I was recently asked if I could offer some advice on starting an online yarn store. I really wanted to help out as I recently made the leap into my own online business. So here are some of the tips and traps this not-so-young player experienced on the wonderful journey that became my own yarn shop.
These tips apply to all types of online businesses and are not intended to be a complete guide. I urge all prospective business owners to use the many resources available both online and in the wider community. It’s an enormously challenging and exciting step, but being a one-man business doesn’t mean you have to go it alone. So here are my top tips for anyone thinking of starting their own online business and living their dream.
1 – Learn about business. It is not just about buying and selling. While you may have strengths in some areas, there are specific things you need to learn. No one can be an expert in all aspects of running a business. Get training (local college courses, government funded programs, etc.) and make sure you have at least a basic understanding of all areas of business. I started my business with the help of an Australian government funded program called NEIS (New Enterprise Incentive Scheme). It is a program for people who are registered as unemployed and who want to start their own business. The program offers training (Cert 4 in Small Business Management, which is a nationally accredited course), a bi-weekly fee paid for 12 months, and regular tutoring sessions. I found the learning process extremely valuable and insightful as I was introduced to many business concepts that I was not familiar with. Without this training, my entrepreneurial dream would have been just that.
2 – Know what it is. There are many facets to running a business, and if you step into this blind, you will almost certainly fail. Make a close friend of your local small business organization. It is one of the smartest things you will ever do.
- Initial financing. Do you have savings that you can use to start a new business? Or will you have to apply for financing, in the form of loans or grants?
- Regulations – Does your local government have rules on how to run your type of business, eg home business regulations, insurance?
- Taxes – This is probably the most challenging of all. Get some basic advice from your tax regulator. Their websites are often packed with good information on starting and building a business and complying with tax laws. If this is not one of your strengths, budget for an accountant to help you with this. Even if it is, you must have an accountant available for annual returns.
3 – Website and Support Systems: Be prepared to invest time and money in the design and implementation of your website. Online businesses are booming, but that doesn’t mean they’re easier to set up than traditional stores. You can’t just build a website and expect visits and sales from day one. You need to optimize your site so that all the major search engines can find you and customers can come to your site based on their chosen search terms. If you use a website designer, ask him about SEO (search engine optimization). It can add significant cost to construction, so learn as much as you can and do as much as you can yourself if you can.
Know what you need from your business systems. Do you have a background in web design (which is quite different from knowledge, as I found out?). Do you know what you need in a website / shopping cart? Again, talk to people, check out web design companies, and reach out to your clients for feedback. Do not assume that a website / shopping cart will have the features that you assume are standard, for example, stock control, email services, and newsletters.
The same goes for office and accounting software. If you have an accounting background, you are ahead of many. If not, consider taking a short course or hiring an accountant. Yes, this will add to your operating costs, but you will also be hit by a huge tax bill!
Make sure your computer skills are up to date as you will be doing a lot of word processing, budgeting and emails. You may also want to invest in a writing course as you will be amazed at the amount of time you will spend tapping the keyboard, answering emails, social media posts, preparing newsletters and blogging.
4 – Do your market research. If you don’t, you won’t have a market to sell to. Obviously, you are going into a business because you have a passion for something, be it knitting, gardening, or any other reason. You can excel in one or more areas, but don’t assume you know what customers want based on your beliefs.
I spent weeks researching thread websites, checking what they were selling, and seeing what other services they offered (blogs, giveaways, tutorials, etc.). I looked at its overall design and feel. I also visited local wool stores to see how I could turn the physical front of the store into a virtual one. The main message I got from this was that it had to provide a friendly, easy to use and informative website with lots of variety and ways for the customer to interact with the store.
You need to know who your competitors are. Direct competitors are those who sell the same type of product that you want to sell. Indirect competitors may be retailers selling mass-produced knitwear or inexpensive unbranded yarns. Your business plan should include an overview of your competition and describe how you will fit in in today’s industry and how you will stand out from the crowd.
You are looking to offer a USP (Unique Selling Proposition). This can be selling a product that no one else has and is in demand, or providing a service that is not available, for example, cafeteria facilities, delivery service, classes, etc. It’s about developing your business as a brand. Think of some great companies and write down what comes to mind when you hear their name. It is as much about how they do business as it is about the products they sell.
5 – Develop a business plan. This can be done on your own or with the help of Business Support Centers. A business plan is essential to obtaining financing, as well as being your “bible” that you refer to frequently, both to see if your business is running according to plan and to remind you why you did this crazy thing in the first place. square!
A well-prepared business plan gives you an edge when you are negotiating finances and getting started, as it shows that you are serious and professional in your approach. It should include the results of the market research, your bio in relation to your planned business, and a set of initial and projected finances.
6 – Develop an effective marketing strategy for your business. Mailboxes may not be the most effective way to promote an online business, but well-placed posters and flyers in shopping malls, libraries, community centers, nursing homes, and hospitals can work well. Print advertising doesn’t have to be limited to just wire magazines. Also consider parenting, craft, and lifestyle magazines.
Use social networking sites. I have a Twitter account and a Facebook page. Of the 2, Facebook has been the most valuable as it offers the viewer an inside look at my business and its core values. This ties into building your brand. I didn’t realize the relevance of this at first, but after attending a couple of business seminars and doing my market research, I realized that my “brand” is the core of what I do. My goal is to help knitters of all skill levels, but particularly new and inexperienced knitters, who may be afraid to approach a high-end shop for advice. This is becoming my “brand”.
Identifying your brand is a key feature of your business plan, so try to establish it as soon as possible. And remember, your original business idea can evolve and change as it responds to customer demands.
7 – Be prepared not to generate income for at least a year. Even though I receive an allowance for the first 12 months, I still have to rely on my savings to survive. You may need to consider running your business alongside a “real” job for a while. I haven’t resorted to this yet, but I feel like the time will come pretty soon. In the meantime, I’m doing my best to avoid it, but I have to be realistic.
8 – Red. Talk to people! If you want to get an inside look at the type of business you want to run, talk to someone who has a similar one. Obviously, you could scare some traders who perceive you as a potential threat. Why not talk to someone who runs a noncompetitive business, for example if your business is knitting yarn, talk to a scrap yard or the owner of another craft store. They are generally happy to answer questions and show interest. You can also contact the same type of company in a completely different location, as it is unlikely to be a direct competitor.
Participate in forums and subscribe to newsletters and magazines to keep up with trends and gather feedback from the people who use the products you want to sell. When I first thought of starting a wool business, I wanted it to be a physical store, containing a cafeteria and a play area, as well as a wide selection of yarns. I asked the question “What would / would your dream yarn store look like?” to a local forum group and came up with exactly what I had envisioned. This was really encouraging, but after much thought and reflection, I realized that I was not up to the challenge of such an ambitious operation. Getting started online is by no means a commitment or a practice, but it may lead me to open a retail store in the future.
9 – Last but not least, keep a positive and passionate attitude about what you are doing! Most people who have dreamed of opening their own yarn shop (or any other business) focus on one aspect of that business. For us yarnies it is the dream of being surrounded by beautiful fibers every day! While this will always be the case, there are many other facets of owning a business that can exceed your dreams.
The daily pressures of small businesses will always be there, so remember why this was so important to you. And if you sometimes forget what it was that made you want to do this, remind yourself by picking up your needles and thread and escaping to your dream world for even an hour, you will soon remember what madness led you to open your own. yarn shop!