New Business Ideas Get Me Revved Up

I am so excited and my brain is going a thousand miles a minute. A coworker gave some people this really neat gift that she made. I've never seen one exactly like it out there in the crafty world so I told her she should sell them at our gift show next year.

Then I said she needs to set up a site on Etsy. I think she'd do really well! Of course I can't tell you what exactly she's doing but it's personalized and very affordable. =)

What are the first steps to take if you think you have a great idea that can be sold online?

First, research. Research. And research some more. I did not do this when I first started selling jewelry. As with most of my life, I jumped in with both feet without a second thought. In reality it would have been to my benefit to do research first.

Research the cost of supplies. Since her items will all pretty much be the same (with slight predictable variations) she can pretty easily estimate her costs. Knowing the cost to create a widget is vital.

Not only do you need to account for the precise cost to produce the widget, you need to think about the intangible costs...

• Power/Electricity - it costs money to turn your lights on and if you need other types of power it will cost that much more...and it can add up.

• Space - how much space will your work take up in your home? Or will you need to actually go out and rent space?

• Advertising - Business cards, fliers, and any ads you may take out can quickly add up. If you haven't factored in the cost of this into your product you may come up short of funds.

• Office Supplies - I go through a lot of pens. And order forms. Right now I am totally out and really need to go pick up more. They aren't super expensive but every penny adds up.

• Photos - Online sales can only be as good as the photos showing your widget. You should see some of the hideous photos I took when I first started. I cannot believe anyone ever bought a single thing from me (not that I had many online sales at first). I tried to pick a horrible one but this is the worst I could find...and it's a huge improvement from when I truly first started.And it costs money - real money and money in terms of time). A good digital camera is vital. For me, a photo 'tent' was a priceless investment as well. But it was an investment. You can build your own, but I could never make one as good as the one I bought.
  

Include all of the above expenses in the cost of each item. It doesn't have to be an exact cost for all of these intangibles, but they need to be accounted for somehow.

Once you figure out the actual cost of your widget you need to decide what sort of profit you want per widget. Some people figure out the hourly wage they want and then figure out how long each item takes to make.

Others just take the total cost of the widget and multiply it by a certain number. Sometimes two, sometimes three, it just depends on the person. The problem I find with doing it this way is not always accounting for time. Something that doesn't cost a lot in dollars may still take a long time to create.

I sometimes use a combination of the two pricing methods...figuring out a total cost and factoring in my time as well. I don't really want to work for less than minimum wage. =)

My juices are flowing now with ideas from my coworker ... and it's not even my business!

There are other factors to research and consider when starting up a new business but we can talk about those later.