One of the great things about being on the judging panel for an online business award is you get access to the nitty gritty details of how people build their digital empires; what software they use, where they spend their marketing dollars, what they measure, who they hire and more.
Reading those award applications made me hungry for more detail, so I took it one step further and conducted in-depth interviews with some of the biggest names in online business – Uber, Booktopia, Freelancer, Canva, Envato and others. My mission? To provide novice (and experienced) entrepreneurs with a fast-track “blueprint” for how to build an online business. After all, success does leave clues.
One simple question
I learnt a lot but here’s a major takeaway I wanted to share: being a successful digital entrepreneur starts and ends with asking one simple question: What do you want? It’s a deceptively simple question but an important one because the answer to it determines every decision and action taken thereafter.
For example, do you want a business that enables you to work from home, watch a few eps of Dr Philand be around for school pick-up? If so, you’ll want a lifestyle business like Lucy Mathieson’s Bake Play Smile, a blogging site for those who love what she loves – baking.
“It took about a year for the blog to take off and I didn’t really make any money from it until then but now it’s turning over more than a $100,000 a year, enough for me to give up my teaching job and spend time with my young family,” she said. (For the record, I don’t know if Lucy watches Dr Phil.)
Maybe you want something bigger than that? Maybe you want to launch an IPO, zigzag the world in your private jet, make $2.2 million a day and marry a supermodel. Don’t laugh. Evan Spiegel did it, so why not you?
If that’s what you want, you may not be able to indulge your passion for candle-making, basket-weaving or blogging about horses. You may need to consider launching a business with the potential to grow fast, scale without friction and become a stock-market darling like Afterpay, the reverse layby service that lets people buy the product and pay for it afterwards. They started in 2104, went public in 2016 and raised $25 million in the process. At last count, their underlying total transaction volumes were $2.2 billion. Now that’s what I call a fast-track start-up.
The key takeaway? What you want will determine what and how you sell it.
How it will make money
Tony Nash, cofounder of Booktopia, says that irrespective of what you sell, you need to know how it’s going to make money.
“People often come to me with an idea and I hear them out. And then I ask, ‘So when are people going to hand over the money?’ And they’ll say, ‘Oh, when they subscribe, or the site will generate advertising’. But it’s all very vague. It won’t cut it. I’m trying to be fair and honest with them, but in the beginning, it’s all about cash flow rather than financial statements. When you’re starting out you must focus on the cash. Money must be coming into the company.”
So what will you sell? A product or service? Tangible or virtual? Will you on-sell an existing product or make it from scratch? How will the business make money? At what point will people hand their hard-earned over to you and what will they get in return?
These are big decisions that need to be considered before you take any further action.
One last tip. Whatever you choose, just know that information-based businesses (like Afterpay and marketplaces/platforms that can scale with zero marginal costs – think Facebook, AirBnB, LinkedIn, etsy, Uber – need I go on?), are the ones most likely to succeed on a massive scale, quickly.
Anything is possible – including the private jet and marrying a super model – you just have to ask one simple question. What do you want?
Bernadette Schwerdt has been an awards judge for the Online Retailers Industry Awards and is the author of How to Build an Online Business – Australia’s Top Disruptors Reveal Their Secrets for Launching and Growing an Online Business.
