Starting a Business | What Expectations Do You Have?

As mentioned in Brian Mell's blog posting, BannerView Out & About, you know that we recently exhibited at the Las Vegas Chamber of Commerce Business Expo at the Las Vegas Convention Center.

A couple came over to the booth that was interested in starting an ecommerce business. They wanted to sell products online that were available to them via drop ship. We love to see entrepreneurs start businesses of all types and we've certainly seen similar business models where the owners made a good living and had fun doing it. In addition to all the business licensing and related requirements, the operation is pretty straight forward from buying computers and software to manage the business, identifying the target audience, designing a marketing plan, developing a brand identify, building relationships with suppliers to building, promoting & maintaining a website to support sales of the end product and customer relationships.

Based on the above, what kind of startup costs would be appropriate to start such a business? Would $1,000, $5,000, $10,000 or more be enough? How about the considerations needed specifically for the online aspects of the business such as:

• A development staff to develop the brand identity and implement their online project, enabling them to sell products online

• Hardware & software necessary to run a high performance website and the people to configure, update and respond to security threats to that hardware and software

• Someone to watch over the website to make sure the server it's on stays running and provide solutions to problems when they occur

• An experienced advisor that acts as an extension of their staff to oversee the implementation of their project who is easy to reach and coordinates the process between the client and the process

• A team available to make updates to the website in a timely manner and be ready to handle additional requirements as the business grows

How much per month is needed for the above online needs? Would $2,500, $5,000 or more be enough? If I told you $350/mo. would get them the above, you'd probably think I was crazy, or at least I would think I was crazy if I said that last year.

So, maybe starting an ecommerce drop ship business, while not rocket science, isn't quite as easy as it might sound. Of course, the couple in this story was certainly at the beginning stages of the process and I make the assumption that the above considerations were not identified, but will soon be identified as their budget was less than $350/mo. Before you laugh and say they don't have much of a chance to make much of a business of it, we've learned the hard reality that there's a large audience of people with no idea what it takes to start a business and obtain the tools necessary to compete, especially when it comes to doing business online. Okay, now you can laugh as $350/mo. isn't a lot of money to expect a very good chance at success.

When we started BannerView.com, we went out and hired staff, invested in technology and spent much time and effort pulling all these things together. While not a ton of money, we were fortunate enough to start with $44,000 in seed capital to make it possible, but other startups don't always have access to that kind of money. There weren't many convenient or affordable options at the time.

Even today the same challenges hold true. Knowing this, we set out to find a solution to this dilemma; a way that makes such an effort much less daunting, more convenient and certainly more affordable. After more than 9 years, we found a solution to the problem of getting a great website, optimizing it for search engines, promoting it on the web, having it hosted and maintained and having someone to navigate a new business through the somewhat complex online world at an affordable price. Today we can provide many of the tools necessary for a new startup to be competitive with the "big boys" on a small business budget. I'm quite amazed myself that it's even possible, but the formula we've developed is truly creative. In fact, $350/mo. is more than enough for that couple to get exactly all the tools they need to be successful online.

Unfortunately, I still don't hold much hope for this couple's entrepreneurial dreams if they are trying to make a go of it without a realistic expectation of the investment needed (see point #3 at the link) and sent them along their way. Our best was done at lowering the capital requirements, but apparently not the expectations of something substantial for absolutely nothing. We've seen a lot of businesses start and fail. The successes are the ones that have adequate capital and realistic expectations.

The same holds true for any business. Before you quit your day job, make sure that you align your expectations with the realities of the time and monetary investment of starting a business. You'll certainly not waste a bunch of money finding out that having the best chance at success involves some pre-planning, the right tools, a realistic budget and some really good luck!