section the authors lead you through the preparation stages of preparing a business plan including putting together a business planning team and finding the necessary resources.

This section also discussed why you really need a business plan and how to set the direction for your business planning efforts.

Describing your marketplace

This section leads you through the process of analyzing your market, your customers and your competition.

Weighing your company’s prospects

This section is about internal analysis and decision making.

The authors walk you through SWOT analysis to enable you to work out what your business does best and what you need to fix so that you can develop a business model that will work for you.

They also guide you through the process of developing income forecasts, operational budgets and cashflow forecasts to support your plan.

Looking to the future

In this section the authors address uncertainty, strategic thinking and growing the business.

Putting your business plan into action

This section is important. In it the authors talk about what to do with your plan once you have finished it.

A business plan should be a living document, one that guides the actions of everyone involved in the business!

The part of the tens

As the title of this section suggests, it is all about ‘ten things’ that relate to your business plans, specifically:

• Ten signs that you need to refresh your business plan,
• Ten questions to ask about your plan, and
• Ten business planning never-evers

So, what did I think?

Although this is a good text on how to put a business plan together, I can’t say it is one of my favorites. That, however, is definitely a personal preference thing.

The information presented in the Business Plans for Dummies is accurate and is presented clearly and logically. It offers common sense tips throughout the book for managing the business planning process and definitely ‘talks to’ the target audience.

For anyone who has only limited experience with developing business models and business planning, this book would be a reasonably good choice.

Small Business Plan

Have you starting writing a small business plan yet?

One of the most important tasks during the the startup phase for your new business is writing a small business plan.

Business Planning is one of the most important, but frequently overlooked, or poorly done management tasks of anyone starting or managing a small business.

Even though it is a lot of hard work to put together a plan, there are quite a few very good reasons for gritting your teeth and just getting on with it.

So what are those reasons?

Planning for your business can:

• Clarify your vision for the business,
• Lead to better management and superior business performance, largely because the process helps to understand your business better,
• Reduce the likelihood of ‘horrible surprises’ and increased stress levels,
• Enable you to convince someone to lend your money,
• Highlight emerging problems and threats, and brainstorm ways to combat them,
• Lead to better decision making by ensuring that you have more accurate information available to you,
• Improve the efficiency of your business processes,
• Create a focus on goals and the direction of the business,
• Help to integrate your personal goals with your business goals, and
• The list goes on, and on, and on.

As a prospective business owner, virtually everyone you talk when you are seeking finance, is going to expect to be presented with a well researched business plan. So basically, whether you like it or not, you are going to have to take the time and put in the effort required to put together a business plan for your business!

The first step in developing a business plan for your new small business is to understand what you should include in the plan. To help you with that you will find a simple business plan layout on this page.

You might also like to read about common business plan mistakes before you start writing, so that you know what to avoid!

Another thing to consider is how you will know when you are achieving the goals you have selected for your business (and published in your business plan). Working out what the key decision points are over the life your plan will enable you to track your progress towards those goals.

Don’t Want to Got it Alone?

If you are not confident that you can produce a winning business plan, there is help available!

One option is to buy yourself a good book on how to write business plans for small business.

What about using business planning software?

You still have to do most of the work, but the software provides you with a structure for your plan and guides you through the development process. Most of the business planning programs available do all of the formatting for you, enabling you to produce a business plan that looks very professional.

Still stuck?

Perhaps you need a business coach or advisor that can lead you through the process of developing your plan in easy to manage steps.

One of the options you have for promoting your business is using business cards.

Business cards are very handy. Giving someone your business card is like giving them a little piece of yourself to take with them. So choose the design and content of your cards very carefully.

Designing Your Business Card

The first time you design business cards it is probably advisable to follow the KISS principle and keep the design clean and simple.

The type of information you should have printed on the cards include:

• Your Business Name and Address,
• If you are operating in Australia, your ABN,
• If you are operating outside Australia, any business registration or ID# that you are required to display,
• Your name and position in the business,
• Your phone numbers,
• The address for your website if you have one and a valid email address, and if you have one
• Your catchphrase.

How Many Cards to Order

My suggestion would be to buy your cards in small numbers to start with, until you are completely satisfied with the look and feel. I can’t tell you how many hundreds of old business cards I have lying around.

Some are out of date because the phone number changed; some because my business outgrew the ‘cutesy’ design. Others have been discarded as I tightened the focus of the business from an “I will do anything” type of service to a more specific “this is what I do” service.

If you are looking for a low cost supplier of business cards you might want to check out Vistaprint.

They offer a small range of professional looking business cards either free or at very low prices. If you take advantage of the free offer, all you pay is the postage and handling.

Need Other Promotional Ideas?

If business cards are not quite right for your small business, you might want to check out some of the other pages on promotional materials, such as flyers or brochures, and newsletters.