Should you start a traditional or digital business?

Attending events up and down the country, it’s a question we often get asked by delegates looking to start a new business. While we can’t answer for everybody, in our opinion, starting a digital business is infinitely better than a traditional brick and mortar business.

Why? Well, read on to find out more.
With a traditional brick and mortar business, we are referring to stores that you see on the highstreet such as a supermarket, hair salon or restaurant. These businesses serve a vital function and are often part of our local business community but they are also high risk.

To set up a traditional business you firstly need to rent a location and pay the necessary insurance, business rates and fees. This can all add up to being time consuming and costly. You then need to install your shop fittings and source your inventory before you are ready to open. Factor in employees and you’re business is already starting from a huge cost base. This means you’ll need lots of customers just to break-even before you can even start to generate a profit.

Sure, you’ll benefit from passing trade and walk in traffic, but you’ll still need to spend money on advertising, marketing and promotion. Throw in the competition, both locally but also online and you’re often competing in a highly competitive environment with price sensitive customers.

These reasons are why we feel a traditional brick and mortar business is not for everyone.

On the other hand, a digital business is a better alternative for most people, both in terms of time but also cost. A digital business can be set up relatively quickly as all you need is a website and technically you’re in business. It is also much quicker as there is no need to rent a location, hold your inventory or even hire employees.

A digital business also allows you to modify and test different strategies quickly. For example, if you wanted to launch a new product but weren’t sure of the demand, you could create some ads on Facebook and drive traffic to the product page to see whether customers were willing to buy before you invested money in holding large quantities of stock.

So what type of digital business can you set up? Now there are lots of options when it comes to digital businesses such as ecommerce stores right the way through to digital arbitrage.

In our opinion, you should always aim to set up a business that has relatively high barriers to entry. This means it is difficult for someone to replicate and compete with you. The benefit of this is two fold. Firstly, you will limit the amount of competition you have, which is always a good thing. Secondly, you can command a higher selling price in the marketplace as you will be a specialist in what you deliver.

Here at iOB Business we help people launch their own Digital Agency where they can offer technology solutions to local businesses without any technical skills. To find out more about how we can help you, please hit the Talk to Us button up top to schedule a call.