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The Frugal Startup: How to Minimize Costs for Your Online Business

by Jill Foster on April 7, 2009

rebecca-malik-pic

Guest post by Rebecca Malik, president of online contemporary furniture business 17th and Riggs. Rebecca thrives off of beautiful home design and explores related conversation at her blog The View from 17th and Riggs. She lives in Washington, DC with her husband (…and growing pet family). Rebecca welcomes your visit at her blog or www.Twitter.com/RebeccaSM.

Laser-like skill at cutting costs
My husband often chides me about my frugality but I know deep down he is grateful that I am so darn cost conscious. Of course, when I was preparing to launch my new company, an e-commerce site called 17th and Riggs, I applied my usual laser-like cost cutting measures to every step.

I’m passing these on in hopes that you’ll be able to utilize them to keep your start-up costs to a minimum. In addition to those I’m listing, I hope you’ll share your tips and cost-saving techniques.

(image Vintage Coupon by Ha! Art By Heather)

Starting your e-commerce website: lessons learned from cookie-cutter templates
I started my online furniture company with a basic hosting package and a template. I took advantage of a special offered by my hosting company that waived both the set up fees and the first month’s fees for my e-commerce hosting package and merchant services (to process credit card payments).

I customized the template as much as possible given my non-tech background and created a logo using basic software I already had (Paint and Word).

After uploading and entering the detail for my various products, it was clear the cookie cutter template did not reflect the level of design and quality of the furniture I was carrying.

I simply couldn’t expect someone to visit my site and feel confident enough to invest in a piece of furniture or even trust me with their credit card information.
Ultimately, I knew I wanted a site that reflected my style (and was an online home for my business that made me proud). Using the following tools, I have been able to keep my costs low while taking my site to the next level.

Cost efficient tools that helped improve my website & business.

  • Craigslist: for finding local service providers
  • It’s an unintimidating way to find local service providers of any kind. However, you can expect to get responses from across the board in terms of professional level and pricing which can be overwhelming. You can overcome this by asking plenty of questions. It also helps to have a very clear idea of what you want and to know the basic technical jargon to communicate this (I recently found a very helpful Adobe Flash tutor by placing an ad on Craigslist).

  • Elance: for finding web designers for your site
  • Post your design or web development project on this site and you will receive proposals from interested and experienced professionals around the globe. You can view portfolios and read reviews to thoroughly compare vendors before moving forward.

    As added security for both parties, funds are held in escrow by Elance and released at the completion of each phase.

    The vendor I ultimately chose was willing to do a quick mock-up of my site prior to officially getting started. There are several other companies similar to Elance that you can look into as well, like Odesk and Guru.

    Knowing what you want: a note on my logo re-design
    It actually was included in the project scope by my Elance vendor. Since I could describe exactly what I wanted [while working with that vendor], I was able to avoid commissioning another vendor i.e. a graphic designer at that point.

  • Social media: for expanding your network

  • Friends and associates can be great sources of referrals. Even still, utilize the power of social media tools like Twitter and Linkedin to expand your reach (and ideally, garner recommendations from a broader scope of knowledgeable folks).

  • 99designs: for designing future iterations of your logo

  • I’m considering sources that poll the creativity of a broad range of designers, such as 99designs.com. Similar to Elance, you simply register your design need on the site along with the amount you wish to pay. Then interested designers submit options for you to choose from.

  • Doba: for drop-shipping product
  • I keep my inventory level at an absolute minimum by taking advantage of manufacturers that are willing to ship directly to customers i.e. drop-ship. I don’t personally work with services like these, [but to relay another resource] Doba is a source of products for drop-shipping. For manufacturers that do not drop-ship, I contract with a warehouse to receive and store these products and fulfill my orders.

    A note for smaller businesses looking for a good warehouse partner
    If you are starting out on a smaller scale it is a bit trickier to find a good partner since many of these warehouses are tailored to working with large retailers (or those moving lots of smaller goods such as electronics and books). However, several [warehouses] that I found were happy to work with small firms such as mine.

    Be sure to ask for a full overview of their services and charges as they can vary significantly.

  • Research SKU issues: for storing & shipping product
  • I actually stopped my partnership with Shipwire because of their imposed minimum quantity per product SKU number. And since the nature of my product requires I am able to ship and store individual units, I switched to a company called We Fulfill It — who ships any quantity of product needed.

    Remember! seek the best customer service possible.
    I’ve got to say that We Fulfill It is simply outstanding in terms of customer service as well. Ideally, any company you choose will be able to guide you in how to ship your items in the most logical, cost efficient way and pass on their special shipping rates.

Of course, cost is only one of a variety of factors you will need to consider. The real focus should be on quality.

Investing time into finding the right options for your company upfront will give you a solid foundation on which to build your business.

Coming soon: social media marketing ideas for your business
I’ll discuss some social media and marketing ideas in a follow-up post here at Women Grow Business. Until then, do you have any cost-cutting suggestions or tools that you used for starting your business?

Please share!

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