Online business? Hah. Easier than a drunk Kardashian. At least, that’s the sentiment when you get a big idea. Two weeks later you’re red-eyed, dishevelled, and squeezing the contents of a bar rag down your throat because “I still can’t afford proper beer”. Don’t believe me? Take a look at the closest web entrepreneur. See his weak stagger? His eyes that reflect lost faith in humanity? He could tell you a thing or two. Like:
1. Online Side Businesses Don’t Free Up Your Time
Do you want your website to passively collect income? Do you want to spend 10 minutes a week on your site, and make an extra $2000 a month? Yes? Well so do I. Let me know if you get there.
Here’s a truth about online business: It’s time consuming. In many cases, you would actually save more time getting a second job. In my student years I fell for this; I thought if I ran an E-Bay shop, I’d make tons of money and have loads of free time. Here’s what happened:
- Answer idiot E-mails – Two hours, because E-Bay is the source of 90% of the world’s stupid E-mails
- Packing things – One hour
- Checking bids, trawling to compare prices – Between two to four hours
- Record keeping (What’s trending? What’s falling? How much did I make this week?) – One hour
- Hunting for things to E-Bay – The whole damn weekend
2. There Are Low Barriers to Entry
If you set up an online business, there will be competitors. I don’t mean in a few years. I mean months after you succeed, you’ll notice competitors multiplying like germs under a coffee shop table.
The Internet dissolves barriers to entry. It promotes competition (and coincidentally, piracy). That means your online side-business is never going to be a brainless, passive activity. You have to innovate and update. You need to develop promotions, find sponsors, connect with clients, provide after-sales support…everything associated with running a full time business.
And if you can’t devote the time it needs, your competitors will swarm over you and kill you. When an online business dies, it doesn’t happen slowly. What happens is 10+ competitors set up at the same time, and asphyxiate you faster than an asthma attack in a sinking submarine.
3. It Is Not Cheap
Sure, an online business can be cheap. But the cheap ones tend to not make money.
Think of the last time you sent money to a website. Did the site look sleek and professional (i.e. expensive), or did it look like a 16 year old’s MySpace page? Yeah, thought so. If you want to make money off your website, you’d better be ready to spend money on it.
If you happen to be a professional web designer, or can get a good one for free (“Kor-kor, come and do this for me!”) than congratulations. Big advantage. Otherwise, you better not imagine your site will cost $17 a year. Get ready to pay for image rights, digital artists, a wizard, content writers, etc. If you aren’t thinking on that level, you have a hobby, not a side-business.
If you expect to generate income, prepare to pay at minimum $500 for the site. Anything less is questionable. I know when I see a $200 site, because it looks like an animal died on my windscreen.
4. Survey BEFORE Launch
Most online businesses fail in four months. That’s how long it takes before the site owner realizes: “Oh crap, nobody will actually pay me for this.”
Amateurs marry themselves to a particular idea. Sarah, whose web business lasted three months, told me that:
“… my idea was you could film yourself dancing, and then get a critique from a panel. I thought it was a great idea because I love constructive feedback, even when it’s negative.
But if I had done my homework first I wouldn’t have done it. The truth is most people won’t pay to be criticized. Not everyone’s professional, most dance for fun or to relax. And they can’t be bothered paying for someone to tell them this and that is wrong.”
And Sarah put a lot of time and work into her site. She hired a panel of experts, set up Twitter accounts, the whole shebang. She went through all that trouble, without stopping to wonder: How many people will open their wallets and give me money for this?
Successful websites seldom launch like that. Before they go up, their owners spend months doing surveys. They ask around and see if anyone will pay for the service, even if it’s just a Google docs survey. They only start setting up once people are saying: “Yes, I will pay you for that”.
5. You Need Content
If your idea of “online side business” is putting up pictures and waiting for orders, you’re clueless. Sorry, but you are.
Online, people have “search bar vision”. They filter out thousands of search results. So if they aren’t specifically looking for you, you may as well not exist. You’ll appear on page 10 of Google search, which is like Purgatory, but more embarrassing because you’re still alive.
The most obvious way to get around that is content. Articles, news, something that makes people frequent your site. Something they can share on Facebook, for example. And who is going to write that content? Can you really find the time to do an article a day?
Got an online side business? Comment and tell us about it!
Get more Personal Finance tips and tricks on www.MoneySmart.sg
More From MoneySmart