An Experiment in Online Business
Today I want to tell you about my first ever foray into the world of online business. Any one who's ever read the Four Hour Work Week, or similar books, will be familiar with the idea of a 'Muse' Business - a sort of side biz that people from all walks of life are setting up to add a little extra income, maybe replace their current income and even to simply free themselves of their regular 9-5 jobs completely.
Well, I have been wanting to try my hand at something like this for a long time now, after having read the Four Hour Work Week, and having spent my commute to and from work listening to podcasts about the subject from guys like Neville Medhora and Noah Kagan at appsumo.com, Chase, Corbett and Caleb over at fizzle.net, and Jason and Jeremy at Internet Business Mastery and this year, I finally took action!
- Sell 'Information' Products - These are things like ebooks, video courses, podcast subscriptions, etc
- Affiliate Marketing - This involves setting up websites that basically market other people's products and you take a cut. The Sandbag Fitness banner link on my site is an example of this, as is the Amazon Associates program.
- Sell Physical products - I could make and ship products myself, buy from an established supplier and ship myself, or 'drop ship' - which is where my customer buys from me, i order from my supplier, and the supplier sends the product out to the customer.
Now, as this was my first ever attempt at something like this, I set myself a number of rules to follow, to keep me focused and to make sure I didn't do anything stupid like blow our savings on some get rich quick scheme online:
- This is a SIDE business project - I have a busy job AND a family to be with - so I didn't want to spend more than an hour on it each week. I DID end up spending a bit more than this each week at the beginning to get it set up, but now it's down to about 30 minutes a week.
- A starting capital budget of $100 - it sounds low, but it's amazing how far you can stretch a $100 bucks when you really need to! It's called bootstrapping, and it actually makes the whole process kinda fun - there is a great book out called The $100 Start Up that tells you more.
- Whatever niche or product I decided to sell, I would have to VALIDATE the idea first so as to not waste time, money and energy on something that wasn't ever going to work. I highly recommend you check out the Sumo Business Blueprint course and the Behind the Scenes of a Muse course on nevblog.com to find out more about the importance of validating your business ideas. These courses also taught me a LOT about starting my first online business.
Next I'll take you through what I did from start to finish...
The Steps I took to start my first Online Business
Basically I spent a couple of weeks writing down EVERY idea for a product that I could sell in my little notebook. And I mean every...single...idea!!
The whole point of this stage is just to brainstorm ideas, you never know which one might actually turn into something. I started out with things that I already know about, then added things that I'm interested in and would like to learn more about.
This is possibly the MOST IMPORTANT step before you actually start an online business. Basically, doing the research into potential business, setting up a website, finding a domain name and hosting, all that stuff takes quite a bit of time and money to do. And there is nothing worse than after having spent all that time and money, to then find out that, well....no one is actually interested in buying that product.
So to help prevent that disappointment as much as possible, it's important to validate your idea first. This can be as simple as messaging all your friends on Facebook who you think would be interested in your product and saying something like "hey guys, I'm starting an online store selling X, and they's gonna cost $20. If anyone is interested in ordering, message me and you'll get the Early Bird discount, 10% off"....or something to that effect.
If you get responses and people seem interested in what you want to sell, AND if they're already willing to pay for it (even if they are getting a discount, it still counts!), then you probably have a product that OTHER people will be willing to pay for to.
Here are a few other things you can do to validate your idea too:
- Keyword Research - Use the FREE Google Keyword tool to see how many people are actually searching for whatever product you want to sell online. Settings should be EXACT Match, LOCAL Searches, and enter whatever COUNTRY and LANGUAGE preferences you want. My rule of thumb was to have about 3000-4000 exact monthly searches for my primary keyword relating to my chosen product.
- Post a listing on eBay and see how much interest you get.
- Create a Facebook Ad for your product and track how many clicks it gets - NOTE this option will cost you some money, but you can set a limit on how much you spend, and Facebook ads can be extremely focused on your exact niche audience, so you can get some pretty good data. As for the cost, they way I see it, I'd rather spend $50 at the start finding out an idea is no good, than $200 building a website, buying a domain, setting up hosting, and all the time that goes along with all this only to find out in 2 months time that no one wants to buy my product!
BUILD A MOCK WEBSITE
After you've been through the Validation, it's ok to spend a few hours building your first website. I followed the advice of Neville Medhora in his Behind the Scenes of a Muse course and built a mockup online store website first, before contacting suppliers.
Most of these suppliers hear from people every day - " Hi, I'm setting up an online store and wanna sell you stuff, what sort of discount will you give me? ", and most of these callers end up not actually doing anything, so you can't blame the suppliers for not taking most of these inquiries seriously. If you have a mock up already built to show them, they're much more likely to take you seriously.
Now a lot of online stores these days are built using dedicated eCommerce Website builders, like Shopify, BigCommerce or Volusion for example, or they are built using Wordpress and special ecommerce themes.
As this was my first attempt at this, and I was trying to stretch my $100 budget as far as I could, I decided not to go with the ecommerce store site builders as they all have a monthly fee. They are really great services and make having your own online store really easy, but they're not the only option. I also decided against Wordpress, because I have tried setting up a different blog site with Wordpress before, and while it's not DIFFICULT to use, it does take some practice to get good with it. I wanted to keep the learning curve as shallow as possible so I could focus my time on other things.
So I decided to use Weebly to build a mock up of my online store, the same website builder that this blog is built on. You can use Weebly for free, and if you have your own domain name, you don't have to have the .weebly.com in your web address. I bought a domain name through 1&1.com for about $8 bucks for a year, and then used it with Weebly to build a website. GoDaddy.com is another great website for domain names and hosting.
Weebly is INCREDIBLY easy to use, its basically all drag and drop, so a relatively computer illiterate guy like me can use it with no trouble at all! It also has built in ecommerce features ready to go.
Once you've done some research, validated your ideas and found one or two that could potentially work, it's time to pick one. My advice, if you're just starting out, is to pick something that you would find enjoyable yourself.
For my first website, I decided to sell wooden Model Aircraft. Being a pilot, and a self confessed airplane geek, I thought that model aircraft of all the different types of aircraft out there would be something that would interest me. Of course, there were TONNES of places online to buy model aircraft, so I niched it down further. I ended up with the idea of custom, hand carved wooden models of personal aircraft.
So if you owned a plane and wanted a model of it for your desk, done. If you flew something special in the military, I could make model of it for you, etc.
Now I knew what it was that I wanted to sell, I had to find myself a supplier.
FINDING A SUPPLIER
The easiest way to find a supplier for your chosen product is to run a Google search, but you need to make sure you search for a SUPPLIER or MANUFACTURER, not a wholesaler or seller. These people get their products from a supplier further up then chain, and then sell on to you, so there are more layers involved and this means smaller profit margins for you. Search for [your niche] SUPPLIER or MANUFACTURER on Google, but bear in mind that you may have to dig deep through the search results to find what your looking for, sometimes as much as 10 pages deep!
You can also check out websites like alibaba.com, or Elance (if you want something made from scratch). I found three suppliers on alibaba.com, contacted all three and chose the one I felt most comfortable with. Remember, I'd never dealt with anything like this before, so I was just winging it, but so far it seems that I made a good decision. I didn't choose a supplier just based on the lowest price, quality of the product was more important to me. Remember that as a drop shipper, YOU are responsible for your suppliers mistakes, so it pays to choose a reliable one.
Contacting suppliers can be a little intimidating, but I found that most of the people I contacted were friendly and happy to answer all my questions. After all, if my site was successful, I'd be making THEM money, so why wouldn't they want to be helpful?
So I had an idea for a product, I'd built a rudimentary online store for pretty much free, I'd found a supplier who could make exactly what I wanted to sell….next came the hardest part - TAKING ACTION and LAUNCHING the website.
I don't know why exactly, but this step is scary. What if no one visits my site, what if no one buys any of my products, what of my friends and family laugh at me, what if I fail…all of these questions were going through my head before I launched, I'm sure it happens to lots of people.
It simply came down to this - I had spent a few weeks using my free time to research this thing, I'd put in time and effort building a website even if it was kinda crappy at this stage, I'd been in touch with a supplier who was willing to supply to my brand new site that had no customers yet - I'd basically reached the point where if I didn't take the final step and launch, then I would have just wasted all that time and energy over the last few weeks for nothing. That idea irked me more than the fear of failing. The way I saw it, even if this little experiment of mine DID fail, and fail horribly - I still LEARNED something. And if it didn't fail, I'd have a little extra money in my pocket, and that's awesome! So I just went ahead and jumped…I published my site live, I used a $100 voucher for Google Adwords to set up an ad, and then I waited.
Turns out I didn't have to wait too long though…three days after my site went live I got an email from my contact form on the site - someone had just placed an order. My first order in THREE DAYS!! Ok, I'll admit it, I was pretty bloody happy that day. In fact, I was home alone, and I may or may not have done a happy dance in front of my computer when I read that email. I actually called the customer up to clarify a few details of her order, and to thank her for being my FIRST ever customer - she was awesome by the way.
And there it was, my little experiment worked. For a cost of around $30 for a domain name and some research material (books, online course, etc), I had my very own little online business that had already made me back the money I'd spent so far plus a bit of profit on top of that. I was now officially an entrepreneur.
For the most part the site has been running pretty smoothly since I launched without a whole lot of work needed on it. I did spend a few days tweaking the look of the site, as well as ironing out some kinks in the order process (with a lot of help from my wife!).
In the 6 months months that the site has been running, I've taken 11 orders for models. The price varies a little depending on the kind of order, but on average my profit is around the $50 mark. It's not a lot of money, but it's something. I have a few ideas in the works on how to target some customers who would potentially order from me in bulk, like for example, a flying school may order a bunch of models of their training aircraft and offer them to students as mementos when they complete their training, that sort of thing.
My main goal when I started this experiment was to see if I could make a $1000 online. I haven't yet, but I don't see a reason why I wouldn't be able to do that. There have been downsides too of course. One is that I get most of my traffic from paid advertising on Google, and I'm also experimenting with Facebook ads. So The site needs to be making more money coming in from sales than money going out on advertising, or its not worth it. So far I'm still on the right side of that equation. I know that other sites are able to rank high on Google for free by using SEO or Search Engine Optimisation. This is a subject I need to learn more about, I'm finding it a little tricky right now.
This new hobby of mine is a LOT of fun. I'm finding the learning experience really fascinating, and the best part is, its a hobby that makes money! As I said before, I have a long and constantly growing list of ideas for products I could sell. I'd like to start another site drop shipping physical products, and if it proves successful, maybe try my hand at selling information products as the profit margin is usually much higher.
This will all take time of course, as I still have a busy job, a wife and kid, and studying to do, so I don't have much time to devote to my new hobby, but that's ok, I'm in no great rush right now. A word of warning though - this hobby can be addictive!!
For those of you who would like to try this online business stuff for yourself, I have a bunch of books and websites I can recommend you check out:
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It's a GREAT resource for finding suppliers or even brainstorming niche product ideas
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This post took me quite a while to get done, even though I've had the draft copy sitting in Evernote for a while now. I hope the information I've presented here is useful, and if anyone uses any of it to start their own online business, I would love to hear from you.
Please leave a comment below, or drop me a line via email.