How much storage do you need for an online business?

So there are all the wonderful benefits of running your business from home, but when 9 boxes show up at the door then it does remind you of the downside! Thankfully these boxes were able to be sorted out within 24 hours. Eight boxes were just picked up to be sent to Amazon's warehouse, and the remaining one has been put into our garage.

We sell maternity and baby clothes on ebay and Amazon so our entire garage is taken up with stock, and as you can see our hallway does suffer too!

If you are thinking of starting an online business you may need to consider storage. For a startup company you can probably fit stuff on a shelving unit in one of your bedrooms, or in a garage or shed. Don't forget to consider damp and also security. At some point you will need stock insurance and most insurers won't cover you for wooden structures like sheds.

On the plus side you can count the cost of your rent or mortgage for that portion of your property which is used for your business. So if like us your garage is used exclusively for your business then you can put a sensible price on that (as a percentage of your monthly rent / mortgage) and include it in your costs which in turn lowers your tax bill. You can also claim the same percentage of your council tax. Treat it just like you would if you were hiring a commercial unit for running your business.

We always assumed that as our business grew we would need to rent a storage unit or ideally buy a bigger house! But as it has turned out we now send a lot of our stock to Amazon who post it out for us. In our particular situation this has worked out well.

All in all though I'll happily take the inconvenience of having my hallway stuffed with boxes rather than have to pay for the children to go to nursery whilst I go out to work elsewhere. And look, I can even get them to help me with processing stock! (The one around her neck is our own... I am keeping a close eye on the stock!)

Can you still make money from ebay?

Still seen as an auction site for second hand goods, sales on ebay continue to grow. Internet sales as a whole contribute more than 14% of all UK retail and this is predicted to grow to 26% in 2016. The UK is already the most internet-based country in the world, according to a report by the Boston Consulting Group.

Many of us do use ebay to sell on unwanted goods, or to shop for a bargain. But, many businesses exist either entirely by selling on ebay, or by mixing their ebay sales with other online platforms or a physical shop. Is there still money to be made?

If you have a business idea you need to look at the sector and see if there is a space for you in the marketplace. If you have come up with a fantastic new invention then you may create your own space in the market by fulfilling a need, but many businesses are selling something that others are selling. If you are setting up a bakery you would want to do so in an area with a high footfall of people but without an existing bakery. If you are choosing to sell online then you would be competing with other online retailers. You would want to stand out by offering good value for money and excellent customer service. 

But, remember that online sales are growing overall, which means that there may be extra room in the marketplace for more sellers. Of course it is not as simple as that, and you need to ensure that you choose a sector which is growing rather than shrinking in the economic downturn. A quick spot of googling should answer that question for you. Remember that people are hunting for a bargain in the economic downturn so if you can sell essential goods at bargain prices you could be on to a good thing.

For an article on the fastest growing sectors in 2013 check out this article from 'startups': http://startups.co.uk/what-business-should-you-start-12-fast-growing-sectors-in-2013/

Why ebay though? I frequently get asked why I sell on ebay and Amazon rather than my own site. The simple answer is that these two internet giants drive a huge number of customers to my products. I do have my own site and I periodically spend time trying to improve the site and money trying to attract customers but to little avail. Ebay takes around 10% of everything that I sell, but for that it provides most of my marketing, customer footfall and technological support. I reckon that's a good deal. Amazon charges higher fees but seems to attract more customers (at least to my products) and those customers are prepared to pay for good quality items.

So in summary, research your sector, check out your competitors, and give it a try. Think about who your customers are. My main business is maternity clothes and babywear. My customers are often pregnant women who want the convenience and choice of shopping online rather than trawling the high street which only has a small quantity of maternity clothes. I believe that for the right business in the right sector there is still money to be made from ebay. Go forth and prove me right!

Register as self-employed

As soon as you get started it is vital to register as self-employed with HMRC (in the UK). This is a very quick process - either a short phone call or filling an online form is all it takes. Please be aware this is a legal requirement and really cannot be overlooked.

You might be unsure whether you need to register, but if you are trading at all then you should be registered even if you are making a loss or have no income from your self-employment.

There are 3 main types of self-employment:

Sole trader
If you are working alone then this is you. It could apply to a plumber, market stall trader, ebay seller, accountant or consultant. There will be a tax return to fill in at the end of the year in which you report everything you earned and everything you spent. If there is any profit then this is liable for taxation.

Partnership
If you are working with another person, eg your spouse or a friend, then you should register as a partnership. This means you are jointly responsible for the business and can share the profits. You set the percentage that each partner is entitled to. Each partner needs to fill in a personal tax return at the end of the year, and you also need to fill in a partnership tax return.

Limited company
This is a more complex mechanism and involves more paperwork. If you register as a company then you create an entity which is separate from you. You become a 'Director' of the company rather than being a sole trader and this can have some savings when it comes to paying tax.

Find more info at http://www.hmrc.gov.uk/selfemployed/

Don't neglect the paperwork!

Getting Started - Initial Investments

Finding the money

As you probably know, few businesses can provide a decent income in the first year of trading. If you keep costs to a bare minimum you may be able to turn a good profit, but you'll find that you need most if not all of that money to re-invest in your business to make it grow. We are constantly facing that problem. The more money we put in, the faster our business will grow, but we really need to draw a salary out of it now! One solution to this problem is to borrow a lump sum to either get things started or push forward growth. If your idea is solid and proven then this might well be a good strategy, but don't forget to calculate interest payments into your margins.

Lets say you want to buy 100 pairs of jeans which cost £5 each. You need an initial investment of £500 so you take out a loan. You find you can sell to customers at £10, and it costs you £1 to sell each pair, eg on eBay. You are left with £4. But, you also need to repay the loan interest. If your interest was 5.5% then you are paying £27.50 a month extra, or 28p per pair of jeans in the first month and more as the months go past. Provided you can sell the jeans relatively quickly then you can still turn a good profit. Also beware of VAT! Many suppliers quote prices without VAT, so when you come to pay you realise the jeans cost £5 + VAT at 20% which = £6 a pair.

You should do all of these calculations before you borrow the money. Don't just borrow a lump sum to get started. Borrow only what you need at the outset, as paying back the loan might hinder further growth.

Ideally you will be able to the invest the £500 from some of your own income. I started my eBay business with about £50 of my own money and grew it from there. But, I hardly withdrew any salary for the first 3 years and invested all of my profits straight back into the business. Now after 5 years I am expecting to see an annual pre-tax profit of £14-£16,000.

Getting established

It is soooo tempting to invest in lots of things. Office space, office equipment, signs, logos, stationary, web designers etc etc. Spend as little as you possibly can to start with, and be satisfied with a 'soft launch'. If your business is PR or marketing then yes you probably do need a big launch with everything perfectly finished. But, for most businesses you can start with what you've got and then grow and improve. You can design your own website for free using software like google sites. You can promote your business on Facebook, Twitter, Google + and Pinterest.

A key part of your business plan should be asking 'how will people know about my product / service?' If you are offering something locally then you might want to invest in marketing materials, eg flyers and/or online adverts. If you are starting a website then you may need to pay for online adverts such as Google and Facebook ads. But, plan your investment carefully and figure out what your money is likely to get you in return.

Write your business plan
You know you need to do it, but it can feel like a real chore. Writing a basic business plan is an essential aspect of being prepared. Write if for yourself rather than for an external agency such as a bank. I now have a 3 month business plan which is an ongoing document that I never really view as complete. I make small alterations to the plan as I'm going along, and of course write a new plan every 3 months. Your first plan needs to take a longer term view and also needs to make some financial predictions.

You don't need to have a complicated structure. Set out your idea - what you want to do, why, and how. Think about why this business is needed in this area. Think about what skills you can bring to the business. Include an assessment of the finances for the first year: include all possible costs and a prediction of the income. Include a 'SWOT analysis' in which you list all the Strengths, Weaknesses, Opportunities and Threats for your business.

Remember to keep referring back to your plan to see if there are small adjustments you need to make and to measure how far along you are in your plans.