Zero Cost Business Startup Myth

Zero Cost Startup Myth

When I talk at various small business events or tell others what I do, people are curious about how to make money working from home with a computer.  They seem to think that anyone can start a business for no money and little time.

That vision is a myth.

The reality is that it takes money (and lots of time) to make  money – whether you are selling online, locally, or in a retail store!

Regardless of the type of business you’d like to start, you won’t succeed without spending some money. This is particularly true if you are starting a gift business.  Unless you are planning to just use a dropship company to create your products, you will need products and supplies to create your gifts.  We’ll talk about these costs in another post.

You can always sell locally and forget online sales.  But even that requires time and money.  I can tell you from experience that selling to friends and at craft shows is just not a viable way to start a profitable business.  Your friends will want discounts or even your products for your cost.  You can sell some individual gift products at craft shows but people who attend craft shows just aren’t looking for gift baskets.

You can market to local business owners and actually do quite well if you do it right.  But even that has costs involved.  This is one way to keep your costs low, however, as you learn the ropes.

Eventually, however, you are going to want and need to have a website in order to look professional and to be taken seriously in today’s technologically oriented world.  And there is no way that this can be done for zero cost.

Here are just a few examples of the what you will need to spend just starting a website if you plan to sell online.

Domain registration ($12/yr.) – This is the name (or url) for your website. It appears at the top of your browser when you click or type it in. Costs vary from around $9 at Namecheap.com to $12 or so at Googledomains.com or GoDaddy.com. There are even occasional specials but those specials are for the first year only. It is not a one-time expense but the name has to be renewed each year. That’s not a lot of money but a lot of people don’t realize that they have to pay for it each year.

Web hosting (Less than $10 on up per year) – Once you have a domain, you have to have a place to store the website. With this, you get what you pay for. I personally used to use Hostgator for hosting until they sold to a big conglomerate and their customer customer deteriorated. The low-cost hosting companies store many different people’s websites on one server which is what makes it cheap but it also makes these websites SLOW. Customers don’t stick around while your website loads to their computer from a slow server.

I now use Siteground for my hosting.  Not only are they very dependable and the customer service is great but they even include an SSL certificate for each domain that I host there.  The SSL certificate is what makes your site secure and is required if you accept credit cards.  It also changes the url from http to https which is very important for ranking on Google.

Web Hosting

Web design/development (costs varies) – I’m a huge WordPress fan; it’s all I build on although I have been experimenting recently with Shopify which is an all-in-all shopping cart/hosting platform. .

But the disadvantage of platforms like WordPress is the misconception that anyone can create an awesome DIY website in 5 minutes. A better option if you aren’t familiar with code and how to use wordpress is a fully-hosted platform like Shopify.  Big Commerce is similar but I personally prefer Shopify.

Some other advantages of using a fully-hosted platform such as Shopify are:

  • You never have to worry about getting hacked.  If you never want to deal with site security, then go with a fully hosted cart such as Shopify.
  • You never have to worry about server downtime. When you host your own site, sometimes you can make an edit and screw things up. I know.  I’ve done that several times while working with my wordpress site.
  • Backups are usually automated. I’ve never lost all my data and my hosting company does back up my site  but the idea of losing everything you’ve spent weeks, months or even years creating is enough to give me a heart attack.  If you don’t want to worry about backing up your data yourself, then go with a fully hosted platform
  • You have someone there to help. Going the open source route like woo-commerce or even the shopping cart that I have used since I started by online business many years ago can be a lonely endeavor. Basically, you must be a self-learner and know how to use the forums effectively. But with a fully hosted cart, you can usually get someone on the phone within a few minutes.

The costs of a fully hosted platform can quickly add up as well and you can’t judge the overall cost based on the base price alone. For example, many of Shopify’s plugins carry a monthly fee that must be factored into the equation.  However, they also have many free apps that are very helpful.

But what about those free website builders like Weeby, Wix and others? Like most things in life, you get what you pay for. They are great for learning the basics but if you plan to have a professional business, they just aren’t going to do it. And if you want a shopping cart, which is essential for an e-commerce business, it is not free.

Search Engine Optimization:  Learning what you need to know to build a website and make it rank high enough to be found when someone searches for your products takes time. Lots of time. I am a DIY self-taught computer user but most are not. The answer, then, is to have a developer build it for you. The cost for that starts at a rock-bottom $500 for a basic site and goes on up.

SSL certificate ($50+/yr.) – Planning to accept credit card payments on your website? If so, you need one of these in place. And even if you plan to skirt around that by using PayPal or another third-party processor, you’ll pay fees for every payment you accept.  Some of the shopping carts include the SSL Certificate in their monthly fee.  This is true of Shopify.

Merchant Account (usually free to set up but costs vary per month). This is what you need to accept payments for your products. Most people aren’t going to pay you with a check or cash unless you are selling locally. You have to have a way for them to pay you. There are many different options.

You can check with your bank but banks usually have high fees. And you have to be very careful about setting up a merchant account or you may find yourself surprised with all the additional fees that are tacked on and even the cancellation fee when you decide to change to a different processor.

Fortunately, there are several options now that weren’t available when I started my business that have a “what you see is what you get” fee system. Authorize net, PayPal, and Stripe are three processors that charge 2.9% + 30 cents per transaction. They are the easiest to set up. As a matter of fact, if you decide to set up your website on Shopify, you will get their transaction fee of 2% waived if you use their payment processor which is also 2.9% + 30 cents per transaction.

These are just the costs for setting up a website. There are also expenses for inventory, equipment, shipping, and all the other costs of operating a business.

NO, starting a business is not FREE but it can be done on a shoestring.

You can certainly build a blog or even a website without a shopping cart on some of the free sites like WIX, Weebly or Blogger.com. This is a great way to experiment and learn but it won’t result in a profitable business.

There are other options that people tend to forget when starting a business. You can sell your products on Etsy, Amazon, Ebay, and other marketplaces. Etsy allows you to set up a branding page for your individual business while the others do not. But Etsy only allows handcrafted and antique products to be sold there. Gift Baskets, including products that you buy and incorporate into designs, are definite no-nos on Etsy.

Each of the marketplaces have fees and learning curves. Amazon gives top rankings, when someone searches, to the companies that sell lots of products which makes it difficult for a newcomer to get their foot into the door unless they have a unique product.

If you have a dream to start an online business, I know this sounds discouraging.  You can eliminate the fees of a website by selling locally but you will end up missing out on sales from people who expect you to have a website.

Don’t be too discouraged.

If you have little money, you can still start a business.  But you need to have your eyes open so that you don’t lose your shirt.

Be aware, however, that it won’t happen for free.

You can do it on a shoestring if you are willing to learn and do much of it yourself. Even then, you will spend some money.

I recommend that you start small and grow it gradually as you learn what is really needed and what sells best for you. We have been there and done that you can learn from our mistakes. Spend your time and money wisely.

You’ll find lots of unscrupulous people out there with their hand out wanting to sell you their services. If I bought every “too good to pass up” opportunity, I would be broke.

Don’t buy or sign up for coaching or anything else on an impulse. Research it and the person offering the opportunity carefully. There are people who make their money by teaching you how to do something that they haven’t been successful at doing themselves. Talk to others in your industry before committing to a large amount of money.

Be realistic about what you can afford to spend.

If money is tight, and it is for most people starting a small business, start slowly. Learn as you go. Invest in only what you need at the moment.

You don’t have to have everything you would love to have to start a business. For example, a ribbon imprinter to personalize your gifts is a great addition but that is something that you can put off buying later when you are more established.

But a mistake that many small business owners, who start on a shoestring,  neglect is LEARNING. You can save yourself a ton of money and headaches if you find resources that are reliable and honest.

If your industry is gift baskets, one the best resources out there is a book written by Shirley Frazier and sold on Amazon called, How to Start a Home-Based Gift Basket Business (Home-Based Business Series).

Need help learning how to design. Shirley’s book Gift Basket Design Book: Everything You Need To Know To Create Beautiful, Professional-Looking Gift Baskets For All Occasions is another excellent investment.

Sign up for Facebook groups that have members who are experienced in your industry and can answer your questions. Just be aware that many members of these groups are new as well and it could be the “blind leading the blind.” You are invited to join the group that I moderate and participate in regularly at Gift Basket Network. You have to request to join and be approved. That is not to keep you out but to keep spammers out.

What it all boils down to is this:

You can create a website on a free platform without spending money. But there will come a day, especially if you want that website to function as a real business, when investing some of your own money is inevitable.

Unless you are using dropship companies to provide your products, you will eventually have to invest in inventory and supplies to create and ship the products that you are selling. You will want to have your own domain rather than one that is tagged onto the hosting company’s name (mywebsite.shopify.com). You will want to have marketing materials such as business cards, brochures, postcards, etc.

Yes, you can create a free website on a free platform but I don’t know of anyone who succeeded in creating a no-cost online business, because it just isn’t possible.

For your online business, you can forget about most of those fees that I outlined above by setting up your store at one of the “all-in-one” shopping carts like Shopify or Big Commerce.  The cost for Shopify is $29.95 a month with a 14 day free trial for you to play with it.

But regardless of which road you decide to take, there is no such time as a zero-cost-startup gift business.

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Creating niches with your gift website

One of the best things that you can do with your website is to develop your content around keywords and phrases that are generic gifts such as “Flagstaff Gift Baskets.

“But my competition is doing the very same thing,” you may say.

That’s true, but that shouldn’t stop you.  Just take it a step further and expand on those generic niches.

There are many niches you can create that people will actually be searching the web for.  “But I don’t have any niches,” you say.  “I sell gift baskets.”

Yes, you do have niches.  And, each of these is a niche that can provide opportunities to create very focused content, with key phrases your competition isn’t targeting.  How about:

  • Flagstaff gourmet gift baskets
  • Flagstaff apartment gifts
  • Northern Arizona University care packages
  • Flagstaff Medical Center Get Well Gift Baskets

If you look at traffic statistics for a gift website that receives high traffic, you’ll be surprised at the search phrases that brings in that traffic.  These phrases are called “the long tail” of seach.

There are a great many more search terms that you can use to create a niche.  Then create content that is focused on these niche  words and phrases and optimize the page for both visitors and search engines.  There will be far less competition, and you’ll do much better in the search engines.  You don’t need to write a novel on these topics.  Five hundred words or so is usually adequate.  The text, combined with photos of what you can create for these niches, can make a very effective search engine magnet.

Your site can develop several niches, each as a major page with sub-pages for each title and phrase.  Why compete for the major words when you’re able to get first page search positions for the lesser-used key phrases?

If you have more information than you feel comfortable putting on one page, link to sub-pages that expand on even more focused niches.

By spending time on this one part of your website, you can go a long ways towards beating your competition.

 

Money Can’t Buy Happiness — But It Sure is Nice to Have!

money1Remember that money doesn’t bring happiness.
     People with ten million dollars are no happier than those with nine million.
Irving R. Levine

Irving R. Levine was a financial reporter.  That statement was tongue in cheek but when it came to money and finances, he was right on target.

Money can make the difference between a successful business and a failed one.  That is why it is so important to create a feasibility plan when starting your new business.  You need to know how much money you are going to need to start and operate your business during the first three years — and, just as important, where that money is coming from.

Are you going to be able to make a profit, break even, or is it looking more like a loss?  What expenses will you have?  What is your projected income (and be realistic)? This is not the time to let the “dreamer” side of you take control.

If you are going to be a one-person operation, can you reasonably put in enough hours to create the products or produce the services that will be required to make the income you are projecting?  And don’t forget that a one-person operation has to do much more than just produce products and services.  What about the time necessary for marketing?  For billing?  For ordering products?  And for all the other parts of conducting a business.

If you’re starting or operating your business without any kind of financial plan, you’re playing Russian Roulette!

Shipping Resources

shipping-boxWe’ve all been there.  You’ve decided to expand your business to the internet which means you’ve got to ship those packages.

As the price of gas has climbed over the past several years, carriers have more than doubled their surcharges. And the change from actual weight to dimensional weight has made the shipping charges skyrocket to the point of being unreasonable in many cases.  If you don’t make the right decisions, your package can cost more than the gift itself.

Shipping those packages doesn’t have to break the bank or scare off your customers though.  Having a little bit of information and surfing to the right websites can save you time and money and keep your customers happy.

First, where do you buy those boxes you pack the gifts in?

Check your yellow pages for local suppliers to save on shipping.  But then also check www.uline.com for great prices and quick shipment of boxes of all sizes.  Even with the cost of having them shipped from Los Angeles (and they have shipping locations all over the country) to Flagstaff, their boxes are much cheaper than I can buy locally.  For the large rolls of packing paper which are HEAVY, I take advantage of Nashville Wraps occasional free shipping offer and place a large order which includes several rolls of that packing paper.

Now that DHL is no longer in business, shipping options are UPS, Fedex, or USPO.  Deciding on which carrier to use for which size package and which delivery service means navigating an alphabet soup of options.  You just don’t have the time to figure out which service delivers the best value.

Shipstation is a website that you can join for $9 a month that will give you the shipping costs for the companies that you use and will prepare the labels for you to print.  I’ve found that the ups shipping rates via shipstation are discounted.  Shipstation pulled in my already discounted rates from UPS so there was no additional savings for those shipments.  I don’t use fedex so don’t know if their rates are discounted via shipstation.

I save on shipping charges by doing all my shipping labels online and am fortunate enough to have a UPS Store (where you can drop off packages with internet generated labels at no extra charge) and the Post Office located just a few blocks from me.  I do a once-a-day drop-off and save the UPS daily pickup fees.  The Post Office picks up my packages at no charge when they deliver my mail as long as I leave a note in my mailbox.

If you’re shipping smaller packages (such as the teddy bears that I ship from my website www.grandcanyonteddybears.com), you’ll find priority mail shipping to be very reasonable and there are no surcharges for home delivery.  You can also order FREE shipping boxes of various sizes from the Post Office website and even have them delivered free to you.  But it is a federal offense to use these boxes with any other carrier.  Using priority mail, I can ship smaller size gifts (such as those created in the small boxco boxes) from Arizona to the East Coast for less than $10 and have them arrive in 2-3 business days.

If you’ve found other ways to save on shipping, please share them with us in the comments below.

 

 

It All Goes Back Into The Box

Ken Blanchard, author of “The One Minute Manager and other business books,”  told the story about the little boy who really wanted to beat his grandmother at Monopoly.  He studied.  He practiced.  He learned.   Until one day, he beat her at the game and told her, “Finally!  I beat you.”

She smiled as she picked up the pieces and put them back into the monopoly box.

She then told the child, “Yes, you did.  But let me tell you another lesson that I’ve learned about playing the game of life.  You can work hard, study, practice and become whatever kind of person you want to me.  But when the game of life is over, it all goes back into the box.  The only thing that’s left behind is what you’ve created or done for others.”

I’ve heard the phrase “You have to give to get,” and have also heard results of how people have been blessed as a direct result of what they have given to others.

But I have a different philosophy.  I don’t think you have to give to get.  I think you give, not because of what you will receive in return, but because your giving is from the heart.

There’s a country-western song that tells the tale about a young man who stopped to help an elderly lady stopped on the highway with a problem with her car.  The young man was broke but instead of taking payment for his help, he told the lady to “Pass it On!”  The song goes on to tell of a waitress, who was pregnant, tired, and discouraged.  An elderly lady left a $100 tip.  That night the waitress laid in bed beside the young man who had helped the elderly woman with her car and told him about the woman who had left the $100 tip.  And the song ends with the magical words of “Just Pass It On.”

I am a business coach for a County Business Empowerment Class in my community.  Last week, a local entrepreneur, who has become very successful, spoke about how he started his business hoping to make lots of money.  He said that he was in the business for the money–not just because it enables him to live well and do things he’s always wanted to do–but because he can use that money to help others as well.  I remember the author of “Everything I needed to Know About Life I learned in Kindergarden” say basically the same thing.

Successful entrepreneurs have to be interested in money if they hope to be successful.  You can’t just forget the financial parts of a business and operate it any way you feel like.  How you treat your customers, your investors, and even your vendors go a long way towards determining how financially successful you will be.

There are, of course, those like Ken Lay of Enron fame and Mr Matoff of Ponzi scheme fame, who cheat others to make their millions and then use it to live like kings.  Then there are those entrepreneurs who achieve their business goals while practicing the principal of “Pass It On!”

When the game of life is all over, and it all goes back into the box, the Ken Lays and Matoffs of the world will leave behind people who have been hurt or destroyed.

The “Pass It On” entrepreneurs will leave a legacy that may not even be known by most but will be appreciated and remembered by those they helped.

We are in the midst of changes in the world.  Changes bring opportunities.  What will you do with them?  Share your comments!