Right now you are probably wondering, exactly what does it take to start an online business? Do you need lots of money, or any special licenses? How much time do you need to invest to make a profit? Just what are the minimum online business requirements?
Here are the answers to some of the biggest questions on your mind.
Do I Need LOTS Of Cash?
No! Incredibly you can start an online business with as little as $50.
The biggest start-up cost you face is purchasing your first wholesale lot, but luckily, there are lots of ways to source items to sell for just $50!
For example, SaleHoo has lots of suppliers with no minimum order quantities - that means how much you spend on each order is up to you, and it's possible to purchase as few as 1-10 items on your first order.
Another great option for people on a budget is drop shipping. We will be talking a lot more about what drop shipping is in another newsletter, but essentially, a drop shipper is a supplier who will let you to list their items on eBay or your own website, and you only need to pay them for the item once you make a sale. This means you'll only be spending money after you make money, which is a brilliant arrangement for cash-strapped newbies.
Believe it or not, eBay itself can also be a fantastic place for sellers on a shoestring to find small wholesale lots to purchase, split up, and then resell. Just check out the Wholesale section in each eBay category to find small lots under $50, for example clothing wholesale lots.
Of course, if you can afford to spend more then that's great too!
For those looking into wholesale suppliers, manufacturers or liquidators, the amount you need to spend will also depend on what you wish to sell. For example, if you want to sell electronics, then you are going to need a budget of at least $500 - and more if you want to get a better profit margin.
As an aside note: We get piles of questions about reselling electronics, but because this market is high volume, low margin, we strongly advise newbies against it! Instead, there are tons of other items such as makeup, sports equipment, clothing and footwear, where a smaller spend will easily get you started.
Bear in mind that you won't get the cheapest wholesale prices unless you purchase in bulk, so you should aim to eventually build up to purchases of $500-$2,000+. When you buy in bulk, you will be getting the lowest wholesale prices possible and so will have the opportunity to earn maximum profits.
SaleHoo Pro Tip
Did you know that wholesalers don't advertise their best prices on their website? Lots of wholesalers won't advertise a price at all until you contact them, because the unit price depends on how many items you purchase at once. The more you buy, the cheaper each unit becomes.
If the wholesaler does list pricing on their website, then it's typically for a single unit only - so don't be surprised if margins sometimes seem a bit small based on this price. You ALWAYS need to contact the wholesaler to get the best price.
How Much Time Will I Need To Spend On My Online Business To Make Money?
The amount of time you need to put into your business depends on how much money you want to make. If your goal is simply to earn a bit of extra cash as pocket money, then you only need to invest a few hours per week to manage your eBay listings or your website, and ship out sold items.
If you are interested in setting up a serious online business as a way of making a full-time living, then you will need to put in a lot more time.
Some new sellers mistakenly believe that they can easily make hundreds of dollars every week by only spending a few hours managing their business.
Unfortunately, this isn't the case. If you want to make thousands of dollars per year selling online, you'll need to be very dedicated and make a few leisure-time sacrifices. If you need to continue working full-time at your day job while you get started, then come home to earn another few hundred dollars, you can expect to be getting a little less sleep that you are used to!
In all seriousness, it's not so much about the time it takes; it's more about readjusting your lifestyle and making the free time that you have when you get home from work more valuable. If you currently watch 4 hours of TV every night, then that will probably have to change - especially when the sales start rolling in!
Where Is The Best Place To Sell My Items For Profit?
Most people new to online selling will start with eBay, simply because it's currently the biggest auction site around and gets the most traffic. Later, you may or may not want to progress to setting up your own website, depending on your goals.
eBay is great for beginners because it is relatively easy to use, gets plenty of traffic and there is a lot of help and training available on how to get the most out of your eBay listings.
However, there are also plenty of other auction sites out there that are very profitable selling platforms for both new and established sellers. Amazon.com is hugely popular now, and although their fees aren't much better than eBay's, the heavy traffic ensures you can make a lot of sales.
For sellers looking for small-but-friendly auction sites, we recommend Bonanza, Addoway and Etsy. These sites get far less traffic than the likes of eBay and Amazon, but they have fantastic communities and a lot of SaleHoo members really enjoy selling on them.
Some sellers prefer the freedom of having their own e-commerce website. When you've got your own site, you can have complete control over costs, marketing and what and how you decide to sell. These days there are plenty of store building options around that make launching your own ecommerce site as easy as ABC, even for the most technologically challenged! SaleHoo Stores is a fantastic option: SaleHoo Stores are easy to use, fast to setup and come with full technical support just in case you run into any problems. They are also very affordable and there are no pesky hidden costs!
I've Heard Some People Talking About A Reseller's License - Do I Need One?
If you live in the US and are intending to start your online selling business there, then you may need a reseller's license - also known as a sales tax ID. Some US-based wholesalers will require you to provide a sales tax ID number (also known as a reseller's license) when you are placing an order to meet their taxation requirements. This only applies to people in the USA and Canada - if you live outside the US and wish to purchase from a US wholesaler, you won't need a tax ID number. Non-US suppliers won't require one either.
Not all US and Canadian states have a sales tax, but most do. If you live in a state that does, then you should get yourself a sales tax ID to maximize your wholesale sourcing options. This is a really easy process and can usually be done online.
To find out how to get an ID, just Google the name of your state plus tax ID (e.g. 'New York + sales tax ID'). Alternatively, you can pay a visit to your local county clerk's office and fill in the necessary forms there. To learn more about sales tax, read our blog post here.
Quick Recap: Action Steps
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Decide how much you can afford to invest in your online selling business. Remember it can be as little as $50, but generally, the more you invest, the bigger the profits because wholesalers will be able to offer you bulk-buying discounts.
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Make a schedule to help plan how much time you can spend per week on starting up your business. As a rough guide, taking photos, listing auctions, answering buyer questions, chasing up buyers with emails, and packaging and shipping items will take a minimum of 3 hours a week.
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Start thinking about where you want to sell your items. Register for an account on any auction sites you'd like to sell on and consider purchasing a couple of items to get a feel for how they work.
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Find out whether your state has sales tax. If so, get your application for a sales tax ID in now.
In our next newsletter: We have a treat in store for you! Get access to SaleHoo's Exclusive Step-By-Step Guide for Creating a Profitable Buisness in 6 months! Don't miss it.
