Peak SBC, LLC  



by: Cary Christian

Thus far we have covered the following steps in starting your own real business online:

Step 1 - Introduction and basics
Step 2 - Assessing your personality, the type of business you want to run, and inventorying your skills, experience and interests.
Step 3 - Identification of needs you can fill, identification of a market that needs what you can provide, and segmenting that market into niches.
Step 4 - Deciding on what products you want to offer and assessing your competition.

Tonight we are going to cover Steps 5 and 6.


1. Determine how you are going to acquire your products.

As we mentioned last week, by far the most profitable products you can sell will be those you create and control. If this is the route you're going to take, you need to get down to the specifics at this point.

If you're going to create it yourself, map it out and get started. If you want to find someone to develop it for you, visit the Elance site at  and post a project for consultants to bid on, get your best price and run with it.

If you're going to hire someone to develop the product for you, make sure you have the product totally laid out and planned before turning the work over to the consultant. Nothing wastes more time and ends up running up costs than indecision or products that have not been properly planned.

If you've decided to sell products as an affiliate, make sure you select only outstanding affiliate products. Don't go for the quick buck by marketing every newly-released matrix program that comes out. That puts you back into the lottery with the 95 percent of affiliates that never make a profit. Select products that have the potential of being around for a long time and are backed by excellent organizations.

If you're going to resell products that you acquire from wholesalers, your job is easier but there are some things you need to watch out for.

The easiest way to resell products is to find a wholesaler that will drop ship for you. That way, you don't have to maintain inventory. You process the orders, the wholesaler ships the product. It's a great and simple way to do business.

The danger comes in finding the right wholesaler. You can buy lists of wholesalers on the Internet for $5. One problem with these lists is that they contain very little information about the wholesaler. The second and most troublesome problem is that most of the companies listed will not be real wholesalers.

Many companies that claim to be wholesalers sell their products virtually at retail. Hook up with these guys and you'll have a short tenure in business during which you make no sales. You're going to have to research these companies very carefully to make sure you can buy products at wholesale prices. Do your research thoroughly. You want to make a minimum of 15 percent profit on these sales. Any less than that and you're not going to make enough money to survive.

2. Assess your financial situation.

Unless you're going to concentrate totally on selling as an affiliate, you're going to need some capital. If you're going to subcontract the development of your own products, you're going to have to pay someone to develop it for you. It probably won't cost you a lot, but you'll need cash available unless you can make a deal to split profits. But remember that you'll make much more in the long run if you simply pay for the development and keep the profits for yourself.

If you're going the drop-shipping route, you won't be buying products until you sell them. But there will be a lag between your paying for the product and receiving your money from the sale. You'll need to be able to cover this cash outflow in the interim.

The amount of capital you'll need will depend on your projected sales, the cost of your products, and the everyday cost of running your business, i.e., your overhead. Do some projections at various sales levels to determine how much you will need. And don't forget marketing costs! Free advertising alone will not get the job done.

If you don't think you have the financial resources to accomplish what you want, evaluate whether you can borrow the additional funds you will need. If you cannot, you may have to sell as an affiliate or just start slower until you can save the capital you need.


1. Write your business plan.

The last point under step 5 leads right into writing your business plan. Take some time and put your ideas, your market and product information, your analysis of the competition, and your projections together into a somewhat formal planning document. Prepare it and present it to yourself and try to identify all the holes you can find. Take the time now to find the solutions to any problems you identify. Looking at your proposed business in written form will help you focus and pull it all together.

2. Take care of the technicalities.

You're close now! Time to start crossing the t's and dotting the i's.

If you're working out of your home, find out if you need any business licenses from your county or city authorities. For a home business where you do not maintain inventory and customers do not come to your house, you probably won't, but you'll want to make sure before you go full speed ahead.

Decide on a name for your business and determine if you want to incorporate. If you're going to be reselling products and buying from a wholesaler/drop shipper, you'll want to incorporate and get a business bank account. It will give you more credibility with the wholesaler and you'll probably need to take this step anyway to get your merchant account.

You'll need to think about getting that merchant account now also. It can be a tough process, but it's getting easier with some of the products available on the web. There are many companies who will take care of the entire process for you, including processing the sales.

You will also need to get your website ready to start making sales. You'll need to build in a shopping cart to go with your merchant account.

Again, this process can be simplified. For example, GoEmerchant offers the merchant account and fully functional website with shopping cart that will integrate directly with your website or can be used all by itself. You can create a store in minutes. There are no setup fees and it only costs $59.95 per month as an all-inclusive package. It is our primary choice for ecommerce capabilities for small and home businesses. You can check it out at

Next week, STEP 7 where we're going to pull it all together!

Copyright (c) 2002


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