Starting an Online Business in Singapore Part 1: Introduction
Step 1: Research, analyze and plan
The first step towards setting up an online business is to think of a viable business idea that caters to a market need. Your potential audience can be broad or niche but there must be a specific need that your business should target to fulfill. However, somewhere between an idea in your head and actually starting an online business, there needs to be intense brainstorming and planning which will ultimately determine your success or failure in the business. Proper market research, analysis, and planning can prove invaluable in determining your idea’s potential. It is important to assess the viability of your idea before you dive into incorporating your business and start spending your hard-earned money on the venture. Your research and planning should give you the information you need to either go ahead with your idea, fine-tune it, take it back to the drawing board or discard it.
Once you have done your research and analysis, you should come up with a realistic working plan of action for your online e-commerce business. Such a plan should address the following questions:
- Decide what you’re selling. Outline the key features and benefits of your online products or services.
- Identify who your potential customers are and how you will reach out to them. In other words, chalk out the sales and marketing strategy.
- Work out what product or service features have the best value proposition that you can deliver initially with your limited resources. Try to identify the minimal set of features or capabilities that will allow you to get your first customers. Make those features or capabilities your first product or service. You can always add more once the revenue stream has started; remember “perfect can be the enemy of good”.
- Conduct a cash-flow analysis and identify your start-up costs, operating costs, revenues, and profits. Stay conservative and do not be overly optimistic about your business prospects. Make sure you are able to identify and cope with your worst case scenario. In particular, plan your cash flows such that you can weather through your worst case scenario for a set period of time.
- Figure out how your product or service might fare against existing offerings. Analyze your competition and get a sense of how to price your product or service, how to target the right customers and how to make your company stand out, particularly in a crowded marketplace.
- As you assemble your business plan and answer the above questions, you will see opportunities to fine-tune your concept, avoid problems that could become disasters and ultimately increase your odds of success.
Step 2: Educate yourself on starting an online business in Singapore
Get an understanding of the regulatory landscape for your idea, you may have to comply with laws that may increase your costs, alternatively you may be able to obtain tax benefits or grants that can help your funding situation. The more informed you are, the better you can plan ahead, minimize business risks and improve your chances of success. We suggest that you start with reading the following four articles in our five-part series of starting an online business in Singapore:
- Starting an Online Business in Singapore – Industry Overview
- Starting an Online Business in Singapore – Regulatory Regime
- Starting an Online Business in Singapore – Taxation
- Starting an Online Business in Singapore – Funding and Financial Assistance
Step 3: Incorporate your business
Before you can execute your plan and begin operations, you must incorporate your business. Remember that your choice of business structure will determine your exposure to liability, your taxes, and your ability to raise capital and run the business.
Most entrepreneurs prefer to incorporate a private limited company in Singapore due to its numerous advantages; these include legal entity status, limited liability, credible image, perpetual succession, and tax incentives. Furthermore, registering a private limited company in Singapore is quick and easy involving just two procedures that can be completed within 24 hours in most cases.
Step 4: Establish necessary infrastructure
Depending on the product or service you plan to sell, you may need a supporting infrastructure. Infrastructure includes anything you need to make the sale and delivery of your products/services to your online customers. This can include facilities, staff, IT systems and business processes to support the functional areas of your business. Choosing the correct infrastructure that matches your business strategy enables your operations to run efficiently. The list below is not comprehensive but it is a good starting point for you to start thinking about the various elements of your infrastructure:
- Website Design and Development
- Register a domain name. To put it simply, your domain name equates to your identity in the online world. It gives your website its own unique web address. Naturally, it should be a name that can be recalled easily and one that is easy to spell and pronounce. The name should help consumers associate your company with its products or services.
- Find a hosting service provide for your website. Choose a hosting provider that provides prompt and quality customer support, uptime guarantee, generous disk space and bandwidth, high level of internet security, multiple platform support, and reasonable hosting fees. Amazon Web Services is a very good option in this regard.
- Design and develop your website. E-commerce sites, like any site, need to build traffic and turn visitors into customers. However, ecommerce sites also need to address other important issues such as product catalog, shopping cart, checkout process, payment processing, security, etc. Choosing the right ecommerce platform is one of the most important decisions you will make in your business. There are many cost-effective solutions that are available in this regard.
- Website Marketing & Advertising
- Website marketing is the process by which you bring visitors to your site. Often business owners tend to opt for online advertising in order to quickly draw in potential customers. However, the problem with advertising based marketing alone is that ads have no long term benefits. A more permanent marketing approach is to create valuable content related to your product/service that your target customers want. By offering great content you earn the trust of the visitor, you build up a network of followers who help to spread your content and brand awareness. This in turn adds to your online visibility and reputation. The content you create is permanent. Over time, search engines such as Google will send more traffic to the content you publish to your site.
- IT Infrastructure for Operations & Customer Support
- It is important to have a great website that is highly ranked in Google and allows your customer to easily place orders. In addition, you also need to have a very efficient IT systems for order processing and customer support. The level of sophistication of such a system will depend on your anticipated needs. Invest in a system that allows you to start small with minimum investment but can scale easily as your business grows. You have many options in this regard: you can (a) build and host your own system, (b) outsource the development and then manage the system going forward, or (c) use a hosted, software-as-a-service platform that is turnkey and externally managed. You should also explore investing in a robust customer relationship management and email management solution.
- Product/Service Fulfillment
- Once the customer has placed an order, you need to deliver the product/service to your customer as advertised. For this you need staff, space and potentially inventory stock. Make sure you are ready to deliver the products/services that you are advertising on your site – nothing kills a business faster than an inability to deliver what has been sold.
- If your online business is at a very small scale, you can explore the possibility of having a home office. Singapore’s Home Office Scheme is of particular significance in this regard. Under the Home Office Scheme, owners, tenants, or persons authorized to live in private or HDB (Housing Development Board) property are allowed to conduct small-scale businesses within their homes, as long as their business activities do not fall under the scheme’s negative list. Note that the premises must be used primarily for residential purposes with only part of it being used as an office. In order to set up your home office in Singapore, you need to register with the Housing & Development Board (for HDB premises) or Urban Redevelopment Authority (for private premises) and comply with the terms and conditions of the scheme. Note that in order to qualify for the Home Office Scheme, your business must be registered with the Singapore Company Registrar, ACRA beforehand.
- Bookkeeping and Finance
- Plan and manage your business finances carefully. Launching an e-commerce business will likely require an investment of several thousand dollars. Starting an online business is not just about setting up a website but rather involves investing in startup costs, marketing, advertising, technology, inventory, staffing, office rental, etc. There will be ongoing operational costs and your ability to plan and manage the cash flow will be very crucial to the success of your business.
- You can manage your bookkeeping and finance administration activities (a) in-house, (b) through an outsourcing partner , or (c) through a hybrid of the two. If your ecommerce platform is tightly integrated to your accounting system, your bookkeeping functions may be greatly simplified. If you use separate systems for your website, order management and accounting, you may need more help for data entry to ensure that the information is properly entered and managed in all systems.
On a Final Note
Electronic commerce presents a tremendous business opportunity; however, starting an online business and making it successful requires time, energy, skills, money, and following the legal framework. To run a successful online business, you must be willing and able to wear many hats. This is not a small undertaking so you need to plan and prepare in order to be successful.