Setting Up an Internet Business – Overheads and Risk

In “Cost Of Setting Up An Internet Business” I showed that starting an online business has very low barriers to entering this market because cost is minimal. You do not need any starting capital because you can get all you need to get started, namely
Internet access
customer service point
either for free or extremely inexpensively.The next hurdle that makes people turn away is the fear of committing to large overhead costs and incurring an incalculable risk. Let’s have a look at these two fear factors:OverheadsConventional businesses cannot get started before they have their infrastructure in place that includes premises, staff and stock.In contrast to conventional businesses, here is a list of what you DON’T need when you’re setting up an Internet business:
premises – because you work from home, your laptop, the beach, wherever…

staff – you can do lots of things yourself; you can automate or outsource it without any ongoing financial commitment. As a matter of fact, you can pretty much automate or outsource everything:

                  – product creation

                  – design

                  – production

                  – packaging

                  – shipping

                  – accepting payment

                  – paying affiliates

                  – book keeping

                  – marketing

                  – customer / client follow up
stock – to be more precise, you don’t need warehousing, large product inventory and administration because you can use drop shippers or fulfilment houses.All this is true for any kind of physical product. When it comes to digital products (ebooks, videos, sound files, programs), the picture becomes even more attractive:
There simply are NO costs for production, packaging, shipping or any kind of handling as everything is electronic AND delivery is simply downloading 24/7.

If you start as an affiliate, you don’t even have to spend time and effort on developing a product, marketing material and managing payments.

Either way, whether you prefer physical or digital products for your Internet business, overheads are not a necessity. They simply evaporate.RiskSetting up a new business is risky, or so they say. Statistics talk about 60% or 80% of new businesses closing down again within 3 to 5 years from start with significant financial loss to the business owner. That’s a pretty high failure rate and makes setting up a new business very risky, especially in times of economic crisis.In a conventional brick and mortar start-up you incur overheads even before you have cash flow, not to mention positive net profit. You have to have stock, staff, premises, insurance, licences, health and safety inspections and whatever else your particular kind of business requires. The risk, apart from your time, is significant financial loss.What is the risk when setting up an Internet business? First of all, as most budding Internet entrepreneurs already either have access to the Internet or own a computer with Internet connection overheads are pretty much negligible. Everything else – domain registration, website hosting, autoresponder – will add about $30 per month.The next risk factor – stock – also disappears. As an affiliate marketer you don’t hold any stock. If you start with drop shipping, your supplier holds the stock and ships it. If you develop your own information product, your fulfilment house will be able to produce and ship on demand. Even if you decide to hold some stock so that you can ship it yourself, the cost will be an initial outlay of a few hundred pounds or dollars. How significant a risk is this, especially when compared to setting up a brick-and-mortar business?Thirdly, what is the risk of not being able to start your business because you are unable to secure a bank loan or find an investor? As you don’t need any capital, this risk simply does not exist.Fourthly, you don’t have to jump in head over heels. You can start slowly, part-time, and build up your Internet business as and when you have the time to do so. Again, this is another benefit that allows you to eliminate any financial risk to yourself and your family.Finally, the most important factor in setting up your Internet business is your willingness to learn how to succeed in this environment. A great deal of information is freely available. Whatever has to be paid for nowadays always comes with a minimum of 30-day money-back guarantee. This means that you can get started and give the system a good run for your money. If you find that it does not live up to expectations, you’ll get your money back. The risk of buying the wrong program is therefore reduced to zero, as simple as that.In summary, as there aren’t any overheads and as there is no risk either, what better business is there to start up than an Internet business, especially in difficult economic times?

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