The job market is tougher than ever, but starting your own business online has never been easier. Here’s how to get a good idea off the ground.
By John Herrman
Alex Andon wasn’t thrilled to lose his biotech job in May 2008. But unlike most of the millions of others laid off that year, he knew exactly what to do next.
“I was a marine biology major in university, and I had some pretty cool fish tanks. I had noticed that jellyfish exhibits had become popular at aquariums,” he recalls. “People were mesmerised, but there was no way for someone to keep their own jellyfish, because they need special tanks and special food. If I could build one and supply the food, I knew there was a market there.”
Nearly two years later, selling jellyfish tanks through JellyfishArt.com is Andon’s fulltime job.
In years past, starting a business was a complex, expensive and risky affair, but online tools have smoothed out many of the logistical bumps in the process. We’ve gathered wisdom from ordinary joes who made good by using the Internet to sell their wares. Here’s how to get started.
Testing the waters
Start small. Signing up for a personal- blog website on WordPress or Blogger is a simple first step: just pick a site name, a password and some personal info, and you’ve got an easily updatable presence on the Internet.
Since these blogs aren’t designed for sales, they’re best viewed as a way to share your work with the world and, more specifically, to gauge interest. Find relevant communities and message boards online. See if anyone else is selling similar products, and to whom. Whether you craft wood or machine metal or knit kitten scarves, you’re guaranteed to find like-minded people online. With your new site, you’ll have something to show them.
“The best way to get started is to put up a simple Web site and see how it goes,” says Limor Fried, who founded Adafruit Industries, which specialises in do-it-yourself electronics building kits. Personal blogs require no financial outlay, are easy to update with photos and descriptions of your work and can even net a few informal sales through PayPal. “Adding PayPal buttons for payment is very easy,” Fried says. “That’s how I started out.”
Zach Smith’s MakerBot Industries, a New York City company that sells kits to build low-cost rapid-prototyping machines – also known as 3D printers – got his start the same way. “At the beginning, it was very much a ‘Send me 10 bucks over PayPal, and I’ll mail you this thing’ type of arrangement,” he says. This was fine, up to a point. “Beyond 30 or so orders, it gets unwieldy. But at the beginning it’s great, because it requires almost zero effort to find out if anybody is interested.”
Setting up shop
If you sense demand, there are two options for turning a marketable hobby into a real online business: shacking up with an established site, or striking out on your own. Which strategy you pick depends on how easy you want the process to be versus how much independence you’re looking for.
The buyer-and-seller culture on sites such as eBay is old and established, but can be intimidating; a new seller can easily get lost in the overwhelming noise of an auction site. Amazon will let you sell under its banner, providing a free online storefront and order processing. (For the privilege, Amazon’s commission can run as high as 15 per cent.)
In recent years, a new breed of Web sites for selling homebuilt products has stormed the scene. Among the most popular is Etsy, which caters to the DIY set, with a special focus on crafts and art. Setting up an Etsy.com storefront is free and takes just minutes. Like Amazon, Etsy handles the entire transaction process, from credit-card processing to shipping calculations, though its fees are lower (listings cost 20 cents (US) per item, plus a 3,5 per cent transaction fee on anything sold).
A site called Big Cartel does Etsy one better with a service called Pulley, for selling downloadable goods such music, photography, videos or software. Pulley’s flat monthly fees start at R50, which gets you 25 product listings.
Stores such as this are easy to set up and pretty much take care of themselves, but they aren’t for everyone. Commissions and fees can choke profits, and being part of a larger site hinders growth as an independent brand. Selling through Amazon or Etsy can feel more like renting a table at a flea market than running your own business.
The alternative? Running a Web site of your own.
The raw materials that go into a Web site are cheap to acquire. First, you’ll need to find a host for your site. With reputable companies such as Internet Solutions, a couple of hundred rand a month will get you enough space and bandwidth to get started. These sites will also sell you a domain name – a dot-com address of your very own. Unless a domain is already taken, it shouldn’t cost more than R150 a year.
Now comes the hard part: building a site. Major Web hosts sell cheap packages designed specifically for small-business owners, which include pre-designed site templates, shopping-cart software and options for customising layouts without the need for HTML expertise. Some companies specialise in prefab hosting and Web site packages for small businesses. Andon sells his jellyfish tanks using one such company, Volusion. “I have no knowledge of programming or coding,” he says, “yet I was able to build my site on my own.”
For a truly custom Web site design, expert help is a must. Freelancer.com, a bidding market for freelance development work, is a good place to start. Freelancer. com’s thousands of listed projects are also an invaluable resource for understanding how much Web design actually costs. (Fair warning: It can cost upwards of R10 000.)
Of course, all of your work will be for naught if you can’t get paid for it. And the Internet has taken the pain out of accepting credit-card payments, even for brand-new businesses. PayPal offers a free basic merchant account, with no minimum revenue requirements and no need for a credit check, plus simple tools for linking it to common e-commerce platforms. PayPal’s commission is reasonable, too, at 2,9 per cent of each sale plus the equivalent of about R2 per transaction.
Adjusting to growth
Every small-business owner plans to grow, or at least hopes to. Few know what to do when it actually happens. “As far as the biggest shock in running Adafruit goes, it was demand,” Fried recalls. Zach Smith came to a similar realisation in MakerBot’s early days: “One of the pitfalls is that you start doing something, then you get successful, then you have to start building infrastructure and logistics. If you don’t have help, the rest of the business suffers.” The pressures of properly incorporating a business, figuring out taxes and dealing with customers can eclipse your core duties.
If it comes time to hire temporary help for shipping or menial tasks, Smith recommends Intuit’s online payroll service, which keeps track of payments and automates the complicated paperwork generated by the freelance hiring process for around R300 a month.
When the logistical demands start to become overwhelming or inventory begins to take up too much physical space, it’s time to outsource. Amazon rents space in its massive shipping centre and will handle small businesses’ packaging and shipping duties as well. The more you ship, the less you pay. And once you’re shopping for warehouse space, maybe it’s also time to move out of the garage.