Online vs Brick-and-Mortar Businesses

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by Advice Chaser
by Advice Chaser

If you had started a small business fifty years ago, there would be no question how you would begin. You would start in a building, either your home or a shop, and connect with customers there. While there was some ability to market products by mail, the vast majority of business was done in physical stores. Today, you have the choice of starting an online business or a brick-and-mortar shop, or even both. Which fits with your goals and expectations?

person handing a package over a shop counter

Brick and Mortar

Having a shop customers can visit in person is the traditional, well-traveled path. It’s also the only choice for many business types. If you’re hoping to cut hair, serve dinner, or rent canoes, people will only patronize you if you’re conveniently located. You will need a shop in an area that’s easy to get to, ideally in a location that will be seen by potential customers.

Brick-and-mortar stores have a few essential expenses. First, location matters, so you will have to pay to rent or buy a shop in a good area. Second, you’ll need to keep your store staffed during open hours. That may mean you stay there yourself every day you’re open. Or you may need to hire one or more other people to help keep it open. The longer you’re open, the more customers you can serve, but it will come with additional labor needs.

Just because your business is a brick-and-mortar shop doesn’t mean you can ignore online marketing entirely. At the least, you  need a way customers can find you when searching online for local businesses. A website is ideal. In that case, you’ll need to pay for hosting, and you may wish to have someone design a nice page. Some businesses have only a Facebook page or a listing on Google Maps. Remember, though, that a more appealing online presence can drive more business. Keeping an eye on your online reviews and responding to customer questions can do a lot to bring people to your physical store.

Online Storefronts

On the other hand, many businesses can be just as easily operated purely online. For instance, if you are selling a product, you could mail it instead of having people come and get it. This saves you rent on a physical store and opens up a national customer base. You can run the business out of your home. Or, if you need more space, you can rent an office or warehouse space in a less-desired area. Since you don’t need to keep a storefront open, you can reduce labor costs by only hiring the number of people it actually takes to fulfill orders.

However, remember that your online shopfront is just as important as a brick-and-mortar store. This is the place where customers have to be tempted into making a purchase, so it must look professional and enticing. Plus, you need a secure method to perform transactions, so that customers will know their information is safe. You can save some time and money here by opening a seller’s account on Amazon or eBay, but you will keep more of the profits if you host a storefront yourself.

Discovery is a crucial problem for online businesses. If you had a brick-and-mortar store, customers would find out about you by driving by or searching local pages. But as an online shop, you’re competing with every other online business selling the same product in the entire country. That includes giants like Amazon. So how will you even let customers know you exist? Generally, this involves paying for online advertising as well as maintaining a consistent online presence. You might try to build a social media following or have a blog that regularly updates. These can reach your customers even if you aren’t on the top of search results. Plus, personally interacting online reassures your customers that you are a real person and not some kind of scam.

Can You Do Both?

Almost all businesses have some online and some physical components. Brick-and-mortar businesses still have online listings, and online stores have a physical address somewhere. But what about truly exploiting both options? This can be ideal for a business that sells items people might like to browse in person, but which could also reach a larger market online.

If you do this, you’ll have to foot both sets of expenses: both the cost of keeping a shop open and the cost of making yourself known online. The labor of self-promoting online while also keeping the brick-and-mortar staffed might be more than one person can do, in which case you’ll have to hire extra people. However, as your business grows, it might be a natural way to expand your reach beyond what only one model could do for you.

Large businesses tend to use both models, to the advantage of each. For instance, a DIYer might search online for where to find the part she needs, then get in the car and go buy it. Or a clothing shopper, finding the size he wants out of stock, can whip out his phone and order it while still standing in the aisle. Having a full online catalog while also keeping the brick-and-mortar store stocked can be a challenge, but it can bring you more business.

How to Choose Between Online and Brick-and-Mortar Business Models

While some types of business lend themselves only to one business model, plenty could easily be done either way. So how can you choose?

If your product is something commonly purchased by most people, physical businesses often make more sense. 85% of purchases take place at brick-and-mortar stores. As long as you’re in a reasonably populated area, your customer base should be big enough to support you. But if your product is more niche, like antique buttons or herbal remedies, you might need to tap into a national audience to get a significant amount of business.

Some items are more appealing in person, where customers can see and touch them. For instance, people often want to try clothing on before buying. Scented candles or bath products are popular to sell in person because customers want to smell them. And some stores are just pleasant to be in, so you’re selling not just a product but the experience of buying it. Examples include book stores or hobby stores, where you can help drive traffic by scheduling events at your store.

Do You Have a Mentor?

Running a business, especially as you’re first starting out, can feel lonely and unsupported. It’s hard to make decisions without any guidance. A business financial advisor can be the mentor who helps show you the available options and talk you through your decisions. To reach the right advisor for you, contact us today.

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