Business Entities

As a small business there are several business entities you can choose from which provide different tax and legal benefits.

• Sole Proprietor
• Limited Liability Company
• General Partnership
• S Corp
• C Corp

Click here for a comparison chart of business entities.

What entity is right for the business I'll be working on?

I believe setting up an LLC is the best option for the web business I'm working on because it helps to limit the amount of liability the owner has over business issues. For example, if the business gets sued for outdated jelly sales or an outbreak of salmonella, people can only collect damages from the company and not necessarily the owner's personal belongings. Of course, this isn't a guarantee they can't go after personal belongings, but it does make another hurdle for them to cross. Also, for now, the owner is doing everything, but if she wants to make multiple people owners as well, she can easily do so in the future. Also, for tax purposes, the LLC is simple enough for her to file papers for, but not as complicated as a corporation.

In order to set up an LLC you need a few things:

1. Unique business name
2. File an "Articles of Organization" document with the secretary of state. This document includes info such as business name, address, and the names of the LLC members.
3. Operating Agreement. An operating agreement includes percentage of interests, allocation of profits and losses, member's rights and responsibilities and other provisions.
4. Licenses and Permits. You need a business license and any permits relevant to your industry. For example, creating jam needs very particular food handling permits, some on the federal level and others on the state level.

Payments and Page Designs

What should I put in my web page?

Choosing a page design and the elements you're going to include is a huge part of the design process. Before making your website, it is important to learn about similar businesses in you industry.

Ask yourself:

• What do other websites have that I like?
• What do other companies have that I hate?
• What is missing from these other companies' websites that I can include in my own?

When choosing a website template, do your best to pick the one that will fulfill your needs in the best way possible. Don't be fooled by all the pretty pictures they have included in the design, because ultimately, it will be your content in this template when all is said and done.

Accepting Credit Cards

PayPal is one of the most widely known and trusted online order processing companies. If you would like to accept credit cards on your website, doing so with PayPal is a simple way to start. You can create custom buttons, call to actions and connect the transactions to your own PayPal account in order to accept payments.

Some things to consider:

• Who will be on the hook for cancelled payments?
• What is the interest rate charged for each transaction?
• Are there additional hidden fees associated with each transaction?
• Will my customers want to leave my website and use PayPal just to complete their order?
• What system does the business currently use? Is it compatible with PayPal?

If PayPal isn't the best solution, there are several alternatives. After all, PayPal only makes up about 20% of the market. Here are some alternatives:

• Checkout by Amazon
• OpenCart
• Squareup

Choosing a Host and Site Builder

Site Builders

Site Builders are services which help you build a website, go figure. Site builders are designed to make it easy for even novice users to create a website. The amount of flexibility and skill needed will vary from one to another. Some work best with their own hosting system while others work great with all platforms.

Here's a list of some drag and drop site builders:

• Weebly.com
• Wix.com
• Google sites
• Yola
• Webstarts.com
• Homestead.com
• Webs.com
• Bluevoda.com
• Website Tonight

Content Management Systems

Content management systems are a bit harder to learn, but offer more flexibility and power

• Wordpress
• Squarespace
• Joomla
• Drupal

Hosting Services

Website content needs to be stored on a server for the world to be able to access it. This is the purpose of buying hosting services. You pay a fee and you get a place to upload your website. Hosting services vary in the options they offer but here are some things to look out for:

• Is it compatible with the site builder or CMS you want to use?
• How responsive is their tech support?
• How much do they cost?
• Is everything you need included, or do you need to pay extra?
• Is a free domain name included?
• Is email service included?
• Are free adwords credits available with purchase?

www.top10hostinglist.com is a great weebsite which compares host companies to each other to help you make an informed decision.

Drop Shipping vs Affiliate Sales

There are two great sales models available when you don't want to take part in the manufacturing of product but you still want to make money off of selling someone else's product. These two models are Drop Shipping and Affiliate Sales.

What is drop shipping?

Drop shipping is basically when you sell someone else's product directly through your website as if it were your own. With drop shipping, your brand and marketing are associated with each sale but the wholesaler is the one who actually packs up the product and ships it out under your name.

Pros: 

• Drop shipping sales are easier to make since there are fewer steps the customer needs to take in order to complete a sale. Much higher conversion rate. Quicker sales.
• You make a higher percentage of profit per sale than affiliate marketing
• This method is more hands-on which gives you greater control over your customer's experience. You take the calls, handle return requests, answer product questions, etc.
• Less time is spent creating a website that contains valued content to drive traffic (compared to affiliate marketing.)
• No capital investment. If there's too much stock to sell, it's not your problem.
• More profit. Usually your sales are getting wholesale pricing since companies can buy large volumes of inventory. This gives you a bigger profit when you make a sale.

Cons:

• This method is more hands-on, you need to deal with the customer, their questions, their complaints etc.
• Since your branding is associated with each sale instead of the wholesaler's this means you need to create a business brand, marketing materials, etc. to sell the product.
• If the transaction breaks down, you could be on the hook for the costs associated with the sale issues including charge backs, refund fees, shipping.

What is Affiliate Marketing?

Affiliate marketing is when an advertiser pays a commission of their sales to a publisher when the publisher brings them a sale. For example, some dude writes a blog talking about fidget spinners and in his article, includes a link to where you can buy a fidget spinner. If the reader clicks that link and completes an order, the publisher gets a cut of the sale.

Pros:

• Very hands-off approach. The publisher can merely set up their website and let the orders come through without even having to deal with a customer.
• Branding of products is associated with the manufacturer/wholesaler and not the publisher. If there's a problem with an order, the wholesaler gets all the problems and bad press that go with it, not the publisher.
• Once the content and website are well established the publisher can focus on market research and providing product links for items which sell well instead of worrying about order fulfillment or pesky customers. This is a great solution for someone who only likes marketing.

Cons:

• Takes longer to produce income. Affiliate marketing is a very passive sales technique. In order to make sales the website needs to have a lot of valued content to attract viewers/ readers to the website so they can be funneled into sales opportunities. Creating highly trafficked content to do so takes linger than merely setting up a website for direct sales.
• Smaller percentage of profits. Since you're not doing much work to complete the sale, you normally will get less of a percentage of the sale than with drop shipping.
• Lower conversion rates. Since customers have to click more in order to make a sale, the conversion rate is much lower. This means you need to have a much higher level of traffic coming through your website in order to compensate for the drop off.

How do I Get Started?

Affiliate Marketing:

If you want to sell products from a well established company, chances are they already have an affiliate system set up for you to join. Simply do an internet search for "company name + affiliate program" or something like that. If they don't have an affiliate program, you can set one up yourself through an affiliate network. Affiliate networks do all the tracking, accounting, and payment of commissions for you. Here are some of the top affiliate networks:

Commission Junction

ClickBank

LinkShare

Affiliate Window

ClickBooth

Amazon

Shareasale

Google Affiliate Network

OurFreeStuff

You will also need to:

• Buy a domain
• Buy Hosting
• Buy Email Service
• Build a website with valuable content

Drop Shipping:

You can contact a wholesale company directly to see if they are interested in doing a drop shipping partnership. Be careful if they have never done one before though. You can also do a web search for "drop shipping + product you're interested in selling" to find suppliers who already have drop ship programs established.

Worldwide Brands is another good source for finding actual wholesalers who do drop shipping.