How to Start an Online Business
Research and planning
In order to start a successful online business, research and planning is crucial. Doing an proper market research and analysis would help provide an insight on your target market. From there, you can find out how to attract customers and to bring demand to your products/service. All the research data will tell you whether your idea is viable to go ahead with or whether it requires any further alterations before incorporation.
After analyzing the information gathered from the research, it's time to draw out a business plan. Use the following questions in this checklist when working on the plan of action for your online business:
When researching on how an online business functions and the regulatory requirements to follow, note which area will incur additional costs and find out if you can obtain tax benefits or grants to aid and alleviate your financial situation.
By utilizing all your knowledge, you can better plan for the future of your business. This will allow you to anticipate any risks or challenges and be better prepared for it, improving your probability of having a successful online business.
Funding the business
As intimidating as it is to invest money to start a business, it is also essential for its survival. E-commerce businesses can be financed using a variety of different funding and financial instruments. Here we will go through the top 3 ways to kick-start your business :
Debt financing is one of the most straightforward way to fund your business. You will be able to keep full ownership over your business this way. However, this option comes with a potential risk. Regardless of whether your business turns out successful or otherwise, you will still need to repay the debts. Also, securing debt finance from banks and financial institutions is difficult unless you have a strong business plan.
Usually, the source of debt finance will be from friendship loans and commercial loans.
Although debt financing is convenient and straightforward, it also come with a big risk of potentially losing your business and even your capital.
Private equity financing is an alternative to debt financing that can still allow you to be able to successfully fund your business. Through this method, private investors offer capital in exchange for a part/ share in your business. If your business does not work out, you will not owe any money to your investors. However, you have to give up full ownership of the business in exchange for funding. Do note that investors will only invest in businesses that is likely to have high chances of success and good growth potential.
The major source for private equity capital include venture capitalist and angel investors. The less common ones would be banks, investment companies and financial institutions.
If you are willing to share the business with others, private equity financing is a relatively low risk method of funding your business
Government funding and assistance schemes
The Singaporean government has in place several initiative to aid start-ups and established businesses to gain access to funding. These initiative includes grants, business incubator schemers and tax incentives. You can look into these start-up schemes and grants to see which you are eligible for. Note the term "infocomm" is also used for IT, internet and/or e-commerce.
Startup SG is your go-to source for loans, grants, funding and capability-enhancement. The platform is said to cater to every possible combination of a start-up ecosystem. They are separated into six different categories: Founder, Tech, Equity, Accelerator, Talent and Loan. This scheme is available to all Singapore citizens and Permanent residents who are first-time entrepreneurs and are ready to commit full-time to their business.
For more information, go to their website here.
ACE Startups cater to first-time entrepreneurs. ACE focuses on five pillars: Start-ups, Corporations, Institutes of Higher Learning, Risk Capital and Public Sectors. They provide mentorship support as well as start-up capital grants. The Accredited Mentor Partners will select the applicants based on the uniqueness of the business concept, the feasibility, management team and the potential market value of the business. All first-time entrepreneurs who are Singapore citizens or Permanent residents are eligible for this scheme.
Visit their website here for more information.
Capability Development Grant is a scheme for any small and medium enterprise incorporated and operating in Singapore. It provides financial assistance to start-ups as well as in other areas like consultancy, cost of certification, and costs of equipment and training. They focus mainly in building capabilities in the ten business areas:
For more information, click here.
The grants and initiatives listed above are a few of the many you can consider to adopt. If you wish to look for more options, click here for the full list of grants.
Incorporating your business
Before commencing your business operations, you have to incorporate your business. Choosing your business structure is vital and will determine your liability, business regulations, taxes and how you run the business. After the selection of your business structure, you can incorporate your business.
Read here: Starting a business in Singapore
After your business has been registered, you will need to considering supporting infrastructure to help you make sales and build your e-commerce business. To get you started, consider the following list:
A domain name
IT Infrastructure for Operations & Customer Support
A website that is highly-ranked in Google and easy to use allows your customers to easily place orders. You require an efficient IT systems for order processing and customer support. You have several options in this regard: you can build and host your own system, (b) outsource the development and then manage the system, or (c) use a hosted, software-as-a-service platform that is externally managed. You should also explore investing in a robust customer relationship management and email management solution.
Ensure that the website design is user-friendly and provides adequate information to the user about your product.
Marketing and advertising
To ensure that more people find out about your business, you need a strong marketing strategy. A popular method to attract customers to the business utilize social media platforms and/or paid online marketing channels to advertise your services and products.
To allow you to collect payments from customers in different ways other than cash or bank transfer, such as by credit cards or digital wallet payments.
Delivery of the product/service to your customer as advertised is one of the most important parts in ensuring that the business remains successful. You may need staff, space and inventory stock.
Bookkeeping and Finance
Starting an online business is not just about setting up a website but rather involves investing in startup costs, marketing, advertising, technology, inventory, staffing, office rental, etc. Accounting and bookkeeping is mandatory for all incorporated companies. Knowing your financial position and cash flow and keeping track of a company’s accounts is important for securing future business loans and investments.
Accounting and inventory management software like Xero can help to easily keep track and reconcile sales invoices, expenses and bank transactions.
In order to run an e-commerce business well, you need to understand your tax liabilities well. If you are well-versed in the tax issues that may come about during the operation of your e-commerce business, it can help you be more prepared in the future.
If you are GST Registered and sell goods through the internet, the goods delivered in Singapore will be subject to GST. The supply of international service, supplied to person residing outside Singapore, is exempt from GST.
All Singaporean incorporated companies must adhere to the reporting standards set by the Inland Revenue Authority of Singapore (IRAS) and the Company Regulator ACRA. All tax filings are compulsory and failure to meet the deadlines would lead to fines and penalties including debarment of directors.