An E-commerce Business Model for Limited Budgets, Time and Flexibility

5 key reasons to have an e-commerce website

Budget: When new entrepreneurs approach me with their desire to start a small business on a very limited budget, my first recommendation is an e-commerce business. This business model helps keep your overhead costs low during the beginning stages of the business when cash flow is a key factor to business survival. In other words, at this stage your goal should be healthy cash flow instead of establishing a beautiful brick and mortar storefront like many “wantrepreneurs” often do to impress others.

Another common cause of startup business failure is high inventory levels, especially for those with perishable or trendy products (like food, clothing or accessories). To avoid this trap, you should use the drop-ship model in your e-commerce business. This means you need to work out an agreement with your manufacturers. You will post their products on your website as sale items, and as soon as YOUR customers place an order with you, you then notify the manufacturer to ship the product directly to YOUR customers. For this, you will receive a percentage of goods sold.

This business model will keep your inventory closer to zero while freeing up your cash for marketing and other essentials. Besides selling on your own website, you can also explore the possibility of selling on other popular websites like: Amazon, eBay, and industry-related sites. Those websites are popular digital storefronts that will help get your products out there the quickest. You should discuss this option with your manufacturers before you decide to post the products on those sites.

Time: If you have a small budget, only 10 to 15 hours per week and you want to run a small business, an e-commerce store is still the best option for you. You can use your 10 to 15 hours each week to focus on customer service, order processing and marketing. Other than that, your e-commerce website will run on autopilot and will be your 24/7 sales staff. It will even make money for you while you sleep.

To further increase your sales numbers, you can leverage social media to spread the word about your products and website. Cross promotions can also help your marketing efforts. You can piggyback with other websites that sell items that complement your products by jointly running cross-promotional campaigns. This collaboration will benefit all parties with minimal effort or funds.

Flexibility: An e-commerce business allows you to establish your website as a professional storefront and enables you to manage most of your business from anywhere with internet access. Whether you are a college student operating from a dorm room, a stay-at-home parent operating from an apartment, or a working professional operating from the basement, this business model will provide flexibility for you.

Often entrepreneurs relish the ability to travel. Whether you are traveling to see your family or jetting off to see the world, this business model can offer you optimal flexibility since you are not restricted to sitting in a local office, but can work anywhere in the world that has reliable internet access. Have laptop. Will travel.

An e-commerce business also lends itself to better accommodating your working hours. Many people choose the entrepreneurial lifestyle because their schedule doesn’t fit into the traditional work hours of 9-5. You will be able to choose which hours to work, depending on your family situation, your outside interests, or whether you are a morning person or a night owl.

Often, when entrepreneurs start their small business, their primary focus is on what makes their products or services unique in solving their customers’ problems. They forget to leverage existing technologies to benefit their company and their clients. Startups should find ways to integrate technologies like web-based stores to save time and money, while adding more flexibility to the management of day-to-day business.

The truth is, I too made that mistake (over 13 years ago) when I was in college, starting my first few businesses. At that time, the e-commerce business model was in its early phase and not as popular as it is today. Yet, I still missed out on seeing the full potential of technology and e-commerce for a startup business. Therefore, I want to point this out to new entrepreneurs so you can profit from my experiences and fully grasp the benefits of the internet on your path to success. I hope you find this article helpful. If you do, please share it with others who you think would benefit from it. Thanks!

Phong Nguyen

BA from St. Olaf College
MBA from University of St. Thomas
SEO from "the School of Hard Knocks."

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