How to Survive…Running an Online Business

How to Survive Running an Online Business

Now when I say “online business” I’m not talking ‘Yahoo’ size company.  I’m talking one-man-band, I love crocheting so I decided to make some scarves and sell them on Etsy for a fiver each, sort of deal.

A few years ago I got into crafting.  I got into it BIG.  I made jewellery, candles, I did glass engraving, etc and I LOVED it.  My dad thought some (SOME) of my stuff was pretty decent and he jokingly said “you should set up a Facebook shop”.  Now I’m really really anti-Facebook so the whole “Facebook shop” thing was a total no-go for me, but I remembered my sister saying she’d bought some cool, quirky handmade stuff off of an online handmade marketplace called ‘Etsy’.  I Googled it, checked it out and signed up.

I started off only selling two things.  A ‘Beauty and the Beast’ inspired necklace and a ‘Resident Evil’ inspired necklace.  It was around October and at first I was getting maybe three hits a day on my shop.  I’d designed a new logo, created a blogsite and blasted social networking with PR but it all seemed pointless and I had one sale in two months.

Late November came around and I was watching TV one night when my phone made that magical “cha-ching” noise at me, that meant I had sold something on my Etsy store.  I said a little huzzah and checked my phone.  Someone had ordered a Beauty and the Beast necklace.  I rushed upstairs to my makeshift office and began putting the order together, leaving my phone downstairs on the table.

Whilst gluing together the various pieces of the necklace, I heard my phone “cha-ching” again.  I gave myself another little hi-five and continued on.  Within seconds, my phone went “cha-ching” another five times.  I had made seven sales in one night – a personal record for me up to that point.  I was buzzing with excitement.

After that night my sales got higher and higher every day, with me making 200 sales in one month and running out of raw materials.  I was rushing in from work and making jewellery, packaging it, putting invoice notes together and shipping it off at the Post Office.

It wasn’t too long before I thought, “I should probably put some sort of invoicing system together to account for incomings and outgoings”.  Invoicing added an extra gruelling hour to my already long day.  I was running on empty before long even though my parter and my dad often helped me out, packing and making little necklaces.

It paid for Christmas that year.  When the orders quieted down a little I began to enjoy it again.  I’d paid someone to make me a professional logo and I’d had some business cards and flyers printed.  I had several requests from people who attended social events to send them samples which they could wear (which I did and this did increase the sales).  I added more stuff to my inventory and was featured on a fashion blog one night and one particular product’s sales went through the roof.

All of this just seemed good fun and a good way to earn money doing something I loved.  I did not expect any negatives.

When I got my first negative feedback from a customer I was heartbroken.  I knew you couldn’t please everyone and not everyone looked properly into what they were buying so, despite my putting the product sizes in the job description, I was marked a one star out of five for my necklace being “too big”.  It effected my overall store rating and my sales went down.

I figured, hey, this is normal I guess, it’s a small hiccup.

I started browsing the Etsy forums and came across one about taxes.  My heart sank again.  I hadn’t even thought about taxes.  In my head, I paid Etsy a fee, part of that fee was surely my taxes.  I was wrong.  And because I had a full time day job, I earned over the amount where I wouldn’t have to pay additional tax.  I had to go all the way back through my invoicing, work out how much I’d earned, how much I’d spent, what my overheads were, register as self-employed (and trust me, HMRC don’t make it an easy journey for anyone – don’t even bother ringing them unless you want to wait over an hour in a queue only to be told by the person who answers the phone that they basically can’t help you), and fill out a self-assessment form to see how much tax I owed.

I had earned roughly, once deducting all outgoings, around two thousands pounds that year.  HMRC told me I therefore owed six hundred pounds in tax.  To be paid outright or deducted from my salary from my work taxes.

I settled everything and kept strict records from there on out.  I filled out my self-assessment forms religiously and did my invoicing every night.

One night I received a message from Etsy saying that they had removed one of my products due to a copyright infringement.  I thought this was odd since I wasn’t using any images that belonged to anyone, only an idea inspired by a movie.  When I checked the marketplace, there were hundreds of other sellers offering almost identical products and theirs were still on sale.  Following that, several more of my products were removed for copyright infringement.  I then started receiving emails with threats of court summons if I ever put the item back up for sale.

The following Christmas my sales went back up again.  I made the unfortunate mistake of using Royal Mail at Christmas and around sixty percent of my items were lost in postage.  I had sent them all via tracked mail so could claim the compensation back for the loss from the postage company, but that didn’t help my customers when their Christmas presents didn’t arrive for Christmas.  My ratings plummeted.  I tried to claim the losses back from Royal Mail but was fighting a losing battle.  It was harder to claim back £4.95 than it was to climb Mount Everest.

I was basically rearranging deck chairs on the Titanic.  I closed my store two years after opening it.

If I had really looked into all the implications and how crazy the law and the world had gotten today, I probably wouldn’t have opened it at all.  If you’re thinking about setting up shop online, please, please, remember the following and don’t make the same mistakes I did:

#1 – Copyright is one massive grey area – you might not think something you have belongs to anyone else, but someone else might feel differently.  Try and make everything from scratch and make it unique.  Use nothing but ideas which have come out of your head and your head alone.  Big companies pay people big bucks to filter out people who are using their logos, images, sounds and designs on their products.

#2 – Get to know the HMRC – I’m not saying take them out on a date and buy them wine (even that probably wouldn’t placate the miserable bastards there) but make sure you register as self-employed if you are earning over the set amount (check this out particularly if you have another full time job because there’s not a great deal you can earn before they start taking it all off you) and make sure you familiarise yourself with the self-assessment tax returns forms (or if you can afford it, get an accountant to do it for you – I couldn’t afford that so I just did it myself and I won’t lie, it was one giant pain in the ass).

#3 – Invoicing is key! – don’t do what I did and leave all your logging of incomings and outgoings until you’ve had your business six months.  You’ll find yourself sat in a massive pile of printed out order confirmations and Post Office receipts, trying to match them together and put them in date order.  It’s time consuming, mind numbing, boring and extremely stressful.  Try and set up an order system from day one and update it every day or at least every other day.

#4 – Have a professional looking website of your own – it doesn’t cost very much to buy a domain name and even if you only have your domain name linked to your Etsy store, people are more likely to remember your store name if they’re typing in a dedicated link (e.g. it’s easier to remember than  I bought a package when I bought my domain name so I got a website free with it and made that look pro too so I had two ways to generate income.  People could buy directly from my website or they could buy via my Etsy store.

#5 – Hammer social media – it really does improve your sales.  I had my partner Tweeting every half hour about a product in my store and occasionally these Tweets got noticed by bloggers who linked to my store and my sales went through the roof.  The days we didn’t Tweet or put anything on Instagram there was a significant drop in views and sales.  There are several programs I found that you can actually program to automatically blast social media for you every hour, half hour, day, whenever you want, so if you’re at work, you don’t need to worry about PR – these suites have it covered for you.

#6 – Use good pictures – let’s face it, if you’re trawling through masses and masses of stuff to buy, you don’t go into every single item and read the descriptions.  You pick the pictures that look best and click them.  I found natural light resulted in the best photo and my phone served as a decent enough camera (I have a Google Nexus 5x with a 12mp camera).  I also bough a small photo studio which made a decent improvement to my photos and I’m fairly sure it was only around twenty pounds on Amazon.

#7 – It’s the little details that count – I used to hand-write little notes that went with my invoices when I sent packages out.  I felt like my customers might feel that I’d gone to that little bit extra effort (which I had) to make their order more individual to them.  I also handwrapped some of my products in coloured tissue paper with little bows and stars.

All this being said, it’s a tough market out there so be prepared for a lot of hurdles.  It’s fun whilst it lasts but it’s difficult to do with another full time job.  Anyone out there who fancies it, I wish you all the best of luck and hope your store turns out epic!

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