Things To Do Before You Shopify Dropshipping

in this one then we’re going to be going through five different things you need to be doing before you actually start dropshipping we’re gonna be covering the kind of topics you don’t really hear many people talk about such as whether you need to set up a new company or not and the different taxes and kind of financial things behind a drop shipping business I feel like I’ve certainly a lot of people I talk to an Instagram because drop shipping is pretty much one of the easiest businesses you can start if you know what you’re doing like within the space of 2 to 3 hours you can have a Shopify store created you can have products on that store and you can be running Facebook Ads to sell those products so a lot of people jump into the dropship and try to make some money really quickly but they don’t kind of take care of the fundamentals or the kind of natural things that come to mind that you shouldn’t that you actually need to be doing before you actually start drop shipping and by avoiding these things then at some point later on down the road gonna come across some problems of headaches that are going to end up costing you some money and some time so

let’s jump into point number one which is setting up a company slash a separate bank account one of the most common questions I get asked is do I need to set up a limited company do I need to be a sole trader what do I need to do so I recommend then in the beginning is when you’re getting started is at the very minimum at least set up a separate bank account just for accounting reasons just to kind of keep your personal finances separated to your company or to your business and then depending on your own personal circumstances will depend on whether you need to set up a limited business and the reason for this then is pretty much tax or financial reasons if you don’t set up a company depending on what your circumstances are that number one is you may end up paying too much tax so it’s giving an example then if we have a look at this image here the top one these are the different tax taxable banded incomes for the UK whilst I’m writing the blog so these are accurate to date the basic rates are let’s say for example you’re earning 25 grand a year which is the average wage in the UK you would be in this basic rate here you’d get twelve and a half grand completely tax-free and then anything between 12 and a half grand and 50 grand you would pay 20% on so let’s say urine in 25 grand a year you start drop shipping business and that drop shipping business makes 50 grand what would happen if he wasn’t set up as a limited company were running as a sole trader then essentially what would happen is that 50 grand profit you make from your drop shipping business the first 25 grand of that you would pay 25 you would pay 20 percent sorry because you’ve already got your previous 25 grand from your formula job and in the next 25 grand would be in this higher rate which you’d pay 40 percent on so you’d pay 25 grand at 20 percent 25 grand at 40 percent which probably roughly averages out about a third cent overall whereas if you separated yourself from the limited company and registered as a limited company corporation tax as according to the screenshot here it’s just a flat 19 percent so instead of paying 30 percent on that 50 grand you would only pay 19 percent plus there’s tons of other benefits through having a different company so for example you can put certain expenses through your business like Wi-Fi different kind of accessories for your office or whatever it is there’s just so many different kind of other ways in which you can put things through your business as an expense the second reason then which is the main reason why all businesses I start I will set up as a limited company from day one with a separate business bank account is because it protects any assets that you personally own so essentially what that means then is that when you create a limited company that becomes a separate financial entity if that’s the right word to yourself so what that means then is if you’re running as a sole trader and for whatever reason you get sued or you become liable for a payment of let’s say two hundred thousand pounds if you don’t have the cash or other means to pay that and you have a mortgage that your wife and kids are living in that house that has a mortgage on it and then essentially that house can potentially be at risk for footing the bill for that payment whereas if you set up your drop shipping business through a limited company it’s a separate entity a separate financial entity to yourself so if it then becomes liable for that 200 grand payment for whatever reason then essentially your personal assets are protected and because I own a few different properties then that is the main specific reason why I set everything up from the beginning in asset a limited company the third and final point name which is just straightforward is it makes accounting so much easier trust me take from me it was the biggest mistake I made in the beginning I ran my drop shipping business from my personal bank account and basically what I did when it started to make some decent money and I knew this was gonna be a long-term thing I registered it as a limited bank as a limited business and then I had to backdate everything from my own personal accounts and their headaches that hours just it was an absolutely just awful job of ham to do have literally go through every single transaction in my personal bank account so I’d have Aliexpress Facebook and Express Aliexpress Aliexpress and it’d just be random once type fuel or some sort of restaurant or an electricity bill that just weren’t relevant to my business so it just took hours an hour so to avoid that and make it easier to kind of keep track of whether you’re actually making money or not I just before you do anything just make sure you set up a separate bank account so my advice then to kind of summarize these points it’s number one speak to an accountant they will within a space of a few minutes allows you a couple of questions and then they’ll be able to give you a definite answer of what the most tax and financially efficient thing is to do for you everything is going to be personal to your current circumstances and then number two is just have a separate bank account from day one this will also make budgeting so much easier if you just keep putting more and more money into your business from your personal account it’ll be difficult to keep track of how much money you’ve actually spent whereas if you have a separate bank account and your staff will say a thousand pounds then it’s quite clear in terms of budgeting it’s just a whole lot easier so yeah at the very minimum then make sure you set up a bank as a separate bank account we even have to point number two then this is a biggie as well there’s a few different kind of life hacks you can do to make the most of the money you’re spending and one of those ways then is to have a rewards credit card for order fulfillment and Facebook ad costs because these are two kind of direct costs of your business that you won’t be able to avoid spending then you might as well get something back for that money that you’re spending now before getting to this one very quick warning I just want to say is be responsible with your spending if you’re not very good at financially planning and stick in if you just basically get carried away and as soon as you get a credit card you’re going to go go out and buy loads of crazy things and don’t do this but if you’re sensible enough to discipline yourself and spending your money wisely then you can get some pretty good bonuses back for the money you spend so for an example then these are what these screenshots are relevant to if I just show you my British Airways account you can see that I’ve got a fifty thousand a vs points I can just refresh that very quickly too so you can see it’s legit and obvious points essentially what they are is when I spend money on my MasterCard or an or Amex my Americans breast card I get a biast points every single pound I spend I’ll get at least one a biast back and then with these obvious points I can use them for certain perks one of those perks for example is plane flight so to give you an example then of how much money I can save then this is an example flight so one-way London to Los Angeles Friday there’s 17th of June 2020 so this is in a few days time if I was to take the economy it’s gonna cost me thirty two thousand five hundred a biast which you’ve seen I have plus three hundred forty pounds now if I was going to book that flight and pay for absolutely everything in cash for the exact same flight so London to LAX in Los Angeles can’t say that word today it’s gonna cost me two thousand six hundred and twenty one pounds so as you can see I’m saving over two grand simply by paying for my facebook ad costs and my order fulfillment using a certain credit card and it’s kind of summarized another reason and why you could have a credit card or why it’s beneficial again another common question I get is that people will start a drop shipping business and they won’t have the money to pay for order fulfillment so they’ll have to wait for that payout from Shopify or stripe or whoever they use in which can sometimes take a week so it’s a week on top of drop shipping delivery times which is not a good thing so by having a credit card you can make sure you fulfill the orders the same day and which in return is gonna be faster order processing faster delivery times which in return is going to be less refunds and complaints from customers moving on to point number three then we have increased professionalism of your store so basically increase how trustworthy your store comes across as a new business the number one thing that’s gonna stop somebody from spending their money with you is whether they trust you or not to hand over their credit card details to hand over their paypal details to hand over their money so make sure that your store is really professional and more professional and trustworthy than the next one then you have the best chance of converting less than 1% of all the Shopify stores I’ve ever looked at have the following three things which in my eyes any decent and creditable business should have these things number one is an email address to match the domain so for example if your website is called blue Krait com you should have an email address that is sales at Blue Creek or more info at Blue Creek com it should match because it’s professional number two is a contact telephone number again something that in my mind should just always be included people want to know they can ring somebody and sort out a problem if they have one now if you’re scared or you don’t want customers ringing your personal phone you know when I talk to customers it’s fine I’m going to show you a workaround in a second number three again is a business address people want to know that you’re a legitimate business with a physical address again so they can contact you or get hold of you if they need to so it’s giving you example then this screenshot here is not just a random office building this is where some of my stores were registered with this called a virtual office so if anybody ever googled my address this is what they would see it would look so much more professional than just a random street address and a picture of your house or god knows what addresses some some addresses honestly that I’ve seen people give their customers and they just have just fake addresses basically it’s just not a good idea so the cost of these are number one an email address to match your domain it’s gonna cost you three pounds per month per email and that is where the G suite account I use it for all of my accounts and it lets you use a custom domain for your email address number two a contact telephone number is gonna on roughly it’s gonna well basically there’s two ways in which you can pay for this number one is approximately 20 pound per month which gets you unlimited calls or you can pay one pound per core and you can use a website called take my calls cut it you K basically what this does is it’s an answering phone service for you so you don’t actually have to directly speak to your customers they will take the information from your customer take the question the query and then pass it on to you so you can then respond to them however you decide to number three a business address you can go with Royal Mail and get a PA box this is going to cost you the cheapest option is 26 pounds 25 per month or you can get a virtual office which is what I do which is approximately thirty pounds per month now all three of these things I would say that optional in the beginning but they will help your business they will help your conversion rate so if you’ve got a decent budget to play with then I recommend getting all three of these things while akka mentioned in the intro to this point is that it increases the trustworthiness of your store and this is the number one factor of why customers will not buy from you if they don’t trust you there’s no chance in hell they’re gonna spend money with you moving on to point number four them which is build social proof of pages and posts so if you’re advertising on a social media platform then social proof is absolutely everything if you have zero engagements zero likes zero views zero comments etc again you don’t come across as trustworthy and as I’ve already mentioned trustworthiness is like the number one factor of whether people will decide to spend their money with you if you can’t get over that barrier of people trust in you there’s no way in hell you’re going to be successful it’s just a fact so how do you actually fix this then number one is you can run page liked campaigns you can get some pretty decent results for quite cheap as you can see here this is like a screenshot from my ID manager account you can see that a cost per engagement is going to cost you about two pence depending on what kind of campaign you run in in terms of page likes and you’re looking at about 10 points per page like so if you can dedicate say 50 pounds to that if I’ve done my maths correctly then that’s 500 page like so you don’t have to spend that much money to increase your social proof coin dramatically number two is you can run post engagement campaigns again these are specific campaigns you can run and you can go really broad on the audience here because it doesn’t matter who likes it essentially all people care about when they see your ad is how many people have engaged how many people have commented it doesn’t really matter who it is plus the broader you go the cheaper results you’re gonna get number three this is kind of like a way of a compound in the engagement on your ads so just make sure that you run ads to the same posts on your page make sure you use the same post ID that way all the engagement is going to compound onto that one post and it’s gonna build up faster essentially so make sure then that you don’t try and compound the engagement until one adder that’s a poor ride that’s never gonna perform very well in the beginning then what I recommend doing is testing multiple creatives in the beginning and then the one that performs the best then starts compound all your engagement onto that one ad creative and then number four phone is regular posting on pages for example then if your last post on Facebook was nine months ago and it’s you changing your cover photo when somebody comes onto your page and that’s why they see you don’t come across as very active or very current so people might start to doubt whether you’re still in business and again they won’t trust you it all comes down to trustworthiness let’s give you an example then here’s like a quick study I found online of the different reasons of what makes people trust you versus not trust in you the biggest thing was customer reviews it goes without saying it’s a fact by the way that people follow people so if the more reviews and more engagement you have them basically then the better number two is easy to contact the company which we’ve already spoken about number three is secure browsing so it says there in brackets the presence of HTTPS with Shopify then you automatically have that number four is a clean website design layout on navigation and number five is accurate and up-to-date content so just make sure you post regular content every single day and it’s gonna be beneficial to give you another example as well is these two ads here again screenshots from certain ads I found on Facebook and therefore the exactly the same products except this one here at the bottom has 10,000 comments and 43,000 reactions and this one here has 3 as you can see if I could just move this out of the way this one only has 3 so if somebody sees this bottom one versus the top one which one are they gonna trust more and actually buy through it’s gonna be this one here because it has significantly more engagement and comes across as more trustworthy moving on to the fifth and final point then which is keep things simple in the beginning so this is quite a big and important one to be honest the amount of people I talk to an Instagram beginners and they just try and do the most complex and ridiculous things like they try and run before they can walk and they’re just setting themselves up for failure it’s like before you learn to ride a bike you wouldn’t try and learn to ride a motorbike it just wouldn’t make sense it’s like it’s a bike with an engine you’d start with a normal push bike that you pedal and then you progress onto a motorbike you will just go straight to a motorbike oh it’s kind of like a metaphor that just come to my head I don’t know whether it really makes sense but what I’m trying to say then is just keep things simple in the beginning don’t over complicate it give yourself the best chance of success but keeping things simple and avoiding the following so just kind of like a few general tips to make sure you run the right path so things to avoid that number one is dangerous fake consumable or trademarked products all of these will either get held up at customs and will never get into the country you’re shipping to or they’ll end up with you getting your Facebook ad account banned your Shopify store abandoned your payment provider banned and you’ll fail before you’ve even started number two is complex store design people I’ve seen people with bright pink backgrounds or black backgrounds or yellow backgrounds and white fonts and it’s just difficult to read it’s off-putting just stick to the basics a white background black test a serif or sans serif font and there’s gonna put you in good stead we saw in the previous point in this study that one of the biggest reasons that puts people off by not trusting you was where is it clean website design layout and navigation so just make sure you stick to the basics get some feedback on your store and make sure it looks professional number three is selling globally in the beginning there’s no need to try and target the whole world stick to one country at a time even today I still focus on the UK when I’m testing a new product if I can sell a product well and profitably in the UK only then will I start to scale out into into bigger countries different markets will react to different products in a different way so if you try and take on the whole world all in one go then it’s going to be really difficult to find something that sticks and something that does well so so focus on one country at a time then to give yourself the best chance and success number four is copying content the amount of people I see that copy content from other drop shipping stores are the Facebook pages especially products product images with models then now if they’re Asian models from Aliexpress then you might get away with its is probably supplier content make sure you always check by the way but if you’re going to Instagram I find some influencer and take content from their page then again it’s going to end up with you receiving complaints it’s going to end up with Facebook getting in contact with you importing a strike against your account it’s gonna end up maybe even with your ad account getting banned there and then or perhaps your company or you even gettin sued so just produce your own content buy the product as a sample so you can test it yourself make sure it’s decent quality and take your own pictures or videos or whatever you want to do with it and with that being said a go says one more thing to do and that is to say thank you very much for watching I really do appreciate everybody who reads these blogs

Hopefully, this article was helpful in informing you about a few things that you should avoid while getting started with shopify dropshipping . If you are interested in an amazing dropshipping product that is just coming out, we have a great article written on kibo code quantum, you can give it a look “here“, and if you want to go through some interesting facts about dropshipping ioscm has a great article on it, “here” is the link

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