Managing a Small Business
Where to Launch Your Business: Online or In Person?
5 Entrepreneurs Share Their Startup Stories
For budding entrepreneurs, a major question is whether to launch online or open a brick-and-mortar location.
John Olson asked himself that 17 years ago when opening his pond and water garden supply business, Graystone Industries. Retail space would have cost him about $1,200 monthly, with total startup costs estimated at $5,000-$10,000.
Olson opted to go the online route instead by investing $500 for a site and $600 in inventory. "The online store provided a safe, low-cost way to test my market and my product mix," he says.
Now Graystone Industries has a showroom/office and a warehouse, each with a retail component, in addition to the original website. It's projecting about $2 million in sales this year.
Here's how other entrepreneurs considered the online vs. brick-and-mortar question.
A Tactile Experience
It was 2009, and Eyal Levy thought an online strategy for selling what he calls "new age bean bag furniture" would be risk-free. A few months later, the now-CEO of Yogibo realized he needed a brick-and-mortar retail space.
"Our products are very tactile. To best understand Yogibo's value, people need to physically experience it," Levy says.
Today, the company has 18 retail stores with five more on the horizon. Events and wholesale channels allow for additional sales.
"The online model reduced our expenses, but it had a similar effect on revenues," says Levy. So while brick and mortar requires a higher capital investment – and mall leases have their own risks – he says he has no regrets.
Emily Dell considered a traditional retail location when launching her fashion boutique over Memorial Day weekend 2014. But instead of worrying about rent, utilities and a lease "that I'm locked into," she chose an adventurous twist: a mobile boutique.
"I'm able to test new markets and meet new customers each and every day by driving 25 miles north, south, east or west," Dell says of her New Jersey-based business, Runaway. The broad exposure has allowed her to offer personal styling, closet organization and fashion parties to the people she meets in person at various locations.
On her website, customers can make online purchases or find out where they can meet her to shop in person.
The decline in gas prices has offset unanticipated truck repair costs, she says, with sales topping $30,000 in the first six months.
Remote Fitness Training
While studying exercise science at the University of North Carolina at Chapel Hill, Jazmin Truesdale became a certified personal trainer to earn extra cash. She spent about $150 a month on gym memberships, so she could use those locations to train clients.
Work was steady, but she says eventually felt she was earning as much as she could from that model and became frustrated with customers who would give up on their workout plans. So after earning two business degrees, Truesdale launched a virtual gym in August 2014.
Jazmin Fitness now boasts more than 10,000 members who spend an average of $9 per month for nutrition and exercise packages. "Often, people don't necessarily need a trainer, they just need guidance," she says.
Truesdale spends $25 a month for website hosting, and she handles much of the web content, marketing and branding herself. She sees her potential for customer growth as massive because her online model is virtually limitless, she says. "A lot of companies fail because they can't cover their overhead. I will never have that problem."
Rentals From a Distance
Vacation rental management businesses often showcase properties online. However, Janet Trogdon struggled with the potential service impact of having no public office for her small business, Niagara Holiday Rentals, even though the overhead would have been $1,000-$1,500 a month, she says.
In 2011, Trogdon launched a website from home instead, and successfully rented two vacation homes on behalf of their owners. By year's end, when her husband became a partner, the business was brokering 15 rental properties and turning a profit. That number reached 30 in 2014.
When necessary, the Trogdons meet guests at the rental properties, a service strictly-online businesses can't match. The Trogdons say they can charge lower fees than other management companies because their expenses are lower. To make up for lack of a physical "face" in the community, the couple wrapped their vehicles with marketing graphics.
An unexpected challenge has been separating work and family life, since subcontractors and owners sometimes tend to just drop by their home, says Trogdon. "Our dining room table has turned into a board room table." But she also says they plan to invest $20,000 in a backyard "tiny house" office in the future.
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Photo: Courtesy of Yogibo | Melissa Ezarik is a Connecticut-based writer and editor focused on personal finance, career/workplace issues and education. Her articles have appeared in Working Mother, Smart Money and Good Housekeeping, among other publications and websites.