1. Research the market
Before you start your business, do yourself a favor and research the market:
– what consumers are buying. There’s no point selling things people do not want.
– what other businesses are selling (i.e., the competition)
– what prices your competition is selling things. If you can sell it for cheaper than your competitor or offer “added value” for your product to the consumer, then go for it. If you can’t, look for another product
– from where you can get the products (i.e., your supply source)
– what gross profit you can make from each product (roughly the retail price minus the cost to you)
– How or where will you store the stock; home garage? Self-storage unit? Industrial warehouse?
2. Write a business plan
Failing to plan = planning to fail. Write a business plan. Did you hear that? Write a business plan. It will force you to think of issues you’ve not thought of and show you any areas that need more attention. It’ll show you if you need more money and whether you’ll make a profit. Many businesses fail because of a lack of cash flow or working capital. A business plan will alert you to potential cash flow problems, which means you can look into funding before a crisis hits!
You can use Business Plan Pro, Business Plan Template, or any other software. Get advice from gov. The UK, your local Chamber of Commerce, an accountant, or a business person.
3. Legal & admin
Are you going to incorporate your company to form a limited company or sell as a sole trader? A limited company means your personal assets are safe in case something should go wrong, but you will have more admin like filing for incorporation at Companies House, filing Annual Returns, etc. See companieshouse.gov.uk for guidance.
If you decide to incorporate a company, you will either need to prepare the documents yourself or use a Company Formation Agent. There are plenty on the internet.
You’ll need to think of a company name. Search the list of companies at Companies House to see if the name is taken. If it isn’t, quickly snap it up!
If you go down the sole trader route, good luck; we can’t help you there!
You will need a business bank account. Shop around for free banking for start-ups. You may also find a package that includes Business Plan writing software or accounting software included for a monthly fee. That might get you started quicker than having to buy them individually.
Don’t forget to set up some insurance for your business. You’ll need some for stock cover, employer’s liability, product, public liability, etc. Perhaps business interruption insurance too.
If you don’t intend on holding stock, at this stage, reach an agreement with your supplier for them to drop ship the goods to your customer when the sales come in.
If you haven’t done so, read up on Distance Selling Regulations!
Now that you’ve found your product and written your plan, work on your branding:
– Business name. Linked with this is the domain name (i.e., your website name)
– Your Unique Selling Point (“USP”)
– “Corporate” colors
You can pay a graphic designer to design a logo, or you could use websites like Graphicriver for logos.
You will need to register your domain name. We have used sites like Domainmonster or 123-reg.
Get business cards done following your corporate colors and in line with the image you’d like to portray.
5. Web design & hosting
Get quotes from web development or marketing companies to design an e-commerce website and host it. Check where servers will be located, server capacity, speed, and so on. Check whether you will have complete access and control of the Content Management System (i.e., the backend of your website) or whether you will need to pay the web company to manage and maintain your website. You can see where the costs are going to rack up.
Alternatively, explore a WordPress site. You can purchase a WordPress template for $30. That’s what we did. Provided you get someone to download it and host it, you can then do your legwork filling out the site with pictures, descriptions, and so on. With Word press, you can add the e-commerce shopping cart yourself and whatever plug-ins thereafter. With something like £300, our website was up and running.
At this point, you’ll need product images and descriptions. You can pay a professional photographer to take images, or you can ask your supplier for images. Most have high-resolution images that they can supply to you for free. If you get your own photographer, you will have to purchase some stock beforehand.
Set up your payment gateway from your website. You’ll need a:
– Card payment processing provider (e.g., WorldPay, Ogone, Sage Pay)
– Merchant Account to receive funds (this is different from your current account, but check with your bank or shop around to see what rates are for debit cards, credit cards and how many transactions can be processed for free)
You can also integrate PayPal as a payment mechanism relatively easily. See their website for details on how to integrate that into your website, if compatible.
6. Search Engine Optimisation
The internet is a competitive place. If you aren’t on page 1 of Google, you won’t get much business, but not everyone can be on page 1. So you’ll need to work on Search Engine Optimisation. There isn’t an overnight solution but rather a consistent effort to improve your search ranking. Please read up on SEO. We aren’t experts, but here’s what we do:
– Create fresh content on our site regularly
– Keyword our products and tag our images with words that people are using in Google searches (Google Keyword Tool can help)
– Create backlinks by listing our business on other business directories, third party websites
– Social media presence on Facebook, Twitter, Pinterest, and so on
– Commenting on forums
– Writing articles
You can pay an SEO company for this for you for a monthly fee, or you can plod through yourself!
This will require more time and effort than you think. You have to consistently market your business. This is what we’ve done:
– Google AdWords
– Social Media – Facebook, Twitter, Pinterest
– Email marketing
– Print leaflets
– Magazine advertising
– Memberships of the Chamber of Commerce and local networks
– Attending networking events
– Corporate sponsorship
– Attendance at fairs/markets
– Word of mouth referrals
The list is endless, but you’ve got to do it.
8. Processing orders & postage
Now you’ve done all the behind the scene work, and your website is up and running, look forward to some sales!
When orders come through, you will need to process them from book-keeping, generating sales receipts, packaging your product safely (to withstand bashing around), and then dispatching it to your customer within two working days generally.
If you do not intend to hold stock, then you will pass the request to your supplier to drop ship the goods to your customer.
Make sure you inform the customer when the goods are dispatched. Our WordPress e-shop has an automatic dispatch notification function.
Investigate the most cost-effective and reliable delivery service for your parcels. It could be Royal Mail or private couriers like Collect+, MyHermes, etc. You can use courier brokers like Parcels2Go to search for prices. If you are sending large items, you could set up an account with companies like Interlink, DPD, City Link, UPS, FedEx, etc., whereby they will collect the parcels from you.
The receipt of the parcel by the customer is the first bit of actual contact they will have with the product, so make sure it’s packaged well and your delivery service is reliable. If the couriers damage or lose the item, although it’s not your fault, your customer will be unlikely to buy anything from you again.
9. Third-party platforms
In order to reach more customers when you are starting up, it’s not a bad thing to experiment with selling on eBay, Amazon, or Etsy. They all have pros and cons, and you’ll soon see which platform is paying off for your type of product and price range.
You’ll need to set up accounts on each site and follow their rules and payment mechanisms. Their fees also vary, so remember to check your statements at the end of the month to see whether selling on those platforms is profitable for you.
10. Stock control
As you sell a stock, you’ll need to replenish it. Keep an eye on stock levels. Your accounts software, if you have one, should be able to generate a stocktake sheet and report stock levels by item or supplier. Re-order in regular intervals. Watch your cash flow levels to see how much you can afford to buy. Order more of the popular items, less of the unwanted items. Physically count your stock from time to time (some people do a yearly stock check). It is boring and tedious but has to be done to account for deterioration, loss, theft, and so on. Adjust your stock numbers on your website when new stock arrives or when stock is lost, damaged, or no longer available (assuming the website adjusts stock when sales are made through it).