How to Run a Virtual Business

Wednesday, May 1, 2013

How to Run a Virtual Business

A virtual business has little or no physical structure, and relies on the Internet and telecommunications to achieve the desired business goals. With low overhead costs, little investment requirements and low start-up costs, business owners across the globe are considering virtual business for the present and the future. You will need to accomplish many things to run a virtual business.

Step 1

Determine the type of business you will run. Start with what you do best and/or consider getting additional training in an area that you love but for which you may be less qualified. Lay out the types of services you will offer, keeping in mind that accomplishing a few things very well is better than tackling many services at a lesser-quality level.

Step 2

Research other businesses that offer the services online or to those in your area. Determine if there is a need for your service and if you will be competing against a large, well-known company. This research may alter your decisions, in that you may decide to offer unique services or develop an entirely new idea.

Step 3

Study your target market. Outline who your clients will be, where are your clients located and how will you reach out to them. It is important to measure the need for your service and determine if those in your target market utilizing your type of service currently. A market analysis will help determine the needs of your market and guide you in marketing decisions.

Step 4

Organize your business finances. Although a virtual business will not require the startup costs and overhead of a physical business, there are still financial requirements. Determine how long you can support your virtual business until the company becomes profitable enough to sustain itself. Determine the costs for online marketing and advertising, shipping, employee costs and other projected expenses.

Step 5

Hire an employee (or two). To free yourself to earn more business and pursue the aspects of the business that excite you the most, consider hiring at least a part-time employee. Along with this, it is valuable to hire out for those tasks that you do not do well or dislike. Be willing to accept your limitations and add to your team to strengthen the company. If h iring an employee is too cost-prohibitive, consider hiring a virtual employee. These employees can work on an as-needed basis on many kinds of administrative tasks.

Step 6

Consider outsourcing for certain areas of your business. Hiring a telephone reception company to answer your calls makes your company look bigger and more successful. Rely on professionals for graphic design and web development. Seek salespeople experienced in your industry. Although they will increase your monetary output, they will also increase your business.

Step 7

Overcome the virtual stigma. Because you are virtual, many will think you are not a real business and that you will not be around in the long-term. Be honest with your clients and potential customers, sharing your vision and goals for the business. Offer references from satisfied customers and educate new customers about your standards for excellence and the processes your business employ to achieve success.

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Easy Tips and Ideas to Start Business

Although anyone can start a business, many people fail because of a bad product or improper research. If you want to start your own business, you can improve your chances for success before you even begin. In order to make your business successful, start strong and make sure that your idea will hold out for the long haul.

Have a Good Product

Ensure that you plan to sell something useful. Although you may think that your product is important or special, that doesn't mean the general public will agree. Ask friends, family and strangers what they think of your product. If they don't seem that interested, ask them why. With their suggestions, you can either improve the product or scrap the idea completely. According to Brad Sugars of Entrepreneur magazine, most small businesses fail because they sold a product that didn't have an adequate market. This also applies to small businesses that provide a service. A lawn-care business might be useful for part of the year in a northern state, but it is in-demand year-round in the south. Consider whether people will actually want to use your service and get constructive advice from those not afraid to give their opinion.

Research Local Businesses

Research local companies before starting up your own business. This will not only give you an idea of the amount of competition you will have, but it will also help you price your product or service. If you're looking to start a wedding photography business, you may find during your research that the market is over-saturated in your area. If not over-saturated, you should contact each business and ask them for a price list. Alter your prices so you can stay competitive with the competition in town. Researching similar local businesses will also help you decide where to locate your business location. Try not to start up a store or office close to another business of your type. If your small business is located away from similar business types, this will cause locals to choose you over businesses that are farther away from where they live.

Get Professional Advice

You may know someone who has started their own successful business. Ask him for advice and listen to his stories of how he started his company. You may gain useful advice on the good and bad ways to start a business. Local entrepreneurs can also introduce you to local product providers or advertisers that you may not have met without their help. Accept any advice with open arms, especially if the advice is coming from someone successful in the area.

How to Calculate Business Start Up Costs

Starting a business in no easy endeavor. It takes a great deal of research, perseverance and hard work. While sweat equity will make your small business more successful, you will most likely need real capital to get the business started. Before you start raising capital and/or investing your own funds, the first thing you need to do is determine the total start-up costs.

Step 1

Determine your costs of sales. For most small businesses this means inventory, the cost of raw materials, manufacturing equipment, shipping, packaging, and warehousing. However, not all businesses sell products. In this case, the cost of sales is primarily the direct labor involved in making the sale. For example, to open a small shoe business entails purchasing enough inventory ($10,000) to stock the store.

Step 2

Determine professional fees. Planning your business structure, i.e., limited liability corporation or general partnership, means hiring an attorney. There may also be the need to pay an attorney for help with establishing trademarks, copyrights, and patents. In this scenario, that puts total professional fees at an estimated $20,000.

Step 3

Determine technology costs. Technology can greatly reduce the cost of labor for small business if used effectively. Most small businesses require computers, printers, cell phones, website development, Internet access, software applications, information security, data storage, and outsourced information technology (IT) consulting. If the cost of technology is $10,000 to start, add an additional $5,000 a year for maintenance (hint: maintenance is not included in start-up costs).

Step 4

Determine administrative costs. This varies with business types and may include items such as business insurance, office supplies, product packaging, parking, rent, express shipping, desks, chairs, fax machines, phones, or anything else necessary to operate the business daily. A good estimate for start-up administrative costs would be $5,000 for the first six months.

Step 5

Determine initial sales and marketing costs. Now that you have your product, you need to let folks know about it. Sales and marketing costs generally include marketing materials for presentations, printing stationery, business cards, advertising, trade show events, and public relations. These initial sales and marketing costs can add up to $3,000.

Step 6

Determine the wages and benefits needed to secure a staff. This includes employee salaries, benefits, workers compensation, and payroll taxes. Let's put the cost of wages and benefits estimated at $20,000 for the first three months of business.

Step 7

Add all costs associated with starting the business for a total. Be sure to only include business start-up costs that will be incurred in the first three to six months of operations. For this example, the calculation is: $10,000 + $20,000 + $10,000 + $5,000 + $3,000 + $20,000 = $68,000.

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Wednesday, May 1, 2013