Starting an online business takes both your time and your money. The best advice is to invest your time to ensure that your money is well spent. Some entrepreneurs believe that time is money, and to some extent this is true, but you don’t want to cut corners to start your business before you have thoroughly researched the ins and outs of how it will operate. You will save yourself a lot of time in the future if you do it correctly and with patience at the beginning.
One mistake that new business owners make is defining their target audience incorrectly. Some new business owners don’t even define their target audience at all and this can slow down the ability to make a profit; considering, they may not be reaching the people that want or need their product/service. Your target audience is a vital part of starting your online business. If you don’t know who you are selling to then it makes it difficult to market your product to sell. Here are the questions you need to answer and research to make sure that you are selling to the right people.
- What need or desire is being fulfilled when someone purchases your product/service?
- What are the demographic of the people that will want to fulfill this need or desire?
- How old are they?
- Are they female or male?
- How educated are they?
- What is their income level?
- Is there a typical race you would be selling to over another?
- Where do they live?
- What are these people’s buying and spending habits?
- How do they respond to different forms of advertising?
- Do like to watch video advertisements?
- Are they into social networking?
- How much television do they watch? And what time of day do they watch television?
- Do they prefer snail mail or email?
- Are they into the news?
- Do they listen to the radio? If so, what kind of music do they prefer?
- Do they read blogs?
- How will you captivate their attention on your website?
Now that we know who you are selling to it is important to understand your competitors. You will more than likely be competing for these people’s money. The only way to outsmart your competitors is to know what they are doing and how they are doing it. Research these questions to help you stay abreast of the trends and keep you on the top for buying decisions.
- Who are your competitors? What are their names?
- How large of a business are these competitors? Can you even begin to compete with them? If they have multi-million (billion) dollars to work with you and you have $1000, what do you think is going to happen?
- What are their prices of the product/service and can you afford to sell at a competitive rate?
- What are their promotions? How are they attracting their customers? Can you offer the same or something bigger or more exciting?
- Where are they located? Are they in the same country, state, or city as you?
- How do they advertise? Are they advertising through television, radio, print material, email, social networking site, etc?
- How will you stand out and look better than your competitors?
Researching fads and trends are very important not only for an online business but any business. Fads come quickly and fads go quickly. For a long-term profit don’t rely on the fads to earn you long-term money. You may be able to jump on the band wagon for a short amount of time but think of this as a bonus and not your actual bottom line (don’t overstock product as the sell may end abruptly). Depending on what the fad is you may just want to stay clear of them all together. Watching and researching the trends in your business are very important to your overall success. There is a window of opportunity to jump in and starting taking advantage of the trend and gaining a competitive advantage. A trend will be present for a long period of time. Trends can be cyclical and seasonal so beware of how this works in your line of business. Spend enough time investigating these trends to be sure that you can accomplish and be successful with what their purpose is. After you are certain that the trend is a trend and not a fad then invest your money. Competitors are great to be able to sit back and watch – let them take the plunge instead of you. If they are seeing positive results then go ahead and invest your funds into the new found successes. Sometimes it isn’t about the being the first one out there to gain a competitive edge. Watching what works (or doesn’t work) for someone else will help you strategize your entrance and you will be able to be much more successful right of the gate. Basically, you want to weigh your risks and this will help you determine if you want to be the first one out of the gate or maybe sit on the sidelines before making a tough and costly business decision.
There is plenty more to research and determine how and when to invest your money when starting your online business. This is a great start to help you to make those tough decisions. Remember always invest your time and do the homework before you invest your hard-earned cash.