Remote businesses have established a firm presence over the past few years. It seems like it would be easy for anyone to design a website and host it for a few bucks a month.
You can run a business out of your living room. But is it really more affordable?
For the most part, an online business will entail fewer startup costs. It may often involve a website and several social media accounts, all of which can be launched for less than $100.
Compare a brick-and-mortar business, which typically requires rent, labor, utilities, signage, possibly a company vehicle, and more. An online business would appear to be the obvious and easy choice, but that’s not necessarily the case.
It’s Not All About the Startup Costs
If you look at the big picture, it’s not just startup costs. Remote businesses certainly seem more affordable during startup, but as your business progresses, various costs may go up or down precipitously.
For example, as your web operation grows, you might find you need more costly marketing, a larger bandwidth package or individual server, and remote workers. Your bills may start to rise, as well as your obligations. Suddenly, the outfit is not as affordable as it originally appeared.
A brick-and-mortar business might turn out to be more affordable over the long run. You could find a great deal on rent, buy a top-ranked used car instead of a new one, and bring in some affordable interns to do part of the necessary labor. All these options can drive down your expenses substantially.
The costs for either an online or a physical business have to be weighed against the gross profits. Your income potential might be significantly smaller with an online business when compared to a brick-and-mortar organization.
When that’s the case, higher startup costs may be nothing compared to what you can earn from a business on the street.
Credibility and Built-in Marketing for Brick and Mortar
One of the most difficult things for an online business that’s just starting out to achieve is legitimacy. It’s tough to establish yourself as a trusted, high-quality brand that won’t disappoint potential customers when you lack a physical address.
Brick-and-mortar stores possess an inherent sense of credibility among consumers that online businesses cannot guarantee. The ability of a business to speak face-to-face with shoppers will sell products and induce loyalty all by itself.
This is a factor that can help a brick-and-mortar business get started faster than an online outfit. However, if your brick-and-mortar firm provides terrible service and low-quality products, your credibility can swiftly evaporate.
Online businesses are a dime a dozen; only successful organizations can meet the challenges of marketing. When you’re a nobody, getting your name out there demands heavy lifting, even on the Internet.
Dozens of online businesses will probably make claims similar to yours, so distinguishing yourself as a market authority is probably going to be a huge undertaking. In other words, the startup costs can be low for online businesses, but if you don’t have – or can’t develop – strong marketing to build your audience, you won’t make the necessary money to offset your startup costs.
A physical business, on the other hand, has a certain level of marketing built right in. It doesn’t eliminate the legwork to get your name out there, but the location itself has marketing power because people will notice it as they drive or walk by.
It will also generate word of mouth as people talk about the new store that just opened. Of course, this kind of quality marketing depends on a high-traffic business location. Such locales are typically more expensive up front, but the earning potential will also be significantly higher than what you’d get with a cheaper office in a remote location.
It Depends on the Business
Ultimately, the cost-versus-income potential depends on what kind of business you run. Some operations, such as blogging, boast of an extremely low startup cost. Expenses may increase as your blog becomes more popular, but your income will often mirror those needs and make it possible to absorb them.
Other online businesses can be more expensive. A retail website might seem like a low-cost option at startup, but as your firm grows, you’ll accrue more expenses, including marketing, warehousing, network servers, employees, and so on.
That’s how an Internet firm can become as expensive as a brick-and-mortar business, sometimes with low rewards. Weigh all the risks and rewards associated with running an online and a brick-and-mortar business. Low startup cost doesn’t cover everything, because costs often grow with time.
That’s why it’s essential to create a business plan before launching your business. This will help you weigh the cost of starting a company with your income potential. From there, you’ll be able to make the smartest decisions regarding the type of business you’ll want to start.