Pros and cons of owning an online business
Before you think about owning an online business, make sure you go over these pros and cons before taking the plunge.
Never before has it been so easy to start a business.
First, the internet has made connecting with people and developing completely online businesses a possibility. Then, Covid-19 caused millions of workers to stay home, and software developers produced thousands of products to assist with it overnight.
This perfect storm means that as a business owner, you can have an almost endless choice when it comes to what you want to do and the tools that you can use to do it. If ever you were looking to quit your job and go into business for yourself, this is the time to do it.
That said, it’s not all sunshine and rainbows. There are drawbacks to owning an online business that make it not an option for everyone. Also, some estimates show that as many as 90% of online businesses fail within only 4 months.
People burn out or lose interest, and let their business die as a result. To prevent them, you need to decide early on if it’s truly right for you. Here are the top pros and cons of owning an online business.
Pro: Lower Operating Costs
Perhaps the top advantage to owning an internet business is the low operating cost. You do not have to pay rent, utilities, or anything else associated with having a physical office space.
You can work from home without affecting your personal costs. If you are going to be a freelancer, for instance, all you need is a reliable computer and an internet connection.
You can also save on your insurance. You will still have to buy some sort of property insurance, but not as much as you would if you had a physical office location. You can get a simple and reliable bop policy and have almost all of your needs covered.
The concept of working from home with an online business is very attractive. If you want, you can roll out of bed a few minutes before starting work, or even stay in bed if you’d like.
There is no commuting, and you can make your own coffee and lunch. However, working from home also involves having distractions. You may have a family at home, or roommates. Your friends and family may think it’s okay to phone you during the workday since you aren’t actually “at work.”
They don’t’ realize that it still cuts into your productivity even if you aren’t in an office. Plus, the couch and the TV are always close by, and a single episode over your lunch break could easily turn into two or three.
Having an online business and working from home requires superior self-motivation and dedication.
Pro: Talent Recruiting
Brick and mortar businesses have to hire within their immediate geographical area or find people who will move into that area. This is not the case with online businesses.
When you need to hire, you can essentially search the entire world for talent. You no longer have to worry about settling for the best application. You can truly find the best person for the job since the entire world is your playground.
This is especially important as we go through a labor shortage in the United States and around most of the world. By being able to search all over, and being able to offer remote work, you can build a stronger team.
Con: No Face to Face With Customers
When you run an online business, you will not have any opportunities to meet customers face to face. For some business owners, this is actually a benefit, but for most salespeople, it is not a benefit.
Meeting face to face makes it easier to build a rapport with customers and get to know that. Building trust is more challenging since they don’t get an opportunity to meet with you, either.
This can affect customer service as well. If customers have no human face to deal with, they may feel neglected and treated like nothing more than a number.
Many consumers have a hard time entrusting their money to online businesses since it’s hard to put faces to a brand, and there’s no evidence of infrastructures like a building and a staff at a location.
Pro: A Bigger Market:
Much like you have the whole world to search for talent, you also have it to search for customers. Instead of being limited to customers who are able to travel to your location, you can reach potentially millions of more people.
Even with a relatively low marketing budget, with proper targeting, you can take advantage of the sheer size of your potential market. This is especially helpful if you hit a rough spot. With a virtually unending market, there are always places you can pivot to in hopes of finding new customers.
With a bigger market, and an increasing ability to operate in online spaces, there are a lot of businesses that have gone online in the past decade. That means that you will face additional competition no matter what type of business you want to open.
However, you can still use the size of the market to your advantage and find your niche. With so much reach, you may be able to find a small dedicated pocket of consumers that are very interested in your specific product that nobody else sells.
If you are not able to carve out your place, then it can be very easy to get lost in the morass of the market.
Pro: Access to Customer Data
When it comes to marketing, there is nothing more important than customer data. An online business by its very nature collects a lot of data on every purchase. If you are shipping then you know where they live.
You can often guess their approximate age range with what pages they visit on your website and what they buy. With customer data, you can customize and personalize your marketing to be efficient and to provide a better experience for your customers.
As you can see, there is a lot to think about if you are considering opening an online business. Make sure that before you take the plunge you go over these pros and cons. That way you can make an informed decision for yourself and your circumstances.