Want to set up your business but only have a very limited pot of cash?
Entrepreneur Daniel Thomas has set up his latest business YourSkip.com for less than £100 and believes hard work, testing your model aggressively and identifying its strengths and weaknesses are the key to making it a success. Daniel set up his first ecommerce site, Danz.co.uk over eight years ago from his bedroom, and has since become the UKs largest online spa retailer. The company is turning over in excess of £1million and as well as supplying the spas, now fits and repairs them too.He has hundreds of satisfied customers across the UK including celebrities such as Sophie Ellis Bextor. Here are Daniel’s tips on how to set up an e-commerce business with just £100.
- Test your assumptions
If you’re starting up with a minimal budget you should test your idea as soon as possible and test it aggressively. You must be prepared to change any plans you have and always expect the unexpected.When I first set up YourSkip.com, I estimated I would get at least 400 people to the site. By spending just £25 to drive traffic to it, I was actually able to double the number of visitors to 800. So I proved that my initial assumption was correct. My other key assumption is that I can convert two per cent of those visitors into customers. That’s the minimum number of sales I need to make to make the business viable. If I can do that, then I have a business. Once I’ve successfully converted that volume of custom for a number of months, then I can invest in the equipment and people I need to grow the business.
- Make sure your business has a focus
Your business needs to have a specific focus. Trying to do too many things will confuse potential clients. When I began my first business when I was just 17, I tried selling lots of different things but almost went bankrupt because everyone else was doing the same thing. I decided to focus on just one thing to build the business around and found that, although I wasn’t selling as much of a variety of products, the business was more successful. Customers came to the site knowing what they wanted and knowing that I sold it.
- Be aggressive
Never sit back and hope your business will be a success. You have to make it work particularly if you’re launching with a tiny budget and aren’t lucky enough to have your own savings to finance. You will start your business with a number of assumptions and you must test each and every one of them until you’re satisfied they’re correct or you’re heading down the wrong business path. You should never sit back and wait to find out if your business idea is flawed – test it and find the answer quickly.
- Build your credibility
People will not use your businesses if they don’t trust you and in general, consumers are pretty skeptical when it comes to trusting organisations. To build a relationship with the public you need to get your name out there. The most effective way of doing this is by using the media and celebrity endorsements. This will obviously be difficult for a business just starting out but an easy and free way to do this is to tell your local newspaper about your business and let them know what makes it different. Local newspapers love stories about local people and businesses so introducing yourself to local journalists will make you more likely to get mentioned in the paper.
- Don’t waste money
Many people think they need accountants and solicitors when they set up a business but they cost a lot of money and if you are only spending £100 you should avoid them for now. See how you are doing after a year or so before looking into hiring them. Also operate as a sole trader rather than a limited company. To register as a limited company will cost, so while the business is in its infancy, avoiding wasting that cash.