If you are considering starting a business, one of your biggest decisions will be whether you want a traditional brick and mortar location, or do you instead want to join the growing number of entrepreneurs who start online-based businesses. While initially, it may seem as if an online-based business will be much easier to start, that is not always the case. Since each of these businesses have various pros and cons, here are five key differences you should take into consideration.
When you have a brick-and-mortar business, you’ll need to have a physical location where customers can purchase your goods or services. If you decide to pursue an online-based business, you can conceivably start this from your kitchen table and keep your inventory in a spare room of your home, at least until your business begins to grow. This makes a large difference in the monthly cost of running your business. If you have a brick-and-mortar business, then monthly expenses include rent, utilities, property taxes, cleaning expenses, etc. If you have an online business, monthly expenses include website hosting and maintenance, online advertising, and content creators. However, brick and mortar businesses tend to require the online website, advertising, and other services as well, which
At a brick-and-mortar business, your customers will generally pay with cash, checks, or credit cards. In addition to the type of transactions, you also need a place that will organize cash for giving change or an iPad for swiping cards. As for an online-based business, they can also often use checks or credit cards, but can also use other payment platforms such as PayPal. This doesn’t require any physical software, however, you will need to leverage software that works with multiple payment portals if you want to take multiple forms of payment. Should you want to be very innovative with your payment options, your online-based business could also be set up to accept cryptocurrency. The monthly fee for these software services or payment portal setups is typically less than that of the physical P.O.S. system that is typical for brick-and-mortar businesses.
When you have a physical location for your brick-and-mortar business, you have many marketing options at your fingertips. For example, you can use plastic displays when you are running a sale on certain products, and can also rely on television and radio commercials if you desire. The use of physical displays such as the ones from Plastic Displays And Fixtures Co. Inc. can be customized to match the aesthetic of the business design. It can also be easy to switch out the sales or advertisement by replacing the featured poster in the display. For an online-based business, your primary form of marketing will be social media and digital advertising, both of which are becoming more popular even with traditional businesses. To change out the advertising online, you’ll simply replace the advertisement running on each platform with the new one or by creating a new campaign that reaches a different audience.
If there is one advantage many brick and mortar businesses have over online-based businesses, it is their ability to offer immediate customer service. By having a physical location, you can resolve a customer’s problem on the spot. This is typically a question about the products or the compatibility of the products with different problems the customer is trying to solve. Oftentimes, online businesses include the answers to frequently asked questions, but that doesn’t mean that the customers will read that information or are able to find that information. These are typically questions that customers want to be answered before purchasing, however, which means that it may be a lost sales. With an online business, taking longer to resolve a problem could have the customer simply moving on to another website.
Though generally brick and mortar businesses have higher operating expenses due to paying rent, salaries to employees, property taxes, insurance, and other expenses, online-based businesses also have various expenses. The most common ones include shipping and web hosting, both of which are becoming more expensive. When it comes to ensuring the customer gets the attention they need, brick and mortar businesses need at least one employee for every moment that the business is open. Since employees need bathroom breaks and may get sick, you typically need at least two employees. Not to mention the size of your business place, which may need additional employees to get full coverage of the square footage.
One of the biggest differences between brick and mortar businesses and online-based businesses is the operating hours for the business. Since brick and mortar businesses require employees to service customers. Because it can be expensive when there are few customers coming through the door, there are typically set business hours when customers can come to your location. With an online business, everything on your website can be available 24/7. Even when someone isn’t actually working, an online business can still earn money for no additional cost to the business. For example, if your online business does custom wood carvings, someone can still come to your website, review your work and order a piece while you are sleeping.
Since each of these types of businesses has key differences between them, you’ll need to take each into consideration before determining which option will result in you achieving entrepreneurial success.