No it’s not free or cheap, Let’s talk about numbers

One of the main issues that we need to deal with is ignorance and misinformation, on one side we have all this  eCommerce platforms telling you “start your online store now and sell tomorrow ” and on the other side is reality, raw, cruel and awful reality.

So what’s the truth? is this a worldwide scam targeting the human need of have financial freedom? 

Well, yes and no…

The problem is a matter of concept, not a matter of if it’s achievable or not because trust me it is.

The issue is this people believe that business owners don’t do anything, when is totally the opposite.

Yes, any business owner can tell you this, they work 24/7 non stop and at least the first 3 years of any business are horrible, truly horrible the amount of stress the bills, the rent, the employees etc. etc.

Feel free to ask around…

However, once you pas that first 3 years nightmare, things get easier, management is simpler and you can have more time to think expand and start new products or services.

Having an online store is exactly the same, yes you are going to save some money on automation and rent but that’s pretty much it.

 The issue is this people believe that business owners don’t do anything, when is totally the opposite.

 Let’s talk about numbers

Let’s compare the cost of an online store vs a brick and mortar business.

On the online store world you can find stores from $50 to the sky is the limit, however being cheap or expensive doesn’t mean that they are going to sell less or more. 

So how do you know how much you need to invest on an online store?

Well the numbers like on your brick and mortar are simple.

You need to invest on the store 10% of your expected revenue for a year that means, that if you are expecting to sell 100k on the next year you need to have a total cost of $10,000 or less for the design of the platform and the platform maintenance.

This is a healthy number because it applies too to the brick and mortar, your rent should be 10% of your monthly or anual revenue.

However this is where things get interesting, on a brick and mortar your store is usually around other stores on a mini mall, strip mall, big mall or next to a popular road, so your brick and mortar comes with something that your online store will never come with, TRAFFIC!!!

If someone walks by your store he might see it, or if he or her visits the mall he might see the store, however unless you pay for ads.

This is where things gets interesting… 

 

So now we know that an actual brick and mortar store comes with traffic and your online store doesn’t, so why on earth would you open an online store?

Because it can sell all the time to everyone in the world, 

This means unattended revenue 24/7, something that your brick and mortar will never be able to achieve…

Ok now you know the main difference between the initial investment and the benefits of an online store vs a brick and mortar

Let’s talk about Ad budget

 

Taking those numbers in consideration we need to talk about ad budget, remember the 10% rule for your selling infrastructure or platform? well we have another one for marketing, it has to be 10 to 20% depending  con how aggressive you want to be.

Imagine this, you are in the USA, and you need to hire a sales person, the usual negotiation will be a minimum plus commissions, that minimum could be from $1,000 to $2,000 per month (10 to 20%) of your 100k projected revenue plus commissions. 

Now witch one is better? the salesperson or the ads? 

 

Both of them are good, if you get someone with experience and contacts the results will be awesome, if you hire someone completely new it’s a risk you need to take, a newbie will take up to 3 months to warm up and be ready to sell efficiently, the ads on the other hand with that same budget can start selling as soon as one month later.

 

However, with the ads you’ll know what’s going on all the time, where are the most of your customers, at what time they clicked their age, sex etc. all over the world all at the same time 24/7

 

And this is were the online store shines and where most of the people fails, the ad budget needs to be high, very high so you can sell and meet your expectations.

 

And that’s why when customers ask us how much the store will cost we just ask them how much money do they want to make.