Seed money for your web store

With the e-commerce sector’s annual turnover breaking records year on year, many budding business owners see creating their own, unique web store as a dream money making scheme. But many people get carried away by fantasies of cashing in on e-commerce’s ever-increasing turnover without giving enough thought to incurring costs. If, for example, the website operator doesn’t have the technical know-how required to install the correct applications or build the web store themselves, they must be prepared to invest in help from experts. So that you don’t run out of money halfway through your web project, we present the essential financial aspects of web stores that website operators should bear in mind when planning their finances.

Before you start making a profit, you need to depend on generously calculated reserve funds to keep yourself afloat as you continue to develop your project. It’s therefore crucial to include the running costs when allocating your web store’s start capital. These regular expenditures come from:

• Hosting: monthly costs will occur, regardless of whether you choose to host your web store yourself or through an external provider. The more traffic you generate, the more expensive the hosting. Further factors such as using a content delivery network (CDN), back-up solutions, or SSL certificates also contribute to regular expenditures.

• Bank fees and payment systems: in addition to a fixed monthly fee for your business account, monthly charges arise depending on the incoming and outgoing bookings, which vary from bank to bank. You’ll also encounter additional fees if you offer your customers different transaction methods such as payment by credit card or PayPal.

• Personal costs and insurance: you must be able to remunerate your staff. You also need to account for costs such as tax advice and bookkeeping, as well as certain kinds of insurance, including liability, contents insurance, and legal expense insurance.

• Warehouses and shipping: your goods should be the central focus of your web store. In order to build and maintain a good reputation among customers, you must therefore ensure that you have a well-stocked storage space that allows efficient delivery. If you also require specific packaging for your stock, you may also encounter additional costs there, as well as shipping fees for working in conjunction with shipping companies.

• Seal of approval: should you wish to own a trust seal from a provider like Verisign, you generally have to pay a monthly fee, the cost of which depends on your yearly turnover.

• Online marketing: whether you choose to take care of online marketing measures yourself, or outsource to an agency, you will encounter more ongoing charges. Advertising and search engine optimization are sustainable methods of marketing, but only when used over a long period.

To get your company off to a strong start financially, your financial plan should be based on the abovementioned one-time and ongoing expenditures. However, expenditures vary depending on factors such as your sector, location, and the size of your online store. Calculating your budget generously usually enables you to avoid getting off to a bumpy start. For additional security during your planning phase, you can make use of the many resources for acquiring venture capital, such as the US Small Business Administration, which works with the government in order to aid budding businesses. Once the stated grace period is over, you repay this loan in manageable chunks, giving you enough time to establish your online store on the market and lay a strong foundation for future success.