Before you even spend a penny you should think very carefully about the life-changing decision you are making.
When I first started I believed there was very little risk involved because I intended to operate from home, as a sole trader. I thought I could give it a go and walk away at any time if things weren’t going right. I was wrong.
Even after months of working 15 hour days and running at a loss, I refused to give in. I attribute this phenomenon to partial reinforcement, the same mechanism that keeps the multi-billion pound gambling industry alive! There was always something in the back of my mind that told me that if I kept going, one day I would make a million. To make things worse I read books on sales and positive thinking which resulted in me putting pictures of luxury yachts, sports cars and posh houses on my desk. Every time I received a sale I felt elated and my dream car seemed a little closer! I even changed the sound in my email client to make the ‘ch-ching’ sound of a cash register every time I received a sale!
Every time I thought of walking away, I looked at the pictures of my dream life-style and simply couldn’t bring myself to make an objective decision. I made excuses to myself and to others and started viewing the accounts with a very biased, overly-positive view. The other major draw that kept me from cutting my losses was the thought of having wasted all the money and time I’d ploughed into the business, not to mention the feeling of having failed. After all, people always said that I could be anything I wanted to be!
When I look back now I realise how important that initial decision was to start the business. It pains me to think that I didn’t spend more than a few hours making the decision (if that).
If you only take one thing away from this article then make sure it’s this: it is essential that you invest considerable time in making this life-changing decision. Talk to friends and family, weigh up the pros and cons, compare the likely rewards with alternative career options and, most of all, ensure you are being honest with yourself. Visualisations and success stories can be hugely powerful… and damaging. If you are going into business imagining you are going to be able to reap large financial rewards by only working a few hours a day, ask yourself how realistic this day dream really is. I can assure you that building a successful business takes huge amounts of time, effort, sacrifice and money.
This is not a decision you can afford to take lightly and before you even start contemplating the pros and cons of this career choice, you need to do a significant amount of research first.
2. Research your market.
According to the Office for National Statistics, there were 723,165 babies born in England and Wales in 2010. If you are considering starting a business in the baby/parenting field then this statistic is encouraging. Furthermore, there were 706,248 babies born in 2009 which suggests the potential market is growing significantly.
However, a quick Google search of ‘Baby Gifts’ produces approximately 214 million websites. That’s a lot of potential competition! What resources do you have at your disposal to get you to the top of Google above those 214 million sites? You should be very cautious of ‘SEO experts’ who claim to be able to get you to the top and we will talk more about this later. Furthermore, I can tell you from personal experience that being in the top positions in Google for ‘Baby Gifts’ is lucrative, but not a fraction as lucrative as I thought it would be. The average online conversion rate in this industry is between 1 – 2% and you can expect to receive around 50-200 visits per day from occupying a top 3 position for this search term. Once you get below the first 3 spots, the visitor rate drops exponentially.
Google Adwords has a free, useful tool which enables entrepreneurs to gauge the size of their potential market and helps them choose search terms (keywords) to target. This tool compares the number of people a month who search for a particular keyword with the level of competition. However, it will usually lead to you overestimating the amount of traffic you will likely achieve and should be used as a general comparative guide only.