With rents ranging between “absurd” and “second mortgage”, online businesses are the way to go these days. Whether you’re looking for a bit of side-income, or aiming to look down from the 60th floor of your future skyscraper, here’s where you begin:
Step 1: Do some initial surveys
Quick, what do you need to start a business? Most of you would say: Facebook page, Instagram page, event planner, corporate secretary, two dozen employees, and so forth. Well that’s all wrong. The first step, before you even think of doing all that, is to do some initial surveys. If you open up Google docs, there’s a simple survey tool that’s free to use. You may as well learn to use it right now, given that you want a start a business (in future this will be your bread and butter, as important as Excel or Word). The first thing you want to do is write down the business idea(s) you have, and then send out a survey to friends, relatives, ex-colleagues, etc. Aim to send it out to at least 100 people*. The reason you use an online survey, instead of asking in person, is that you’re more likely to get an honest answer. In face-to-face conversations, people are a little less willing to tell you when your idea’s terrible. You’re going to ask two simple questions in your survey: Do you need this product / service, and would you pay money for it? You’ll know your business idea is workable, if you get at least 80 per cent positive responses to both. Otherwise, you’ve picked something (1) too niche, (2) too unprofitable, or (3) too difficult to explain clearly. *If you don’t know 100 people, then go out and network. This is important when starting a business anyway.
Step 2: Make sure you meet two out of four crucial criteria
There are four main criteria that help to distinguish your product or service. You won’t get far in business, if your company can’t stick out from a few thousand competitors. These criteria are:
- Quality (An extremely well-made product or well performed service; possessed of far higher standards than the industry norm)
- Exclusivity (Rare or only available to a select few; perhaps even customised for each individual customer)
- Novelty (New and interesting, a cool gimmick)
- Pricing efficiency (Cheaper than the industry norm, while still maintaining an acceptable level of quality or quantity)
As a rule of thumb, most successful products / services emphasise at least two of these criteria.
For example, a company like Hermes focuses on quality and exclusivity. A company like Forever 21 focuses more on price efficiency, and to some extent novelty. These are ways to distinguish themselves from competitors. Beware of going for pricing efficiency, especially if you are offering a service. You can undercut others by 50 per cent if you want, but will you really be happy working just as hard for peanuts? Lower prices always seem like the easiest way to get ahead, but it can be painful later. It’s easier to lower prices than to raise them.
Step 3: Identify your target demographic
This is where women lose one of their key advantages. It’s believed (although not decisively proven) that women are better with face-to-face sales. Women on average have better verbal skills, and are more cued-in on emotional states. The bad news is, a lot of that flies out the window when you sell online. There is no face-to-face communication; all you can do is vary the images and choice of words on your website. To do that, you must have a highly specific demographic.
Who are you selling to?
Demographics can be based on gender, age, income, profession, geographic location, or even industry. The more specific your demographic, the easiest it will be to market. For example, if your target demographic is female teenagers, you’d know the best form of social media to use is Instagram (see our previous article for the reason), and your website’s graphic designer could pick images that appeal to them. You’d also be able to guess the correct tone to use on your website – you’ll know your posts can’t read like a letter from the company chairman. Once you know your demographic, answer the following:
- Which bloggers, celebrities, or other influencers are most important to the target demographic? How can you work with those influencers?
- What other products does the target demographic buy? Can you tie-in with those product manufacturers for sales promotions?
- What does the target demographic aspire to? Do most of them dream of being able to go on vacation every week? Have a hot beach bod? Own an expensive car? How can your product help or relate to those aspirations?
- How does the target demographic buy things? Do they use cash or credit cards? How much do they tend to spend?
- What will anger or gain the respect of the target demographic? If you want to sell to younger generations, don’t do something silly like post rants against the “strawberry generation”. If you want to sell to older generations, posting YOLO memes is not a good way to be taken seriously.
As you can see, understanding the target demographic shapes everything from your marketing strategy, to your pricing and delivery methods.
Step 4: Identify your key partners
Who are some organisations you need to work with, to engage the target demographic? For example, say your target demographic is “self-employed persons”. You might decide to work with organisations like the Employment and Employability Institute (e2i), as they have initiatives to help freelancers. Other examples are trade organisations (how about a discount for, say, all members of Singapore’s law associations?), or even activist groups (perhaps your no-animal- testing products can be aligned with animal rights). It’s much easier to engage your target demographic, if you pick the right partners. Spend some time thinking about who these may be, and how you can work with them.
Step 5: Learn the numbers
In a recent interview, Jeanne Sullivan (co-founder of financial powerhouse StarVest Partners) pointed out that male presenters were more likely to get funding. One reason is businesswomen who don’t familiarise themselves with the numbers. Even if you’re not going to seek funding, it’s important to be aware of every dollar going in and out of your business. You should have a clear idea of:
- How much money the business is going to take to run, every month
- Your breakeven and cut-off point (when must the business at least cover its cost? At what point will you let it die?)
- Debts and interest rates
- The operating costs, such as how much you need for new inventory, and how much is spent on storage
- Your performance at the end of each financial year
Knowing these numbers clues you in, on whether your business strategies are working.
Step 6: Set up the website and inventory system
How much do you need to buy and store, and how will you account for issues like refunds? How will people pay you over the internet, and how you will keep track of which customers are frequent buyers? When it comes to logistics, Synagie.com has you covered. Just drop us a message, and we’ll help you handle everything from the order processing, down to the creation of your website. This leaves you free to focus on the sales and marketing.
Step 7: Know how taxes and grants work
Singapore is a low tax environment. Take note of what your corporate tax should be (currently a flat 17 per cent of net profit), but start-ups may get a few years tax free. Check on the Inland Revenue Authority of Singapore (IRAS), to see what deductions you qualify for. You can also see our previous blog article on government grants. Make sure you make full use of all of them.
Step 8: Prepare for customer interactions
Write down everything that can possible go wrong with your product or service. This includes everything from late delivery, to defective product. The next step is to write down a clear policy for each case. Do you give cash refunds, or only exchange? How will you deal with negative comments on your company’s Facebook feed, or criticism in the media? If you don’t have a Public Relations company to handle this for you (yet), you’ll have to face the customers alone. Rather than do it on the fly, prepare all the scripts beforehand.
Step 9: Buy the right insurance policy
Look up business insurance policies, and make sure you’re well protected. This isn’t just about worker’s compensation for injuries – the insurance is also needed to protect you against third party claims (e.g. if a customer claims your product or service damaged their business), or against situations like ransomware attacks. Business insurance usually isn’t expensive, and newer, smaller companies are in serious need of it. Remember, one hacker deleting your website could cost you days or months of revenue.
Step 10: Remember to look back as well as forward
Running a business is much tougher than being an employee. There will come a time when you haven’t gone out for nine weeks, are working in front of a computer in the hours long past midnight, and are down to the last 80 cents in your weekly budget. At that time, it’s important to look back as well as forward. Keep a list of milestones your business has reached, so you can see how far you’ve come. This might give you the extra push you need to keep going.