How to Start a Home-Based Internet Business on a Budget

I’ve recently started a home-based business selling gift baskets over the internet. Ask anyone who has started any type of small business and they will tell you it is difficult at best- nearly impossible at worst. Money is usually the biggest obstacle one faces. You have the idea and have done the research to see if it is actually a viable plan (right?). If you haven’t done the research, do it now before you sink too much more of your hard to find capital into the venture. If it turns out to not be the money maker you thought it would be then you hopefully haven’t wasted a lot. It helps to have a nice college degree in business but there are those of us who were unable to go to college so we have to use common sense, research, and in my case, previous experience- my parents ran there own business for many years and it was a family business.

If you are not experienced in bookkeeping, then a night course on the subject is a good idea, or at least a really good computer program and knowledge of how it works (again, you might have to take a course). An experienced and trusted accountant is also a good idea when your head is above water or if you absolutely cannot do the books yourself. An accountant will free up your time also to devote to the business or to some time away form the business. It isn’t healthy, after all, to spend 24/7 working your business. A fried brain is bad for everybody involved, I should know- weeks after building my own site I still down think straight half the time. Another really big advantage to using an accountant is that they handle the tax paperwork for you. A really good accountant will go with you in the event of an audit or send in the clarification paperwork needed if there is a tax question.

Speaking of tax questions, you need to know if you have to collect sales tax and from whom. Internet businesses (even home-based businesses) are not exempt from collecting sales taxes from people in their own state in Wisconsin (where I live) so you should check with your state’s Department of Revenue to find out if you need to collect them and how much. You also have to have a state issued license or permit and a tax identification number. Usually if you are the sole employee your social security number is good enough, but ask. They will be glad to tell you. The license isn’t that much either. Don’t forget to apply for your sales tax exemption card for when you buy products that you will sell. You can get them without paying sales tax -might as well not pay them twice-right? This is only good on products you are going to sell, not products you are going to use in the course of conducting business.

Did I mention licenses and permits? Believe it or not, a home-based business (even one run over the internet) is subject to licensing and permits from your county, city, township, or village in addition to the state. Check to see which one issues them. One person where I live did ask, but he asked the wrong person and was told he didn’t need one to open up a storage facility on his property out in the county. Well, he nearly lost his business, accumulated a massive legal bill, and had to pay an enormous fine (in the thousands of dollars). It is a lengthy process if the board only meets every three months- I got lucky; the board was meeting a few weeks after I put in a petition for the permit. You will have to go before the board and explain what your business (in my case an internet business) is and how it will or will not impact the infrastructure or other issues concerning your area of the controlling entity (county, city, etc). If no one objects, the board votes and you either will or will not be issued a permit. You may have to appeal the decision if it goes against you, but without that permit, you cannot legally go into business; not even an online business.

A small business loan is nice to have, but you have to make payments on that loan right away even if you are still in the creation stages of that business. Credit cards are the same. Wholesalers and drop-shippers may charge a fee to use their service and they associate it with a credit card (or your debit card) and you have to pay that whether you are open for business or not. This would be an advantage over an internet based business if you actually have a building that people can find easily and not have to wait for the search engines to direct traffic in your direction.

I didn’t have a loan. I did have an excessively small budget. I wasn’t able to afford to have my site professional created but some of the best sites are actually not created by the pros. The professionals can definitely make it snazzier if you don’t know how to do it yourself, but they can also make it too ‘busy’ and the average customer will leave the site without entering the magic door to your products. The sites are aesthetically beautiful, but that can be distracting to the customer. They can also be so caught up in the graphics and flash presentations that they are hard to load or navigate. There is a delicate mix and really good programmers know this. They also charge a lot of money because they know how to do this balance. They could be in such high demand that they don’t have time to do your site right away and so you go with the person who has the time and cost less, but makes it too dazzling. I didn’t even have that much of a budget.

Some internet business sites offer to do it for you for a really nice fee but you get what you pay for. The site may look really nice and function as it is supposed to , but if they don’t put in the legal declaration pages, such as terms of use, shipping information, privacy policies, etc., then your site could be shut down for non-compliance with laws regarding the internet. They will charge you extra for adding the necessary documentation pages if they even know about them and that’s where their fees add up. I needed a creation/editing program anyway so I bought one and made my own site. I asked site builders and consultants about the compliance laws and they told me where to look for them. They also charged me for every conversation so if you need to consult someone on any matters whatsoever, find out if you will be charged and how much for what. It could run you as much as if you had just had the site professionally done if you don’t watch the time.

Now being inexperienced with website building, I do not know code (HTML, PHP, Java Scripting, etc). I do not know how to read it. The program I used codes for me so that I don’t have to. Developers cringe at just how “ugly” the code looks when they read it, but the site looks good. A good source of information on building you own website is to search for forums on site building. A great resource is the W3C Schools Online Web Tutorials (found at http://www.w3schools.com/). They can tell you about the laws regarding websites and web pages as well. The courses are free and if you have the time they will teach you coding and you can test on the different codes and receive a certificate for learning it. It won’t be fast, but if you build another website in a year or so, it could be most helpful. They also have a message board to ask others questions whether you are building a web page or a web site.

One major problem that encountered building my own site is that I did not know that if you use a shopping cart program (rented or purchased) that the site must be built around the shopping cart. In other words it has to be set up first and site added to it more or less. I had planned on using a free shopping cart program that you just create buttons with a lot of time and typing but it didn’t offer the options I needed after I got started with it and the site was done except for that. There was a way around that problem, but no one told me that at the time. I ended up shopping for a shopping cart program that could be applied to an existing site and required no programming skills. Guess what? A nice salesman told me he had just what I needed (after two weeks of researching many different programs) and it was simple to use- no programming necessary. Well, it was one of their more expensive programs (naturally) and it had no money back guarantee or demonstration to use to see if it was what I needed. I didn’t even know they had guarantees or demonstrations. Several weeks of trying to figure out a manual that was poorly written and in extremely technical language, I tried technical support, who couldn’t even figure out why it wasn’t working properly. I ended up hiring a programmer to come look at my site to figure out why it didn’t work. Ten minutes was all it took to figure out why. I had to change my site over to PHP programming rather than HTML and it would absolutely not work in any mode other than coding mode. If you can’t read code, you can’t use the point and click method of inserting the buttons. It was a completely useless program for me and wasted money. She did however show me the trick to the free program. It took several days to get going, but I did it.

I’ll bet you think that’s all there is to it. (You mean it’s not?) Of course not! You still have your domain name to get, which you should have gotten before you ever started to build your own site and you should also have subscribed to a web host/server. You can’t be online if you aren’t on a server. Shop around. You can get domain names for different prices and web server hosts vary in prices and services as well. It can run from a huge amount to a very reasonable amount. Find a server host with really great technical support. Some offer very little, so read all their terms of use or user agreements.

Some hosts offer templates either free or for a small fee and you have the option of using your own (like me). You usually have to ‘sign’ up for at least one year of service. You can even get free space for a business site if your site is small enough (only a few items to sell) but if you belong to a wholesale club or use a drop-shipper they may refuse you admission to their service if you use a free site. They claim the sites don’t look as professional as a paid site. If the free server has free templates as well, they may tend to be few and pretty much alike so I can see their point to a degree. Some, however, offer a lot of templates (free) and you really can’t tell they were a free site by looking at them.

Advertising is another expense involved in going into business and it doesn’t matter whether it is on the internet or in a store front. You can do several things to advertise for free. For instance use word of mouth via e-mail. Tell all your friends and relatives and let them pass the announcement along to their contacts and so forth. That does only go so far, however. Our phone company has local web-pages for each area in every state. They offer free classified ads for 60 days on their new page. All anyone has to do is click on the classified ads and my ad is there for two months. You can also go to forums and tell the world; there are tons of them out there. You can use the Blog system as well. Make sure the forum you use is appropriate for such actions. They will remove your message or blog if it isn’t appropriate to the site. You can also use a free internet press release site. You will eventually have to pay for advertising but if you don’t advertise, you won’t be in business for very long. Consider an ad in a local newspaper or shopper that has a wide coverage area. You can also aquire addresses from mailing list firms and send out flyers or postcards. Catalogs are more costly, but if you have them in your budget, then by all means send out catalogs. Try to make sure your mailing list is geared to the products or services you are offering. (You don’t want to send a catalog for kitchen supplies to someone who is only interested in auto restorations for instance). It would waste your time and resources.

Keep in mind it takes months for search engines to find your site so you may have no sales at all for several months.
There is also the issue of promotional items or logo office supplies, such as letterhead, business cards, brochures, postcards, etc. My son was in a computer graphic arts class this year and they had to get a contract with a business to make their business graphics needs. How fortuitous! It is a high school class so they do run into problems such as computer systems going down and running out of ink, so be flexible. Remember, they are doing it for the cost of materials only. I supplied the paper stock they needed and they printed off proofs for my approval (free), business cards, note pads, letterhead stationery, postcards, and even redesigned my rather poorly made logo. I didn’t have the right program to make it the way I wanted it to look, but they did. My cost? Less than $5 for the printing plus my paper. Now remember, everyone in the class has a contract to fulfill and as long as you have a master copy of the work (if you will use it again and again) you can get it copied anywhere-even do it yourself. You can supply them with a CD for digital copy, but if you don’t have a compatible program (or the printer you may hire) then it can’t be used, so always get a printed out master copy of everything. Get a few items instead of a thousand copies of everything. Business cards come ten to a sheet and a starter set of 50 or a hundred is plenty, (five to ten pages of business cards). My materials look very nice and very professional.

You may also need photographs for your site of either you or your products. If you are photographically challenged and have no program to make it look it nice (or the knowledge to do so if you do have a program), you will need to hire out the work. Make sure the photographer knows it is work for hire and signs a release to that effect. I needed a photograph for the back of my book and Wal-Mart informed me that if they took it they got a portion of the proceeds of every book I sold. They maintain the copyright of every picture they take. Other photographers may be the same way, so check before you use the picture or even let them take it. You can be fined huge amounts that you don’t have if you use it and don’t pay them. They will sue to get it. A good option is to use a photography student in a college. You will have to pay for processing, but they may do the actual photographic work free or for a very small fee if you acknowledge somewhere on the site or (usually) beside the picture the name of the photographer. You can also see if the local high school has an advanced photography class that is willing to do the work so that their students get experience. You should acknowledge their contribution to your site as a courtesy, and again you will have to pay for the processing.

The bottom line: Research everything, get money back guarantees on any products you buy for your business where available, know and follow the law (it will save you money in the long run), have a business plan in place with contingencies if anything goes wrong (you’ll need one to get a loan anyway), and know when you are over your head and get help before you go broke. Good luck and great profits to you!