Starting out a new business in the niche you have no previous experience with is always a risk. Still, there is no reason why you shouldn’t learn from your own mistakes.
Over the years, numerous entrepreneurs have shared their stories of both success and failure in order to help others exploit or avoid them.
With this in mind, here are several issues that those who decide to open an online store and take a plunge in the world of ecommerce may encounter.
1.Small Expenses are not that Small
The price of hosting your website on a server is not a major expense for your company and neither is buying a domain name. Later on, when you start dealing with clients, the cost of the transaction fee will not be considered a major expense and neither is the credit card processing fee. Then, when you decide to provide your website with an SSL certificate, you will face another minor expense but what happens when you decide to put them all on paper. However, once you start counting these small expenses as a singular issue, they are more than responsible for a major leak of your resources. Needless to say, those who disregard them early on will be in for a bad time.
2. So Many Choices
Another problem that a lot of first-time entrepreneurs simply aren’t ready to face is the multitude of choices on virtually every level of their business. First, they must choose their industry and sub-niche. Then, they are responsible for making the choices regarding the overall design of their website. After this, they need to decide on the payment gateway (or gateways) they are going with. In 2017, the number of e-commerce platforms alone is quite staggering, which, although convenient, also might pose a significant problem for those who are indecisive due to their inexperience.
Even experienced business owners who are just now tapping into the world of e-commerce may be quite unaware of numerous tax deductibles available in this field. For instance, web hosting, domains, stock images and design templates are all tax deductible. In a scenario where every dollar counts, you need to ensure that you exploit every single one of these advantages.
One more thing to keep an eye out for is the fact that not every region has the same tax laws. Furthermore, a country like Australia has an incredibly complex taxation system. In fact, it was ranked highest in complexity when compared to its economic peers such as Canada, USA, UK or Singapore. Add to this the fact that Australia also has 10 percent sales tax on any non-essential item and suddenly the above-discussed tax deductions become essential to your e-store’s survival.
So, the best way to handle this would be to look for a local tax accountant. In other words, companies from NSW should probably look for a reliable tax accountant from Sydney, due to their experience dealing with the local tax system.
4. Marketing Budget
In the digital environment, marketing is everything, which is why you need to set a proper marketing budget and allocate an appropriate amount of resources to each branch in question. The greatest problem here is the fact that the approach you take depends on the industry you choose.
Nonetheless, e-commerce brands often follow the pattern of spending 1-24 percent of their marketing budget on SEO and about 29 to 57 percent of their marketing budget on paid search. Apart from this, the greatest marketing asset they need to consider is PPC, which, combined with SEO, might range from 39 to 81 percent of their entire budget.
5.Setting the Profit Margin
Finally, due to the fact that the competition can be incredibly stiff, setting a profit margin is not an easy task but this mostly depends on the current state of the market. If you are an exclusive supplier of a certain product for your region, you can allow yourself to set the bar a bit higher. On the other hand, if the market you are currently in is particularly competitive, you will probably be forced to set a minimal margin and find a way to additionally lower your overhead.
While none of the above-listed is a complicated matter, they still require a certain amount of situation-specific experience that most first-time entrepreneurs lack for apparent reasons. Due to the fact that learning from their own mistakes can be incredibly costly and risky, it is best to either hire professional help, try to learn from other mistakes or employ both of these techniques at the same time.