E-commerce has become a viable source of income for many entrepreneurs in the digital age. Starting your own e-commerce business can be a terrific option if you have products or services in mind to sell as it requires less overhead than a physical business location or retail storefront.
How to Starting an E-commerce Business
Here the critical things you should know before starting an e-commerce business.
1. Know your products.
Make sure you have a clear understanding of what you’re planning to sell. Conduct research online to find similar products and determine what price the market will bear. Examine other sellers and what appears to be working for them. Also, do a careful cost comparison of your product’s retail price and the amount needed to obtain supplies. Don’t forget to factor in the cost of your time. You want to be sure that you’re not only selling products but making a profit.
2. Develop your business plan.
As part of your planning, you should write a full business plan that includes your goals, revenue projections, and marketing plan.
3. Seek out funding.
Small business owners and entrepreneurs can receive funding assistance through a variety of programs. The Small Business Administration (SBA) offers loans and grants for which you can apply. Additionally, you could go the crowdfunding route and build a profile on sites such as Kickstarter or Indiegogo.
4. Obtain the necessary licenses and permits.
Operating an e-commerce business is just like any other, meaning you’ll need the proper licenses from your local and state government, as well as the federal government.
Some of the licenses you might need include:
a) Business License: Typically necessary at the local level.
b) Business Tax Registration: Typically necessary for the state you’re operating your business in.
c) DBA Registration
Additionally, your local government might require a Gross Revenue Business License. This is a business license with a variable renewal rate based on the amount of gross revenue your business has generated.
Some states require a seller’s permit while others will require merchant’s license. If you intend to run your e-commerce business out of your home, you’ll also need a home occupation permit, normally filed with your local or county government.
Also, certain businesses that involve products like food, alcohol, and pharmaceuticals require additional licenses, and on occasion, you’ll need multiple permits from different states to operate them legally.
Use online search engines, like License123, to find the different licenses and permits you’ll need.
5. Set-up your space.
Whether you’re working out of your home or rented space, make sure it is outfitted with all of the tools and equipment you’ll need to be successful. There are multiple checklists online that can help you ensure you are covering all of your bases.
No matter the type of business you start, it’s important to meet all of the necessary requirements including local and state regulations and to follow all the steps to successfully and legally get your business up and running.