Virtual Business

When people are interested in starting a virtual business, what are three things they must consider?

A virtual business, or making money online is as easy or as hard as you want it to be. You could start by drop shipping, affiliate linking, or similar. You can also start a newsletter business (crazy money these days) if you have something valuable to say

Or you could be like me, drop 350k on a software business, and completely rip your hair out in the process.

In reality, all virtual business is hair-ripping-out business, I don’t care what the Twitter business bros are telling you. It’s hard, dig in and you need to work your ass off.

And wait. Oh, did I mention that?

The most insane thing about social media businesses is the amount of time people spend doing videos for instance and how many years it takes for some to become successful. Mr Beast famously made a video and sent it to himself five years to open and watch. In it, he is procrastinating on a high school test or something and he talks about how he hopes he has a million followers by then. Little did he know it would be 100x that (plus)

But the road to virtual business or making money online. A virtual business is one that is run primarily online rather than a physical, or brick-and-mortar, office. 

Starting a virtual business can be an exciting venture, but it's crucial to approach it with careful consideration and planning. Here are three important things to consider:

Business Model and Value Proposition

Product/Service Viability: Is there a demand for what you're offering? 

There’s nothing like a virtual business that doesn’t have any following. There you are in the middle of nowhere on the internet, just you and a (literal) Google of information. How do you stand out when there is no demand for your product or service?

The Short answer is Google ads but even that is enormously expensive and not a sure shot.

So conduct what is called “market research” to validate your idea and understand your target audience. Market research is a fancy way of saying who buys similar products or services or the things you will offer. It’s an important part of the process. 

Being First To Market 

Be careful here, this deserves a whole subject. If you have a unique take on an idea that needs to be patented, being first to market to raise a boatload of cash sounds promising- and not easy. If you are like me with just a tiny buttload of cash in the beginning, then being first to market is hard. Believe it or not- I have been there. When you have to describe your product more than once and someone doesn’t get it- you know you are in trouble.

Monetization Strategy: How will you make money? 

Charge subscriptions? Downloads? Memberships?

Scalability

Determining the scalability of a business involves assessing how well your business can grow in terms of revenue, customer base, and operational capacity while maintaining or improving profitability and service quality. Here are key factors and steps you can take to evaluate the scalability of your business:

• Market Size and Demand:
• Assess the total available market for your product or service and determine whether it can support growth.
• Understand the market trends and demand scalability; is the demand increasing, and can it accommodate a larger supply?
• Business Model Analysis:
• Look at your current business model and determine if it can handle increased volume without a proportional increase in costs.
• Consider whether your revenue will continue to outpace your costs as you grow (operating leverage).
• Infrastructure and Technology:
• Evaluate whether your current infrastructure, including software, hardware, and technological systems, can handle an increase in transactions, customers, and operations.
• Determine if your technology is easily upgradable or if it will need a complete overhaul to support growth.
• Operational Processes:
• Analyze your operational processes to see if they are standardized, documented, and efficient enough to be scaled up.
• Look for bottlenecks or inefficiencies that could hinder scaling and address them.
• Financial Resources:
• Review your financial situation to see if you have the capital required to fund growth, or if you can access necessary financing without undue strain.
• Calculate the cost of scaling and the projected return on investment (ROI).
• Supply Chain and Logistics:
• Assess the robustness of your supply chain and whether your suppliers can handle larger orders.
• Examine logistics and fulfillment capabilities to ensure they can grow with your business.
• Human Resources:
• Determine if you can scale your team and whether your human resource management is systematized.
• Consider if your current and future employees can be trained and managed effectively as the company grows.
• Legal and Compliance:
• Understand the legal and regulatory implications of scaling, especially if growth involves moving into new geographic areas or product lines.
• Customer Service and Experience:
• Ensure that you can maintain or improve customer service quality as your business grows.
• Product or Service Scalability:
• Assess if your product or service can be mass-produced or delivered at scale without decreasing quality.
• Consider the potential need for product adaptation or evolution as scale increases.

Competition

Who else is doing what you’re planning to do, and how can you differentiate yourself? Analyze your competition and find a unique selling proposition (USP).

Technical Infrastructure and Tools: AH here is where the rubber meets the road, or in the virtual world, where the silicon meets the er- well you know what I mean. 

Website and E-commerce Platform: Choose a reliable platform that suits your business needs and offers a good user experience.

Starting a virtual business is like starting an in-person business but you must understand the tech that will be the infrastructure, have a partner that does, or have a team that does (that you trust and can deliver). 

For instance, for those back in the early days of Etsy, people depended on one site to market their product, but it happened to be THE site. This way, they could spend time on their widgets and make them great. But if you were to market your own site with the widgets on it, that would be a tall task indeed.

Finding a virtual business that fits your desires is rewarding and thrilling as well as hard work. But by learning the ropes early, failing early and often but rebounding, you can continue to grow, sustain, and become more successful.