| Thanks to the Internet, the opportunities for | | | | your personal assets to clear the loan. Sole |
| working and conducting business online have | | | | proprietorship is a bad idea if you have a large |
| grown by 200% since the mid-1990s. Yet, 90% | | | | debt. Try to form a partnership with a more |
| of small businesses fail. Why? The major reason is | | | | experienced, or financially strong business. If |
| that most people are not prepared to take on | | | | depending on a single partner in the business |
| the challenges of managing and building their own | | | | sounds risky, join a cooperative to offset the risk. |
| business. Read on to assess your business | | | | Forming a corporation, while the best method for |
| preparedness. | | | | keeping personal liability under control, is not |
| 1. Do you have the aptitude: Are you a self | | | | practical for small businesses because of double |
| starter? Can you communicate effectively with | | | | taxation, bookkeeping, and similar issues. |
| suppliers and customers? Are you ready to work | | | | Once you have started your business, in the initial |
| hard? Can you stick to schedules? If your answer | | | | stages, you need to take care of the following |
| to any of these questions is no, you are not yet | | | | issues: |
| ready for entrepreneurship. | | | | 1. Employee Management: Online resellers do |
| 2. Are you street-smart: Drop shipping | | | | not generally hire other employees unless they |
| resellers often run into scams. These include fake | | | | have a large business. Most people who work |
| products, poor quality goods, and excess shipping | | | | from home hire temporary or contract workers |
| costs. As a rule of thumb, you should not do | | | | for managing their online store or handling phone |
| business with suppliers who demand a fee. If you | | | | calls. Your employees will work well only if you |
| cannot find honest suppliers from the thousands | | | | treat them well and they think your business is |
| of suppliers who advertise their products online, | | | | worth their time. Therefore, you have to present |
| you will only get slightly burned in a business | | | | a professional image to employees and |
| venture. | | | | contractors, and make sure they understand you |
| 3. Can you acquire licenses and permissions: | | | | mean business, literally. Many startups hire people |
| Resellers require a business tax license for | | | | who do not take their employers seriously, and |
| ordering supplies. You have to look at considerable | | | | this can ruin your efforts and waste your time. |
| paperwork related to tax, shipping, and import | | | | Employee management also involves tax, health |
| and export of goods. If you think it would be hard | | | | insurance, work visa issues. Contact workers |
| to get the licenses, put your business plans on | | | | have to pay tax on their income, and you have |
| hold until you have an alternative. | | | | to ensure that your freelance workers fall under |
| 4. Can you acquire finances: Some business | | | | the category of contract workers as defined by |
| ideas find many supporters. Others flounder and | | | | the Internal Revenue Service (IRS). An employee |
| die because the required financial backing was | | | | contract is helpful for long-term projects, but you |
| unavailable. You need money not just to buy the | | | | don't require one for shorter projects with |
| first inventory, but also for hiring equipment and | | | | freelance workers. |
| paying employees. And you need enough capital | | | | 2. Insist On Written Contracts: Resellers have |
| to support your business until you break even. | | | | many complaints against unethical drop shippers |
| Banks are the obvious choice when looking for | | | | like: They supply poor quality items, they steal |
| funds, but unfortunately, few banks are willing to | | | | clients from resellers, they charge too much for |
| extend loans to small businesses, particularly | | | | shipping, they do not package the products |
| home-based ones. If you plan to set up a | | | | properly, and they ask for high monthly fees. The |
| home-based business, the Small Business | | | | only way to protect yourself from unscrupulous |
| Administration might be the right organization to | | | | suppliers is to have everything in writing. |
| approach for guidance and funding. There are | | | | Contracts are not always mandatory by law, but |
| many other loan programs run by the | | | | they go a long way in protecting business |
| government, and you should do a little research | | | | interests. Besides suppliers, you also need to sign |
| to judge the feasibility of your venture from a | | | | contracts with shipping companies, warehouses, |
| financial point of view. If you are a female | | | | and other service providers. |
| business owner, or belong to any of the special | | | | 3. Customer Relationship Management: For |
| groups notified by the government, you can get | | | | resellers, communication is the key to success. |
| substantial financial support through these | | | | Whether it means you provide detailed product |
| organizations. However, if a few experienced | | | | descriptions, prompt and courteous email |
| people in the industry feel that your venture is | | | | responses, or proper phone etiquette, it is |
| not attractive enough for lenders, you will have to | | | | important that you do all you can to keep |
| revisit your business plans. | | | | customers happy. Create an ecommerce website |
| 5. What will you sell: Some products sell, and | | | | that allows customers to create user accounts |
| some do not. Computer related items are popular, | | | | and track their shipments. Send out newsletters |
| as are CDs, books and toys. Niche products are in | | | | informing them of special schemes, discounts, |
| demand in select markets. Good market research | | | | sales, and other business-related matters. Poor |
| is perhaps the most important part of starting a | | | | customer feedback can impact your business |
| business; it allows you to spot opportunities and | | | | badly, so go all out to keep them as customers |
| get ahead of competition. Sometimes, you have | | | | and keep their business. |
| to push the market - persuade people to buy | | | | 4. Working From Home Has Its Challenges: |
| something (for example, if you feel people who | | | | Home-based businesses should put up a |
| buy a computer keyboard online may also need a | | | | professional front when needed. Consider hiring a |
| mouse, make sure they are targeted | | | | conference room for meeting suppliers and |
| appropriately). If you are bad at market research, | | | | important customers. Don't use your street |
| handling your own business may not be the right | | | | address for communicating with customers; a |
| choice. | | | | post-office box looks more professional and |
| 6. Can you find suppliers: Finding suppliers | | | | addresses privacy concerns. Install a dedicated |
| who are honest and offer fair priced products is | | | | phone line, work desk, and Internet connection for |
| difficult. Another problem is finding suppliers in | | | | handling business matters. If you are unable to |
| particular regions. For example, if you want to | | | | get the necessary licenses for running a business |
| drop ship to Venezuela, you have to find a | | | | from home, you should rethink your options. Tax |
| supplier as close to customer location as possible | | | | filing is difficult for home-based businesses |
| to save shipping costs. If your customer base is | | | | because the business owner is allowed to ask for |
| located too far away from suppliers, you have to | | | | exemptions only for business expenses and not |
| be ready to pay more for shipping, or find | | | | personal expenses. |
| warehousing facilities in a location. This involves | | | | If you are using your phone for personal as well |
| more costs, and if you are not ready to take on | | | | as business purposes, you have to prove that the |
| the additional costs, you should look again at your | | | | amount billed as business expenditure is accurate. |
| business plans. | | | | Similarly, if you want property tax exemptions for |
| 7. Can you rise to the occasion: Every | | | | business, you can get an exemption only on the |
| business has its problems, particularly unforeseen | | | | office part of your home and not the entire |
| situations that require quick thinking. Suppose a | | | | house. The IRS scrutinizes small business |
| regular customer of yours orders a product and | | | | expenses carefully, so make sure you save bills |
| your supplier is out of stock, how do you react? | | | | confirming expenses and keep them in a file for a |
| Yelling at the supplier will not pacify your | | | | long time. If you find too much paperwork |
| customer's need. A reseller dedicated to customer | | | | annoying, or face difficulties in tax planning, you |
| happiness will probably order the product from | | | | may not be ready to start a business. |
| another supplier, or go out and buy it from a retail | | | | 5. Practice Discipline: You are the only person |
| outlet - anything to keep the customer happy. | | | | responsible for the success or failure of your |
| To ensure that your business does not join the | | | | business. Therefore, make it a point to stick to a |
| ranks of failed entrepreneurial ventures, you must | | | | schedule. Don't let your personal life intrude on |
| build a business with sound basics. Don't wait for | | | | business, and this is very important considering |
| business to "take off" before you think about | | | | that most online resellers drop ship from home. If |
| what direction to take, which markets to target, | | | | you think your family may not be supportive of |
| and how to plan finances. If you want a business | | | | your business goals, or you cannot set aside a |
| "some day," remember that the some day may | | | | few hours daily for calling suppliers, emailing |
| never come. Start small, but do start. Here is how | | | | customers, handling orders, then you are not |
| you can start preparing to go into business even | | | | ready to start your own business. |
| while employed: | | | | 6. Decide On Type Of Business Structure: |
| 1. Save: Put off buying the second car or a | | | | One of the key challenges in drop shipping is hiding |
| new car if you don't really need it. Use cheaper | | | | the source of the package sent to customers. |
| remodeling kits for your home. Reduce | | | | You do not want the customer to know that the |
| unnecessary household expenses. Save as much | | | | package was sent by a wholesaler and not you. A |
| as you can. You will need the money when your | | | | private label arrangement is the safest because it |
| business is still emerging. Drop shipping from home | | | | allows the reseller to label the product under their |
| does not require a lot of capital when compared | | | | name and contact details. A second option is to |
| with other businesses, fortunately. But you will | | | | send packages with no return address, but this |
| need to invest in eBay listings, online promotions, | | | | might look a little suspicious to customers. |
| and website development. | | | | Marketing and selling OEM products is also a good |
| 2. Insure your business: Business insurance | | | | option, but that requires more inputs than |
| will cover things personal insurance does not, such | | | | traditional drop ship reselling. If your supplier |
| as office supplies, equipment, and theft. | | | | refuses a private label or blind transportation |
| Professional liability insurance is optional for drop | | | | arrangement, you have to find other ways to |
| ship resellers. Remember that health insurance | | | | conduct business. |
| premiums are high for individuals, and if you | | | | 7. Online Or Retail: One of the best kept |
| cannot afford them, stay with your current job | | | | secrets within the drop ship community is that |
| to keep that insurance for yourself until you can | | | | you do not necessarily have to operate online, |
| afford insurance on your own. | | | | though this is the easier, less costly method. |
| 3. Prepare A Business Plan: No business, no | | | | There are critics of the online drop ship model, |
| matter how small, succeeds without a proper | | | | who claim that reselling online does not generate |
| business plan. Most new entrepreneurs put off this | | | | much profit. Suppliers prefer bulk order, not small |
| task, but a business plan is necessary to run any | | | | orders generating less than $10 in profit, |
| business. For resellers, a business plan should | | | | particularly if order handling involves shipping and |
| cover cost of inventory, supplies, supplier fee, | | | | elaborate order processing. There are companies, |
| logistics, etc. If you are not the kind of person | | | | such as Tupperware, that prefer the older style |
| who can sit down and draw up plans, then maybe | | | | of promoting products through affiliates who visit |
| staying at your 9 to 5 job is a better option. | | | | people's homes and stores, and set up stalls to |
| 4. Get Help From The Experts: Find friends in | | | | promote products. |
| the business community. You can also visit online | | | | If you cannot afford to work from home or stay |
| forums. Online marketers can advise you on how | | | | on your computer for long hours, you can work |
| to promote your business and build customer | | | | out of a small office. This option works only if |
| loyalty. If you are not willing to network, starting | | | | you are buying and selling in bulk or products with |
| a business might be a bad idea for you. | | | | larger profit margins. For example, selling shipping |
| 5. Protecting Personal Assets: While large | | | | containers via a drop shipper is lucrative, and this |
| businesses function as corporate entities, small | | | | is one of the few businesses where word of |
| businesses often neglect the need for protecting | | | | mouth works better than online marketing, partly |
| their non-business related assets. If you are | | | | because the market is almost always limited to |
| unable to pay a business loan, the lender can seize | | | | the shipping, export, or logistics industry. |