If you want to get started in ecommerce, but have a limited budget, dropshipping is one of the most accessible ways to make money online. But what do you really need to start a dropshipping business? How much money do you need? Here’s a quick look at everything you’ll need to become a successful dropshipper…
Fake gurus everywhere are telling you that you can start dropshipping with nothing: no money and no skills. Learning how to start a dropshipping business, as with any type of venture, isn’t easy. Nevertheless, it’s a great first step into the world of entrepreneurship, and if you’re serious about your new venture, you can build a sustainable source of income in the long run.
If you’re contemplating dropshipping, you will learn in this article what you really need to start a dropshipping business. Let’s get started!
The most precious resource we all have is time. It’s a non-renewable resource you can never get back. As with any other business, dropshipping takes significant commitment and a long-term perspective. If you want to start a dropshipping business, be ready to invest heavily in time currency, as you will have to learn many things, to build a solid asset for the future.
2. Strong Determination
Whatever the reason for launching your dropshipping business is, If you’re hoping for a six-figure income from six weeks of part-time work, you’re going to be sadly disappointed. Remember that failure is the mother of success, and success in dropshipping, takes strong determination.
When things get in the way of reaching your goals, you may get discouraged, and tempted to give up.
You all have heard about Colonel Sanders, the founder of KFC. But did you know that he didn’t become a professional chef until he was 40, didn’t franchise Kentucky Fried Chicken until he was 62, and didn’t become an icon until after he sold his company at 75? Colonel Sanders failed 1009 times before succeeding.
Few businesses are overnight successes, and it takes hard work and a strong mindset to get things started and going strong.
The Roman poet and philosopher Lucretius expressed in his book ‘on the nature of things’, that by observing nature and her laws, we find out that nothing can be made from nothing. How much do you really need to start a dropshipping business?
You will need a small cash cushion in the $1,000 range to get your business launched and operational. You’ll need this for minor operating expenses (such as web hosting, domain name, marketing costs, suppliers,incorporation fees, and so on).
Be prepared to spend money, to make money, and If you don’t have $1,000 in your bank account, starting a dropshipping business is not a good idea, as you won’t be able to scale things up when it’s needed.
4. Business Entity
If you’re serious about your venture, you’ll want to set up a legitimate business entity. We’re not lawyers and can’t offer legal advice, but we can give you a rundown of two commonly used business structures:
This is the simplest business structure to implement but also offers no personal liability protection. So if your business is sued, your personal assets also may be in jeopardy. Filing requirements are minimal and you simply report your business’ earnings on your personal taxes. No other state or federal business filings are required.
Limited liability company (LLC)
An LLC offers increased protection of your personal assets by establishing your business as a separate legal entity. While the liability protection isn’t foolproof, it does offer more protection than a sole proprietorship. You may need to comply with additional filing requirements and will need to pay both incorporation and ongoing fees.
5. Business Checking Account & Credit Card
To pay for all the expenses associated with the business, such as hosting or products, you’ll want to keep your business and personal finances separate as much as possible. The best way to do that is by opening up a business checking account, and get a business credit card that is used for business expenses and dropshipping inventory purchases only.
6. Fast PC or Laptop
Can you reasonably expect to beat Lewis Hamilton in a F1 race, if you are driving a Honda Civic? No matter how hard you push on the accelerator, you’ll never be able to compete with him.
Having a fast PC or laptop is an essential ingredient in the online business recipe, as you will be doing multiple things at the same time on your computer, and you don’t want to spend too much time, waiting for your computer to load, and be responsive.
Again, time is the most precious resource. Personally, we’re using laptops with at least Core i5 processors, and 8GB RAM, because we prefer to drive in Formula one’s cars.
7. Stable Internet Connection
When you run a dropshipping store, everything you do is online. Having a fast and stable internet connection makes sure you do not come across any sort of interruptions while working.
8. Niche & Idea
Choosing a niche for your dropshipping store is one of the key elements for the future success of your business.
The products sold in your ecommerce store should all be related to each other in some way. This thematic consistency is called a store niche. Niche products often have a more passionate customer base, which can make selling to specific crowds easier by raising awareness for your products.
We strongly recommend choosing a niche that you know well. Ideally, you should be a fan of the products you’re selling. This way, you will have the necessary expertise when setting up your store, and you’ll be more likely to succeed because you have enough knowledge about the topic of the niche. Additionally, you need to make sure that the competition in this niche is not too fierce.
9. Domain name
A domain name is the address of your website that people type in the browser URL bar to visit your website. In simple terms, if your website was a house, then your domain name will be its address. If you are serious about your business, you should have your own domain name, and preferably use the .com extension as it is the most popular business-oriented domain extension for brands.
If you want to buy a suitable domain and make sure no one is already using it, you can try GoDaddy, one of the most popular and reliable domain name registrars.
10. e-Commerce Store
The next thing you need to start a dropshipping business is an ecommerce store. This will be the home where you send traffic, sell products, and process payments. If you want something that is easy and do not require any technical skills, Shopify or Big commerce are a good option. But if you’re looking for something that gives you more control, more possibilities, and will be cheaper in time, then WooCommerce or Magento, are solid alternatives.
We personally recommend WooCommerce, that will require you to install WordPress on a hosting, but will allow you to be fully in control of your business. Ecommerce platforms such as Shopify can shut down your store without explanations and there’s nothing you can do about that. You can imagine the tears, if it happens after years and years of hard work…
Choosing a dropshipping supplier is a critical step toward creating a successful dropshipping business. Without suppliers, a dropshipping business wouldn’t have any products to ship to customers and, therefore, cease to exist.
To find a decent supplier in the first place, you can start by doing a research on google, or by checking supplier directories. One of the most popular options for dropshippers is Aliexpress (a company owned by Alibaba), but you could choose any other marketplace for that matter. In the next articles, we’ll cover in detail how to find reliable suppliers for your dropshipping business.
12. Is that all I need to start?
In this article, we tried to cover what you really need to start a dropshipping business. In the next articles, we’ll cover in depth, what you’ll need once you start working on your business, such as a payment gateway to accept payments on your store, Google Drive to store all your documents, or a team of virtual assistants to help you scale your business.