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Published On: Thu, Apr 30th, 2020

3 Costs all Ecommerce Entrepreneurs Should Prepare for

It is true that it has never been cheaper to start a business nowadays. All you need is a domain name and a decent host, and you could start a business in seconds. On the other hand, too many e-commerce entrepreneurs are crippled by the lack of funds and end up being surprised by costs they didn’t expect. 

If you’re serious about growing your business, you have to be ready to invest in it. You should also know what you can expect to pay if you are trying to build a solid plan. Here are some of the common costs that e-commerce entrepreneurs should prepare for.

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Website Hosting and Building

Here, you can choose to go the easy way, or the cheap way. You can try to build your website from scratch yourself, or use one of those website building tools. While some will get you a semi-decent site, prepare to pay more once you get more attention and want to grow your operation.

If you run an e-commerce store, you will need to start paying more attention to security, payment processing, SSL certification, and upgrading your hosting. You might even want to consider having your own servers for added control. 

Permits and Licenses

Strangely, a lot of people who do business online seem to think that they’re out of the reach of the law. But just because you don’t run a brick and mortar business, doesn’t mean that you don’t have to abide by the same regulations.

So, make sure that you set aside money for a general business permit and look at the costs of getting one in your state. You might also need to pay for a DBA (doing business as) license. You can add health inspection certificates in case you want to sell or prepare food products, and professional trade licenses if you intend to provide services, like financial advisory for instance.

Returns and Refunds

This is probably one of the most vicious costs you might have to incur as an e-commerce business owner – especially if you intend to start a dropshipping business. If you can, try to pick a niche with minimal shipping, and avoid those with high return rates, like clothing for instance.

You should also know that returns are much more common online. As a matter of fact, they are about twice as common online than in traditional stores, so be prepared for that.

How to Cover for Unexpected Expenses

If you’re running an e-commerce business, we strongly suggest you keep your current job in the beginning. Building credit for your business will take time, and keeping your current position will allow you to use your personal credit to get financing in case you have emergency expenses.

Keeping your position will also open you up to many more financing options. For instance, the state of Texas has very liberal regulations when it comes to payday loans. This means that you can find a wide variety of lenders that will offer payday loans in Texas. Sites like LoanPigUSA offer short term payday loans ranging from $500 to $2000, and you’ll be able to get your money 24 hours after your approval. This is a great option if you’re in a cash crunch, but don’t have the credit for a traditional loan. It’s much more convenient as well.

These are just a few of the expenses that you can expect as an e-commerce business owner. Make sure that you are fully aware of what you can expect, and consider getting advice from other entrepreneurs who’ll be able to give you a clearer image of what it’s like.

Author: Carol Treahearn

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