It’s an old adage, a saying that goes back for decades, probably for centuries:
You have to spend money to make money.
But, is it true? Well, yes, I believe it is true, but it is a lot less true than it was a couple of decades ago.
Why is it less true now?
Because of the Internet.
The old way
Let’s say it is 1985, and you have an idea that you want to start selling baseball cards. You have good sources for the product, including some pretty rare cards, and you have researched and found that your local area does not have a store selling collectible baseball cards, or any type of sports cards for that matter. It seems like you have a pretty good chance at success! So, you decide to open up a store where you will sell cards.
You have a couple of choices, you can either buy or build a building for your shop, or you can rent space. Since you are a brand new business, it is most likely that you would rent the space, at least until you find out how successful your idea is. That location, though, may be quite expensive, especially if it is a commercially viable location. I mean, you want to get the best location that you can afford, so that customers can easily find you. Such a location will likely set you back thousands of dollars per month. But, you have to stretch as much as you can, so that you have a chance at success. Still, you will have to sell a lot of baseball cards even to cover just the rent expenses. On top of that, you will need to spend thousands on fixtures and such just to get started. You will likely need to renovate the retail space that you rented. There are lots of expenses in getting a business off the ground. Frankly, it will probably take you a few years in business just to get your money back, before you even start making a profit.
The new way
Well, fast forward to 2012, and things have sure changed. Let’s keep the same scenario, you want to start selling baseball cards. You have a good source for cards that you can sell for a profit. You feel like you have a good shot at success. What are you going to do?
Likely, the first thing you will do is start selling on eBay or other online auction sites. After a few months of doing this, and seeing some profits and success on eBay, you decide to open that new store. Do you have 10 or 20,000 saved up to sink into that new store? No, you don’t need that anymore! Instead of a “bricks and mortar” store down at the mall or that new strip center down the highway, you are going to open a store on the Internet! If you are internet savvy and can do things yourself you can build your own website. If you have to hire somebody to do it for you, it will likely cost you only a few hundred dollars to have it done. First, you need to buy a domain name, and web hosting. Next, get that website up. Total cost for all of this would run between $50 to $500 (depending if you need to hire somebody to do the work or not).
Not only is the cost much lower in starting that online business compared to the one you would have had to open back in the ’80’s, but you also have a larger potential customer base. How? Why? Because if you opened up a shop in your local mall without a website, you have an customer base which is mostly limited to local people. Yeah, a vacationer comes through and stops at your shop from time to time, but that is a small number. When you open up a shop in the web, your customer base is not limited at all, anybody in the world can shop on your site!
So, if you are savvy, and know how to play the game, things are now easier, cheaper and more profitable than ever! The question is, are you taking advantage of this new way of doing business? If not… why not?