7 Budgeting Steps for a New Online Business
Small businesses are the backbone of every healthy economy. According to the data provided by the US Small Business Administration, 57.9 million people worked in such enterprises in 2016. Since this market is constantly growing, it’s clever to jump on that bandwagon and become a small business owner. It’s even wiser to go for an online business since you can target the global Web market. However, collecting assets for that business is no cakewalk. Therefore, we bring you some smart tactics that will help you form a sustainable budget.
1) Learning more about lucrative niches
Business rules are brutal but quite straightforward – you need to select a niche that generates continuous demand for new projects. If possible, it would be great to start an online business in a field that suits your preferences. Nevertheless, if that’s not possible, then find the second best, i.e. a lucrative niche that’s closest to your interests.
For example, a Spanish teacher who finds the school salary too low can launch an online content agency. Your mission will be to create texts in Spanish for various websites in that language and get paid for that. In this case, your qualifications will be adjusted to the needs of the market and your personal affinities.
You should follow the same pattern in every other niche. Also, it’s important to keep reading about the most popular online jobs to anticipate the changes in the labor market. As a result, you might be able to switch the niche and modify the nature of your business if necessary.
2) Setting reasonable rates
One of the major influences on your budget will be your income. When you’re an apprentice in the online business environment, you can’t expect a high income. So, if you want to be noticed by your potential employees, you should set some reasonable initial rates. However, the main challenge here is to identify those perfect rates.
What you should do first is register on one of the freelancing platforms and check average rates in your niche.
Apart from that, you should do some research on forums and social media. That way, you’ll gather enough information to form a working price that will attract your first clients.
Moreover, stress out the value of your service and not your time, when negotiating your price with the potential customers. When they’re convinced that you’ll provide them with a special value, they’ll be ready to agree to your rates.
3) Employing temporary workers
Founding a small business is the only way to pursue your own business vision. More often than not, you’ll need assistance from other people in achieving that goal. However, you should be aware that having employees isn’t cheap. When you pay your employees’ social security tax, Medicare tax, and health care insurance, your budget will suffer.
What you can do to diminish the impact of these expenses is employing people as temporary workers. That option makes it easier for you to hire new people in case of increased workload. On the other hand, they won’t be on your payroll when you have fewer projects. Hence, you’ll save some budget assets instead of spending them on unproductive employees.
Apart from that, temporary workers will have better motivation for advancement and improvement if they’re trying to earn a long-term contract. Therefore, keep their motivation on a high level by rewarding them if they display expertise and commitment to your business.
The bottom line – it’s crucial to weigh all the pros and cons of hiring temporary and long-term workers. That way, you’ll be able to hold the reins of your budget while still making progress in terms of work productivity.
4) Ensuring fast payments
Postponed and late payments will take their toll on your budget. Consequently, your accounts receivable will be a real mess and your balance sheet will always be in the red.
Because of that, it’s essential to bring a firm payment policy at the beginning of your small business career.
For starters, make sure to stress out the importance of timely payments during negotiations for every project. At this point, you can even set the exact payment date for every month.
Additionally, ensure convenient invoice templates that will nudge your clients to make fast payments
Another handy option is to offer several payment solutions to your clients, especially the international ones. Giving them a chance to pay you via credit cards, PayPal and Stripe will result in faster payments. What’s more, it will result in a quicker completion of every project, opening room for the new ones to come
5) Forming a partnership
Setting your budget will be easier if you can rely on someone else, as well. One of the most practical solutions is to form a business partnership. On the one hand, you’ll be able to join funds with your business partner and count on a higher budget. On the other, that partnership might be more eligible for a bank loan than a single-owner small business.
If you decide to go for this option, make sure that all the rules and rights are discussed before you sign the partnership agreement. It’s extremely important to set the obligations of each of the partners, as well as their incomes and the exit strategies. That way, both partners will be protected in every possible situation.
Additionally, you can seek for angel investors on the Web. In that case, it’s highly likely that your ownership percentage will be less than 50%. However, if you have an original business idea, but can’t form a budget to pursue it, this is your only solution.
6) Shopping around for Web providers
Being present on the Internet is impossible without a website – at least a one-page business website – which is why you need to launch one at the beginning of your business quest. However, if you want to go for a larger website with a variety of pages, it might be an expensive option for a new business player.
What you should do is shop around the Web to find some special discounts by website designers. You can simply Google those words and see what the search engine will offer.
Alternatively, visit Upwork or any other trustworthy freelancing platform and look for affordable but reliable website designers.
By doing so, you’ll have a chance to save a significant amount of money, which is your main budgeting goal.
Apart from the website, try to look for discounts and bargains in every single service you need at the beginning of your business career, from hosting to computer equipment.
7) Raising funds via crowd funding
Crowdfunding has recently become a popular budgeting option, especially amongst the younger entrepreneurial population. Also, thanks to the rising number of crowd funding websites, today you can form a budget without too much hassle with banks, funds or individual investors.
However, those platforms aren’t suitable for every entrepreneur. A rule of thumb is that the crowdfunding tribe will rather support alternative game designers, ecological entrepreneurs and welfare developers than traditional niches.
Nevertheless, you can never tell if your business concept will be recognized by that particular audience. Therefore, feel free to present it and see if you can raise some assets through such donations.
Building an online small business will take some time and energy. Also, you need to learn how to finance that venture. The steps provided in this article should help you form and retain a sufficient budget for your business needs. If you take it slowly and gradually develop your business, you’ll always be able to count on a reasonable budget. It will make your business a financially firm unit, well-prepared for every financial challenge.