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Should Your Small Business be Online or Brick-and-Mortar?

Starting a new business is always terrifying. Will you have enough capital? Have you done enough marketing? How do you even go about hiring the right employees? The devil is in the details when it comes to launching a fledgling company whether you’re planning an online venture or a retail store.

So, how do you know which type of business is right for your idea? There are advantages to being totally-digital and of course, benefits to having a physical location but if you can’t afford to launch both at once, here are some things to consider…

How much money do you have to invest? In most cases, an online business is far less expensive to get off the ground than a brick-and-mortar location. It all depends, though, on the costs. Maybe you know someone willing to rent you cheap office space where you’ll only have to supply a desk and some office supplies for your service-oriented business. Likewise, if you’re selling products that require space to display and employees to sell, an online store will likely be cheaper. Don’t forget that online businesses – ones really destined to succeed – still cost money. Developing a great website can cost tens of thousands of dollars and you’re going to have to spend more to make more on marketing your site.

Do you need to keep inventory? And if so, is that inventory perishable? If you’re going to be selling bean bag chairs you’re going to need a big brick-and-mortar location to display your wares. That requires rent, employees to man the store, and all kinds of additional insurance overhead. Having an online store means you may simply need to invest in high-quality pictures of your merchandise and simply fill orders when they come in. On the same token, if your inventory is perishable it may make more sense to sell it in-store so you can ensure it stays fresh and gets turned over regularly. Your product (or service) will greatly dictate the nature of your store.

Will your customers expect immediate gratification? Some things just aren’t meant to be sold online. Take Netflix: when they launched onto the scene they had a novel concept with a slow build. Turns out lots of people liked DVDs…but they didn’t want to wait 24-hours for a movie to show up at their home. Now that Netflix offers live-streaming services they’ve become a household name and it’s all because of immediacy. That same message can translate to your business. If you’re going to sell specialty cupcakes or hostess gifts you should probably cater to people who need what they’re buying right that minute by opening a retail store. If your products are well-considered purchases such as home goods or custom art you can probably afford to ask folks to wait on delivery.

Where are you located? It may seem simple but in all actuality, your super-cool vintage record store probably isn’t going to fare as well in Akron, Ohio as it will online. Particularly if you’ve got a really niche business you may like the instant access a digital store gives you to people all across the country and even the world. If you live in a small market or even one that doesn’t have a lot of resources, online may be the way to go. But let’s say you want to sell hiking gear and you live in Denver? A storefront near a popular outdoor area may give you an edge.

Are you a salesperson? If you open a real, live location the success of your business will greatly depend on the customer service people receive, especially if you’re selling anything pricey. If you can only afford to hire apathetic high school students to staff your location and you really, really hate interacting with people? You’re probably going to have better luck online. Make your own furniture from scratch and love to talk about it for hours on end? A retail store may be a better fit because you’ll really be able to sell people in person rather than depend on your website to differentiate your products.

Deciding whether or to have a brick-and-mortar or digital business is something you shouldn’t take lightly. And remember: even if you’re planning a physical location you shouldn’t simply throw some e-commerce features on your website and call it a day. Until you can devote time and effort to building a solid, intuitive online store you should really consider going it the old-fashioned way. It’s about trade-offs!

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