Saturday, July 30, 2011

How to Start A Penny Auction Part - 1

I am starting a series on how to start a new penny auction site. It may not really impress everyone, but it is worth mentioning here because there are several bidders who are interested in getting into it themselves sometime. Plus, there are many businesses who want to do the same and establish themselves in a particular niche. More recently, many small businesses that already have a presence are getting into the game, which means they already have an established base.

Now, it might also be of interest to the casual bidders and readers of my blog. After all, penny auctions are a curious business model and people want to know how to start new penny auctions.

Before I start the series, I wish to let all prospective entrepreneurs and small businesses know this: contrary to the popular belief, penny auctions are not a goldmine. The first few weeks/months will be painfully unprofitable. If you think you can make a quick buck and leave, you are mistaken and this industry is certainly not for you.

However, if you are serious about the business, you should read on.

Step-1: Set up Your own Company

This is the first and most important aspect of running a penny auction or really most other businesses. If you look at established penny auctions, you will see that almost all of them are LLCs. Limited Liability Companies are ideal for this kind of business, at least when you are getting started. Even if you already own a business, it might be a good idea to first incorporate an LLC and then start off with your penny auction business so you can test the waters safely. Remember that the best penny auctions in the industry, like Quibids, are all LLC's.

If you are not a legal expert, then you need to get professional help in forming your own LLC. This is important for long term sustainability of the business. If you are looking for a company, think CorpNet. They have a great legal team and being small but highly experienced, they can really understand your needs well. Plus, they offer one of the lowest industry fees, so you can get away with less. They also have a money-back guarantee, so you cannot lose trying them out.
If you already have a legal team in place, then you do not need another company, unless you need specialized advice.

Setting up an LLC is the first step towards starting your own penny auction site. This is also one of the most important steps because you want to do it right - very right. If you are free from legal hassles and have done this step in the right manner, you have a strong foundation upon which you can build your business for further profitability. 

4 comments:

  1. Thank you for blogging and the information on Penny auctions. I look forward to more.

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  2. Glad you found it helpful. I'll keep writing the series, so stay tuned!

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  3. Making your own penny auction business is really good idea. Why not try Penny Auction Software from PHP penny auction?

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