Business overheads: Physical vs online

Business overheads: Physical vs online
With the British economy back on the up and optimism growing, new businesses are cropping up everywhere; around 600,000 of them per year, in fact - many of them in the retail industry. When you consider the benefits of going self-employed in the shop game, it's pretty easy to understand the trend: you work under your own steam, doing something you enjoy, with the potential to make big bucks (should all go successfully).
Before you get going, though, you've a big decision to make: do you open a conventional, physical store or head straight to the internet? There are clear benefits to both.
At this stage, you'll probably have money on the mind, and understandably so - so how do the two compare financially?

Business premises

From where do you plan to sell your products and services? You can have the best stock in the world but without a store - physical or digital - you'll make nothing.
If you're keeping it traditional and opting for a bricks-and-mortar store, this'll probably be one of your biggest overheads - especially in the early days. If you're renting, expect to pay tens of thousands of pounds every year for city-centre retail space, and not much less for an out-of-town location.
You then have deposits and fees to consider, as well as running costs (gas, electricity, water etc.) - it's expensive business, and with regular bills coming in, the pressure's constantly on to make money.
Running an enterprise online is completely different, as virtual spaces cost very little in comparison to their high street counterparts. Take eBay, for example; anyone with a UK postal address and a bank account can register for a business account and start trading pretty much straight away.
You don't have to stop there, either. Invest a little more (but still much less than required for a conventional store) and you can have a dedicated website, complete with fully featured, eye-catching pages and copy that eases buyers towards check-out.

The workforce

If your business starts moving in the intended direction, you'll be building a team of employees before long. It'll add to your overheads, of course, but get it right and you'll be able to achieve more, and profits should rise accordingly.
Workforce size doesn't necessarily dictate stature, though; especially when you start comparing online and physical stores. You'll often find that ecommerce companies operate considerably more efficiently than high street retailers, as the supply chain is shortened. There's no longer a need to have customer-facing staff when you're selling through a website - information is instead passed on through engaging content. You don't even need an actual human to complete the sale; all is handled by your payment gateway.
This reduced need for staff can make a big difference to your company's budget.

Marketing your business

Open a physical store and your reach is pretty limited; you've an audience comprising only those in the local area, and even then, your products won't be relevant to everyone. Your marketing efforts need to be particularly strong if you're going to successfully pick out prospective customers from such a small group. We're talking pricey promotion through traditional advertising channels like radio and print media.
On the other hand, an ecommerce website has a potential audience of more than one billion internet users across the world. Your only goal - aside from providing great products - is to stand out from the competition, and this can be achieved with the help of more cost-effective search engine optimisation (SEO) and a bit of social media PR.
If you're operating on a site like eBay or Amazon, your marketing is pretty much taken care of already. These platforms already attract millions of users every day, all of whom are searching for the products they want at the best possible prices. Value, therefore, becomes your selling point; and with the money you've saved from the marketing budget, value is something you can afford to deliver.


Insurance is something else you'll have to consider when you become a business owner, but chances are it'll be much cheaper if you're running a small online business from home and not from a high street store.
Run a traditional shop and you'll need specialist business insurance in place in case anything goes wrong. A customer could trip and injure themselves on the premises, for example, or a break-in might stop you from trading on the busiest weekend of the year. If you're only working online, you don't face the same risks - you may even be covered by your existing home insurance policy, meaning there's no need to spend any more money.
It seems pretty clear to us that running a business can be made a whole lot cheaper if you're doing it all online. This is why entrepreneurialism is now an open route for anyone to follow - not just those with big budgets and enough bravery to risk it all.
Enlist the help of a great value courier service as well and you should be on the clear road to retail success!

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