Despite popular belief, is web is still very much a sort of wild, wild west when it comes to making money online.
That is, if you have a half-way decent idea on deck.
Given that just about anyone can make money blogging these days, it’s no secret why serial entrepreneurs are popping up left and right, looking for a piece of the action. However, understanding how to fund your next big idea ultimately separates newbies from the big fish in the proverbial pond.
Whether you’re looking to fund your next web-based start up or simply wrap your head around the reality of what it takes to fund your online empire, consider the following questions as a solid starting point.
Who is Your Audience (and How Much Are They Spending)?
Perhaps one of the biggest mistakes that new online entrepreneurs make is failing to understand their audience. While you may think that you have a brilliant idea, it means very little if there’s no one out there to buy into it. Likewise, you may have an audience in mind, but have you done the following in terms of research?
- Do you know where your audience typically hangs out online and spends their money?
- What is the budget of your audience? Are you targeting CEO’s spending big bucks or penny-pinchers who are stingy with their disposable income?
- What does your competition look like? How can you realistically break through with your own idea?
Focus on low-hanging fruit instead of reinventing the wheel. Do your homework and understand if your business plan is realistic from a financial standpoint. The more specialized and niche your market, the better.
Where is Your Traffic Going to Come From?
You can’t just slap a site on WordPress and hope for the best when it comes to traffic and sales. If you’re looking to drive serious traffic that’s willing to spend, chances are you’re going to have to open your wallet a bit yourself. For example, think of the time and monetary resources involved in driving traffic to your idea, including a combination of the following:
- Organic traffic as a result of long-term content marketing, blogging and writing
- Pay-per-click traffic and social ads, which can get quite costly depending on your niche and competition
- Referrals and affiliates, who can actually help do most of the legwork for you as you build an audience
There is no one-size-fits-all approach to driving traffic on a budget; however, consider that this will be a significant chunk of any online entrepreneur’s spending, regardless of niche or industry.
What Are You Going to Sell?
Keep in mind the amount of sheer work it takes to push a physical product versus an informational product such as an e-book or web course, which can be easily updated and re-purposed. Beyond an initial investment, informational products can be a potential goldmine versus physical products which encompass shipping costs and a warehouse, for example.
Do You Have Any Potential Partnerships?
Having someone else on deck to help can relieve a lot of the stress and financial costs associated with running your business. A joint venture could help you drive traffic, support you financial or help you sell your product for the long-term.
What’s Your End-Game?
It’s not counter-productive to put the cart before the horse when it comes to ecommerce. After all, many serial entrepreneurs wash, rinse and repeat their business process to build new sites, sell and start over in pursuit of a bigger budget. Perhaps the best advice is to start small and then build from there: once you’ve found success once, you can replicate it.
There’s a lot of hype surrounding the idea of starting a business online, and rightfully so. Understanding the financial realities of a web-based business can help you manage your expectations and avoid potential snafus that could sink your big idea.