Startup costs

This article is available at Startup Nation.

I keep saying that Startup Nation is a great site no entrepreneur or entrepreneur-to-be must skip. There are tons of useful information available and one of the most intelligent and willing to help group of people I’ve come across in a very long time.

Please read the full article directly at Startup Nation, as I will only write down some information I believe to be important to me.

This entrepreneur started her own greeting card company, as she considered this industry to be low risk and low cost. I am not so sure I agree with her about the low risk aspect of it, but that’s not what matters to me now. I want to better understand what the costs involved to start an online retail business are…

Her three main areas of concern are:

• Designing a dynamic website
• creating a top-quality product
• implementing a strategic marketing program

 So, this is what she came up with:

Website

$5,000.00 - this included the web designer’s hourly fee, web hosting, domain name registration and the purchase of a shopping cart (so she can accept online orders/payments).

My take on this: she paid too much! I know you get what you pay for, but nowadays there is no need to spend 5K on a very decent and professional-looking website. With some research this figure can probably be cut in half (or even a little more).

If you sign up with a hosting company such as 1 & 1 or GoDaddy.com you get a wonderful deal, reliable service and at least one domain name included in your plan.

If you find a good web developer, you can have a shopping cart functionality included in your design, as there are free (open source) shopping carts available and widely known by any decent developer. Besides, you can also use PayPal for accepting payment. PayPal is a great way to start accepting online payments without the hassle of signing up for a merchant account.

Another option would be to sign up with Yahoo! Small Business. You can set up your online store in a couple of hours! I tried their solution once and it worked perfectly fine for my needs at the moment.

Top-quality product

I can’t draw any comparisons here, considering that her product and my product are completely different.

Marketing program

$900.00 - In their case they created a focus group by printing a certain number of card designs and having friends and family over to discuss the design, materials, etc. This figure includes card printing, product displays, food and drinks, and gift bags for each participant.

Again, I don’t believe I can do something like this, but I can use this idea in a different way. I can have a test website set up and ask my friends to visit it and let me know what they think about the products I am selling, pricing, easy of purchasing, etc.

Trade Shows - Again, because I will be a reseller, not a manufacturer, I won’t sell my goods at trade shows - actually, I will be buying at trade shows. But again I can use this idea for my advantage. I can set up a booth during the Holidays at street fairs in New York City (think about Columbus Circle, Union Square and the Grand Central Station Holiday fairs). These are high-end places to sell my products.

So, all in all, I think her expenses were a little too high (mainly the website design), but I can use some of her ideas for my own business.