April 5, 2009
11 tips on starting an online business
For job seekers, there is hope in the virtual world. Government agencies and software leader Microsoft have grants and subsidies to help you set up your own online business. Sherwin Loh offers tips on how to get started.
1. Pick and register a domain name: Choose a simple name - perhaps your company's name - to identify your business. Decide if you want the name to end with .com, .com.sg or .sg extension.
The latter two identify your business as a local one. If you want a global audience, pick .com
You can also choose to register all three permutations to deter cyber-squatting, where someone can take your company's name and register it.
Registration fees vary and there is an annual fee for maintaining the name. To find out more about domain-name registration, visit the Singapore Network Information Centre (SGNIC) at www.sgnic.sg
2. Design a website: This allows you to hook and interact with customers with appealing images, spiffy text and user-friendly navigation.
Hire a photographer to shoot products if you are planning a retail store, or yield profile shots for those offering services.
Have a rough idea of what the website should look like and hire a company to custom-design it.
Look into having a shopping cart that allows you to secure customer information. Add a chat interface for immediate online communication instead of sending e-mail and waiting for replies.
Depending on the number of webpages your site has, and the use of animation and music, be prepared to spend $1,000 to $4,000 to create one.
3. Find a Web-hosting company: You need to store your webpage content on servers rented out by Web-hosting companies. They will transmit your webpages over the Internet when someone types in your domain name.
The SGNIC site has a list of partners offering such services but there are also international ones.
Rates can start from $8 a month and go up to $99, depending on the amount of storage and bandwidth space, e-mail accounts, security and support levels. Some firms offer Web-hosting plans bundled with free domain-name registration and e-mail accounts, so shop around for a good deal.
If you are targeting the Singapore market, a local Web host means your page will load faster here as data is not sent across the world from an international server.
4. Blogshop: Alternatively, go small and think about setting up a small blogshop on free blog sites like LiveJournal (www.livejournal.com).
It may not be the most professional-looking, as all you do is post a picture or thread, and hope to have visitors, but you can always upgrade to a proper website when things take off.
While it is possible to host your own website using a home broadband connection, the bandwidth may not be able to support high visitor traffic.
A Web-hosting company also provides dedicated technical support in case your website cannot be accessed due to technical faults.
5. Use free software: Save money by using free software. Consider G-mail or any free e-mail service instead of paying for one from local telcos.
Another free offering is Open Office (www.openoffice.org) to create documents and spreadsheets.
Use Internet phone services like Skype for cheap overseas calls.
6. Payment methods: Look into Internet payment options like Pay-Pal (www.paypal.com.sg). For monthly sales under $5,000, it charges 3.4 per cent plus $0.50 per transaction. Rates fall as the amount increases.
Otherwise, use online banking where customers can deposit money directly into your local bank account, even if both of you use different banks.
Setting up credit-card payments is worth considering if payment for your services and items is high and you need secure transactions.
7. Have a physical presence: Consider working with a retailer to showcase your products in a store. Or rent a booth to display items.
For $60 a month, you can rent one from Toy Outpost. Of the 200 booths at its Plaza Singapura shop, half are used by non-toy-related online businesses. About 10 online businesses rent booths solely to deposit items for collection by customers who bought online.
8. Getting funding: Media Development Authority (MDA): The MDA's i.JAM (IDM Jump-start and Mentor) initiative supports research and development efforts in the interactive and digital media sector. Be it Web applications or software learning tools, a qualifying project can get up to $50,000.
Companies must be in R&D and technology (creative, social or business model) and the team should have at least one full-time founder, who holds at least 20 per cent of the project's stake. Visit www.idm.sg/support/support-for-startups/
9. Getting funding: Infocomm Development Authority: To help companies go online, the SME Infocomm Package (SIP) is a bundled package offering hardware applications, website development solutions and broadband support.
The SIP subsidy is available to 5,000 small- and medium-sized enterprises (SMEs) on a first-come- first-served basis. As of last month, more than 1,000 SMEs have applied for it.
The subsidy applies to any SME with at least 30 per cent local ownership, fewer than 200 employees, less than $15 million in fixed assets and no website. Taking on an SIP means your company must develop a website for the business.
For more information, visit www.ida.gov.sg/Infocomm%20Adoption/20070618182747.aspx
10. Getting funding: Spring Singapore: Spring Singapore has two schemes for start-ups.
Companies developing innovative products or processes for a global audience can qualify for the Spring Startup Enterprise Development Scheme (Seeds) equity investment, which matches dollar for dollar what an investor puts into your business, up to $1 million.
Spring Seeds Capital, a subsidiary of Spring Singapore, will also take an equity stake in your company. For more information, visit www.spring.gov.sg/SEEDS.aspx
Under YES! Startups, or Young Entrepreneurs Scheme for Startups, Spring will contribute $4 for every $1 raised by applicants aged 26 and under for their businesses. The maximum grant is $50,000.
Spring will evaluate business proposals based on innovation, feasibility and potential market opportunity. For more information, visit www.spring.gov.sg/yesstartups/
11. Getting funding: Microsoft BizSpark: For IT-related start-ups, Microsoft will provide free software tools. They include Microsoft Visual Studio, used to create graphical user interface applications for websites, and the Microsoft .NET Framework, a programing software for writing applications.
To be eligible, start-ups have to be in the business of software development, be privately held, be in business for less than three years and have less than US$1 million (S$1.5 million) in annual revenue.
For more information, visit www.microsoft.com/Bizspark.
Sources: MDA; IDA; Microsoft; Spring Singapore; Daniel Quadt, managing director of www.GuideGecko.com; Stephen Ho, chief executive officer of GameShop; and Sarah Yip, founder of Slow Loris.
Website offers free delivery
In the first year of running an online business selling games in 2003, Mr Stephen Ho counted himself lucky if he could sell a game a week.
He pushed on and counted on word of mouth from customers to generate awareness of his business. It took two years before he started drawing a salary.
Instead of trying to upstage retail shops in pricing and product selection, GameShop (http://gameshop.com.sg/) provided free delivery here.
'We were using the bus, MRT and whatever combination we could find,' said the owner who runs the site full-time with his business partner, Mr Aaron Ang, 31. He started the site with Mr Ang and a $1,000 investment. Both also ran a Web-hosting firm and knew how to design the website.
The flipside of having same-day delivery for orders made in the morning is that game-launch days means working past midnight to fulfil all the orders. 'Our customers are understanding. We delivered one game at 3am and the buyer was waiting for us at the gate,' said Mr Ho, 29.
The company has expanded to Malaysia, Indonesia and India. It ties up with distributors there to deliver games directly to customers.
Here are his tips:
§ Make sure your online shopping portal looks professional. This will boost visitors' confidence when placing orders.
§ Obtain testimonials from customers to put up on your website.
§ Look for ways to enhance your services. Aside from free delivery, GameShop provides warranty exchange service for some products. This means that if a product malfunctions during the warranty period, it will be picked up by GameShop and sent to the service centre.
§ Do not be discouraged by slow sales at the start. It takes time to build up Web traffic and a reputation. It could take months or even years to reap dividends.
Cheaper than opening a shop
Ms Sarah Yip started a business selling Singapore-made messenger bags with $50,000 of her savings.
Because the bulk of the money went into hiring designers and artists to produce the bags, setting up a shop to sell them was never an option.
Instead, the former foreign-exchange sales officer set aside $4,000 to pay a Web designer to create the Slow Loris website (www.slow-loris.com) to showcase her bags, which are priced from $182.40.
'Going online is a relatively cheap and efficient way to introduce a new brand, and is more practical and affordable,' said Ms Yip, 26, who started her company in 2007.
Still, she understood the need to have a retail presence and approached retailers like Anthropology in Raffles City Shopping Centre. 'We see customers checking out the quality in stores and returning ones would visit the website to purchase new designs. They are complementary and help to boost sales for each other.'
Her bags are also available at 77th Street in Tampines Mall, The Heeren and Far East Plaza, as well as Page One in VivoCity.
Last October, she got $50,000 from Spring Singapore's YES! Startup and is now rolling out a new collection and sourcing for overseas distribution.
But chances are, she will never consider setting up a boutique for her bags.
'The cost of retailing your products is higher compared to just selling online.'
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