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Brick and Mortar vs Online Businesses

I’ve never run a brick and mortar business before, but I’ve had the fortune of knowing several people who have. In this post, I’m going to discuss the pros and cons of brick and mortar versus online businesses.

Brick and Mortar

Brick and mortar businesses have been around since society’s existence and offer many advantages against an online business, as well as some drawbacks.

Location Based Marketing

One of the biggest advantages of owning a brick and mortar business is your physical location actually serves as marketing in and of itself. In other words, if you pick a good location, people will drive or walk by your store or business. For many businesses, the location of the business combined with good word of mouth is all the marketing they need.

The two big questions you need to ask yourself is (1) what location would be good for my business and (2) how can I make my products or services appealing enough to customers so that they will spread the word.

Cheaper rates can be found for locations that have less traffic, so you will have to determine whether or not your business will benefit enough from a good location to justify the cost.

Legitimacy

Having a physical presence increase the legitimacy of the business. People are more willing to trust businesses that have a physical place that they can walk into. Additionally, being able to speak with your potential customers face to face can be helpful as well.

Higher Startup Cost

Rent and employees can lead to much higher startup costs for brick and mortar businesses. If you are just starting out, the perhaps you should consider trying out lower cost alternatives to test the market.

For example, if you are offering dance lessons, rent out a space within another facility. One successful dance instructor in Philadelphia rents out space at a fitness center, which is less expensive than renting out a dedicated studio.

For physical products, consider starting out with a kiosk or a flea market.

Long Hours

Another disadvantage is that brick and mortar business owners usually work super long hours, at least at the beginning. The key to avoiding this is to be able to hand off responsibilities to your employees and trust them to make the necessary decisions.

Web Based Businesses

I love web based businesses because of their lower start up cost and the ability to reach tons of people around the world.

Lower Startup costs

Low startup cost is a good reason to get into online business. You can get a simple website up for a few hundred dollars. In fact, you don’t even need a website to get started.

Elance, Ebay, and Amazon are just some websites where you can sell products or services without any large upfront investment. They are inexpensive to try and if you fail, then you didn’t risk that much upfront to begin with.

Work at Home

Working at home is another great perk of owning a web based business. Not having to commute saves a lot of time. Even if your commute is short, it usually takes you an hour or two to prepare and then go to work and back. Working at home offers conveniences and freedoms that you don’t get from running a brick and mortar business.

Marketing Intensive

One of the biggest drawbacks is that you cannot benefit from people finding out about you through a physical location. You need to market your services, products, or website or else no one will know you exist.

This will require you to learn about things like SEO, pay per click advertising, affiliate marketing, and various other methods of online promotion. Forming relationships with other people online is also beneficial.

If you want to start an online business, come up with a plan to market it. I’ve seen many people build websites and do almost nothing to promote it. Coming up with and executing an online marketing plan will be crucial to your success.

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About Brian Lang

I've been making a living online since 2002, mostly through e-commerce sites and content sites with advertising. Through the years, I have also learned a lot about other types of businesses and helped other people with their business problems.

Comments

  1. Hi Brian Lang,
    Thanks for another informative post. Where else could I am getting that type of info written in such a perfect manner? I’ve a project that I’m simply now operating on, and I have been at the glance out for such info.

    • Brian Lang says:

      Hi Shuvro. I wrote this article from personal experience and knowledge, but you can also research on the web.

  2. Great to know.

  3. hi brian i am setting up new online travel services website.i am willing to help people in 3 big cities of pakistan and people elsewhere where i can manage and.why i say 3 cities is because i have lived there for at least 3-4 years or more.i want help regarding marketing as well as any certain approach to adopt or reject. i plan to make my website & facebook page for the purpose and post on forums having any marketing potential.
    am i on right track?
    what would you like to suggest or add if may say so….

    • Hi Ihsan – that’s a big question. Basically, when I start a business, I look to make sure there is competition already so I can be sure there is demand. Then I see what they are doing and create a similar marketing strategy. Hope that helps.

  4. 3 biggesst cities i have worked/studied in lived for atleast 4 years so i know the people&dyanamics

  5. Starting and building an online or traditional ‘bricks and mortar’ business can be very problematic. It will always be a numbers game online and whatever marketing methods you choose to leverage there will always be positives and negatives. Starting small can reduce risk, but reduced risk inevitably leads to reduced returns. Arguably, the greatest relatively recent advancement in business (online) is the ability to use tracking and analytics which allows for a greater ability to scale a successful online business, but competition is very high in some verticals.

  6. Brian

    I currently work at a brick and mortar as the IT guy and the owners offered me to start the e-commerce side of the business. How would you suggest costs and revenues be split with them owning the brick and mortar, inventory, labor cost and cost for e-commerce product. I would develop the e-commerce site, marketing, develop fulfillment and drive all e-commerce business.

    • Brian Lang says:

      Hi Tim. There’s no simple answer to that and it would be up to you to decide. I would calculate all costs including your own time and figure out a profit margin that is mutually acceptable to both you and the store owners. You will also have to take into consideration the store owners financial position and how excited they are about the project.

  7. I love this! You took a complex comparison and broke it down to the basics. I hope this will help people who are considering starting a small business. I know that I love my small businesses!

  8. It seems like millennials are more attracted to online businesses and may be overlooking service related businesses that are right in front of their face. I hear a lot of stories of people who spend hundred of hours working on Internet businesses that never make more than 4 figures a month. Sometimes you can find success in the mundane, service industry

    • Brian Lang says:

      Thanks Steve! Definitely true and I know a few people who have done well recently with traditional offline businesses.

  9. Brian Lang thank you so much for the info. I am turn between E- and offline spice business. I have never owned my own business, but after reading this I am leaning towards starting with the e-business. My question is how would I target the residents if the city I live in to gauge whether I should transition to a offline store? Thank you for any suggestions you may have.

    • Hi Opie. I would look to see if there are already similar stores in your area. That’s usually a good sign that the market is good enough in the local area. If not, it’s more of a risk. You can also try something less risky initially, like starting off at a flea market or cart before opening a dedicated store.

  10. This article has inspired me to work harder to Promote my business.

    I suppose I assumed that since its EBay I dont have to promote because they do all the work, just being who they are. I’m making around $1000 a month, bronze level top-rated power seller with usually between 6-700 items for sale.
    This is the wrong way to think. I could probably add a few percentile points to my end of year by promoting on my own time. Thanks!

    • Brian Lang says:

      Yes, definitely come up with a plan to promote on your own. I also got a good amount of repeat business from past customers on Ebay so targeting past customers might be another idea to look into.

  11. Thanks for the article; it helped my school project 🙂

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THANK YOU for SUBSCRIBING
Join the Small Business Ideas Blog Newsletter to stay updated and also get access to member only downloads and content, including special reports, studies and articles I write on other blogs. Some member bonuses include:
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  • Study: How LinkedIn Publishers Get Featured on the Pulse
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  • and more!
Thanks for signing up for our newsletter. Please check your email and click the confirmation link to confirm your email address and receive your free bonuses.