Should You Start an On-line or Traditional Business?

New people to business ownership might get confused and make a fundamental and costly mistake by picking the wrong function.

There are definite differences between on-line and traditional businesses. Review the following to help you decide which method is most appropriate for you and your model.

Start-up cost: On-line stores cost a lot less to start. The typically website hosting runs an annual feel of around $15 per month, a high speed connection for $50 per month and a telephone line for less than $40 per month. Your total cost will be around $110 per month if you don’t have to carry inventory (also depending on the nature).

Brick & mortar stores might cost $10,000 or more to start. One has to consider the facilities, remodeling, inventory, phones, credit card processing, employees and more. Thus starting a traditional business is not an avenue for the faint of heart. Great care has to be made to make sure everything runs within budge and runs well. If you run out of money your out of business.

Visitors: On-line stores have the ability to draw millions of visitors a year if they are popular. The problem is that many of the web based businesses don’t draw more than a hundred a day. The reason this is the case is because there are ten’s of millions of other sites for people to choose from.

Traditional businesses draw typically more traffic than an on-line business due to their location. People see the sign, walk in and make a purchase. This traffic is limited by the demographics of the neighborhood and the location of the business (i.e. high or low traffic street).

Sales and marketing: Sales and marketing can also be different for each of these services. For example, a traditional business can advertise in the yellow pages, in their local neighborhood, or local newspaper. A web business would promote its products on-line which reduces the cost but also has a low level of commitment by these customers.

It should be noted that traditional marketing generally earns a better response rate than on-line advertising and thus attracts more customers. For example, a person walking into a store can see the clerk face-to-face and will be more likely to purchase than if they are simply browsing a website.

For those who are still unsure of which would be the best approach they may consider a hybrid model. A hybrid model has a physical location like a traditional store but also has a website with all of its products/services available for purchase. Hybrids combine the greatest affects of each method and have a propensity to have the greatest amount of sales. The only problem is that they also have the greatest costs associated with running two models together.