When it comes to starting and building an online business, there’s quite a few different problems entrepreneurs are going to encounter.
To help make sure you are giving yourself the best chances at succeeding, I’ve broken down 10 of my best tips for building a successful online business and navigating your way through some of the most common mistakes I see entrepreneurs making.
1. Have a plan
It’s actually pretty amazing how many people I see trying to start a business after buying a book, giving it a quick read, or getting themselves involved in a training program that promises them overnight riches.
If you don’t think about what you’re going to be doing, set clear goals for the business, and take time to understand exactly what it takes to become successful online, you are setting yourself up for a major disaster.
It sounds harsh to say it like that, but that is the honest truth. I believe many more people would be successful if they went into their business with a clear plan, and then stuck to the plan that they set for themselves.
Focus on figuring out your budget, how you’re going to spend that budget, and which tasks need to be done on a daily basis, and then do them. Planning is critical to your success as an online business owner.
2. Start now
At the exact opposite end of the spectrum from the first tip is going to be that you want to avoid waiting too long to actually start the business.
This is another common issue that I see - people having great ideas but failing to act on them, watching the months and years pass by without ever making any real progress towards their goals. Don’t let this be you.
Instead of trying to perfect every aspect of the plan before you ever get started, spend more time focusing on taking action, even if it’s imperfect or you could be making a mistake. Mistakes are the best way to learn.
To give you an idea what this means, take a look at someone wanting to go swimming. They have fully prepared themselves, went to a pool with a lifeguard, put on a life vest, taken expensive swimming lessons, but they won’t jump in the water until it is the perfect temperature.
At some point, you’re simply going to have to jump in the water.
Yes, it takes time to figure out your plan, but at some point you’re going to need to gain the experience needed to keep taking your business to the next level. The only way to gain that experience, for most people, is to make mistakes, learn from them, and keep pushing forward.
Building a business is the ultimate way to gain on-the-job training.
3. Make your business legal
If you’re only going to be selling items here and there on eBay, you may not ever have to worry about this. However, if you are going to run your business as a real entity, you’re going to need to register it as a legal entity.
Most platforms will never require you to register your business with your state or country if you are going to be operating it out of your home, however if you have any intentions of generating large amounts of revenue or view the business as a good source of revenue, you’ll want to get a license.
You will also need to have a sales tax number. Any time you sell an item to someone located in the same state you’re based in, you will need to collect sales tax, and then pay it to the state.
To get this done, you will need to register with your state and have them give you the tax number. Most wholesaling companies are going to require you to have a tax identification number before they will let you start sourcing products.
Finally, you will need to register with the IRS and get a tax ID number. This can be done at IRS.gov and is simply an ID number for the business that you have registered. This prevents you from giving out your personal social security number.
4. Plan on investing
This is another huge problem I see entrepreneurs making -- they simply refuse to invest in themselves, and will not take risks that could cause their business to grow exponentially.
Take a step back and ask yourself where you see yourself in 3 months, 6 months, a year, or even 5 to 10 years. How big is your business going to be and how are you going to invest to make sure you hit those goals?
If you’re simply looking to build a part-time income stream, then you’re not going to need some of the expensive tools and services that are designed to help you get to that point.
However, if you are planning on your business being able to support you in the future, you are going to need to make sure you’re prepared to take risks and invest in the business to get it to the point where your goals have been met.
5. Safeguard your time
Time is priceless. You can try to put a price tag on it, but you’re going to end up overspending.
To help you understand this concept, and have it really hit home, let me give you an example.
Take a look at a corporate, commissioned sales team. Each person has two different tasks: finding prospects and setting appointments with them, and giving the sales presentation.
For each hour that these salespeople are in front of a prospect, if they were able to close half of their sales, their time would be worth $200 per hour. For every hour that they spend prospecting, they aren’t making any money.
In that situation, wouldn’t it be worth hiring someone to do the prospecting for them, and pay that person $10 or $15 per hour? This would effectively let them double the amount of time they spend actually giving the sales presentation, hitting those $200 per hour goals.
Not doing this is akin to walking down the street, passing by a $20 bill on your way to pick up a $1 bill. It just doesn’t make sense not to put people in place to handle the lower value tasks in your business.
In every business, there are two different levels of tasks: low value tasks and high value tasks.
Doing the low value tasks that you could easily outsource or automate is going to waste your time, and keep you from working on those high value tasks that actually generate revenue.
6. Always stay focused
A business is constantly in flux, always evolving, growing, and changing. This is especially true online where the landscape can change so quickly you don’t even realize it has happened.
Once your business is established, running well and generating revenue, most entrepreneurs will want to sit back and relax, kick their feet up and bask in their glory. This can be a critical mistake, though.
You should always make sure you are looking for new products to promote, new services to offer, and new ways you can get your business in front of your target prospects.
It’s easy to be guilty of wanting to relax, especially after working hard enough that your business is finally established in the marketplace. However, make sure that you are staying focused on your goals and, when you hit them, always set new goals to continue striving to reach.
7. Shake off your losses
Losses and bad decisions are going to happen. It’s just a part of the learning process.
You may purchase a large amount of inventory thinking that you’re going to sell it all out as quickly as possible, only to realize that it simply won’t sell.
Or, maybe, you’ve created a new venture and it just doesn’t matter how hard you work on it or how many hours you put in, the venture just won’t take off.
You’ll need to be able to identify when it’s right to quit, and when you need to push through and persist.
In these examples, if you are sitting on a large amount of inventory that won’t sell, forego making a profit, drop the price, and get the inventory liquidated as quickly as you can. You can reinvest the money you’ve made into a different product that will actually sell.
If you’ve started a new venture, make sure you’re giving it the time needed to become a success. As long as you’re improving and growing, even if that growth is slow, you should keep moving forward.
But, if you’re staring at the end of the tunnel and there is no light, it’s best to cut your losses and move onto your next goal.
8. Reach out for help
Would you believe it if I told you that some of the world’s best writers have never actually had any formal writing training to get better at what they do? Yet, they still produce bestseller after bestseller, and have made millions of dollars as a writer.
What those writers do, is hire people that are good at writing, and have them edit the books once they’re done with them. Utilizing the help of others, they’re able to better their own craft.
Your business is going to demand the same from you.
There may be certain skills that you simply don’t have, or tasks that you don’t know how to complete, so reaching out to someone that is a professional or an expert and getting them to help you is the perfect solution.
9. Build relationships
Networking is a word that gets tossed around in business circles and training all the time. It gets tossed around because it’s a critical skill to have.
Before you start putting too much pressure on yourself, though, networking is really nothing more than making connections, building a list of acquaintances, and nurturing friendships.
There are people around you that you can call on for help with whatever you’re doing, as long as you’ve put in the time to build the relationship and show them that you are a valuable person to know.
This is especially true if the people you are networking with have been down the road that you’re traveling down. They can give you crucial advice to help you keep from making the same mistakes they’ve made, and how to take shortcuts they’ve taken to get to where they’re at now.
10. Watch your expenses
Another unfortunate mistake is entrepreneurs believing they can throw money at a problem and that it will eventually go away. What this can lead to, though, is spending far more money than you actually need to, and having your expenses creep up to unsustainable heights.
Most online business owners don’t understand their expenses, and don’t properly track them, so it’s going to be nearly impossible for them to get the expenses under control.
Managing your expenses is actually relatively easy to do. Start with a spreadsheet. List your revenue in one column and your expenses in another. Whenever the revenue column exceeds the expenses column, you’re making money.
That may seem oversimplified, but it’s honestly the best approach to take. Having each of your expenses listed out like this will provide you with the visual aide you need to accurately compare what’s needed and what can be cut, so you can keep your expenses under control.
Eventually you will want to invest in an accountant or at least some accounting software, like QuickBooks, to help you understand and manage your revenue and expenses.
Even though there may be times you encounter problems while you’re starting your online business, as long as you take heed of the tips that I’ve given you here, and pay attention to some of the more common mistakes entrepreneurs make, you’ll be able to easily overcome them and continue pushing forward.
Author: Jock is the founder of Digital Exits, an online brokerage service. Jock has been featured in Forbes and contributed to numerous websites and podcasts. He specializes in appraising and buying/selling online businesses and enjoys helping other entrepreneurs do business online.