The internet has changed the way the world does business. Today, without a web presence, a brick and mortar business could get overlooked, and many businesses are opting to be an online-only storefront. But no matter how big or small your online business is, you need a budget.
Start when you are small and by the time you reach the stage where your business is a household name, you will have a solid financial plan in place, a trusted financial adviser to help and a wealth of budgeting experience so you’re ready to handle the big time.
While every sort of business needs a budget, online business have a slightly different set of priorities. What are some things specifically that online businesses need to bear in mind with their budgets?
Built for Speed
Invest in a high-speed internet connection and choose a web hosting service that can comfortably deal with your projected high-traffic goals. Budget for an infrastructure that can support the need to act quickly. You want to be able to respond to customer questions and take their orders. You don’t want your business web site freezing, crashing, or even loading slowly.
Make sure your web design is adapted for mobile devices and loads quickly across many platforms. This will also help your business by boosting your ranking with search engines like Google, which prioritize web sites optimized to load quickly on smartphones.
Licensed to Sell
Although most communities don’t require a business licenses to operate out of your home, be sure that your community isn’t one of the ones that does. You are going to want a sales tax number either way. Items that you sell to people in your own state will need to have sales tax collected.
You may file your business as a sole proprietorship with or without a DBA name (“Doing Business As”), but that will mean using your own social security number to conduct business and many businesses won’t deal with individuals. So it is a good idea to register your business as its own entity with the IRS and get a free EIN (Employer ID Number) tax ID for your business.
Unified with Branding
The reputation of your business online is how you build your customer base. Ironically, in the quick moving current of ever-changing trends, a mistake can taint your brand forever. Organize your web-based assets to optimize your brand not just on your site, but across social media and even offline advertising.
Strive for an integrated marketing plan that controls every relevant asset. Set up notifications with Google Alert, so you can act promptly every time your brand is mentioned. If you have employees who use social media for the business, make sure they have a clear idea of your guidelines and understand what is expected.
Stay on top of new products and services that can help you stay relevant and increase your marketing range. The marketing portion of your budget will be the most fluid as you adjust to trends. Change happens quickly on the internet.
Ready to Play the Hand That’s Dealt
Sometimes it pays to be persistent. Most online businesses take about three years to begin showing an actual profit. Don’t get discouraged too easily. On the other hand, sometimes a product just doesn’t hit, and you need to cut your losses and try something new. In the words of an old Kenny Roger’s song “You’ve got to know when to hold’em, know when to fold’em.” If your inventory has been sitting still for more than six months, it’s probably not going to sell.
Mark it down and make room for something that will sell. If you are getting some sales and slow growth, keep going with that item. As long as you are making some sales, look for ways to improve and increase those sales. Keeping track of your product inventory will help you decide what’s working and what’s not. Ask a financial planner from The Burish Group or a similar company in your area to run spreadsheets to track this information so you don’t have to sort through the raw data yourself.
Protective of Customers
Businesses have a legal obligation to safeguard their customers’ privacy and protect any customer data obtained online. Store information on separate back-up devices, and have a way to securely destroy credit card data once it is no longer needed. Keep your systems current and updated to guard against hacking, as this needs to be a priority item in your budget. Along with secure systems, maintain controls over access to records by restricting it to certain employees.
If you are planning to start an online business, start it. Begin with a basic plan and a budget, and go for it. Putting your budget on paper (or in Quickbooks) makes your dream start to be more real. As you track expenses and incoming revenue streams, you will see where you need to adjust, where you need to cut back, and what you can free up for expansions and future needs. Commit to the success of your online business by planning your budget today.