How to Start an Online Business in Canada: A Simple Guide

Not long ago, starting a brick-and-mortar business was for the few with deep pockets and the right contacts. High start-up costs and connections were crucial barriers. Today, the internet has changed the game, turning attention from mere access to the nuts and bolts of how to start an online business.

That said, hurdles remain. You need a standout product idea, a smart approach to sourcing or production, and a sales strategy that actually delivers.

To make things easier, I’ve dug into how to start an online business in Canada and compiled a straightforward, step-by-step checklist to guide you through every stage.

Before diving into the digital business arena, you need clarity on two fronts: what you’ll sell and who you’re selling to.

 Start by identifying your niche—the specific market you aim to target, be it a certain industry, a demographic, or a group with specific interests. Next, define what your business will provide.

Think about it: What problem does your product solve, and who benefits from your solution?

This focus is key to standing out rather than blending into the vast online crowd. Dedicate time to pinpoint exactly what makes your business unique.

To get your ideas flowing, here are examples of different types of online businesses:

1. Open a digital storefront

Ecommerce has become increasingly popular in recent decades. In fact, Canada’s ecommerce revenue is set to grow at 9.76% annually and reach US$104.40bn by 2029.

To achieve this, nail down your niche, pick a platform like Shopify, BigCommerce, and WooCommerce, or jump onto online marketplaces like eBay, Etsy, or Amazon, set up your store, and start bringing in traffic. Here’s our take on the top 7 ecommerce products you can explore.

2. Jump into affiliate marketing

If you don’t plan on creating your own products, you can promote someone else’s and earn commissions on every sale through affiliates.

To get started, sign up for an affiliate program, pick a product to promote, and share your referral link on outlets like a blog or email newsletters. The best part? The startup cost is super low—you only need a domain, hosting, and email marketing software to get going.

3. Try out drop-shipping

Drop-shipping means that when a customer orders from your store, you pass the order to the supplier, and they ship it straight to the customer. This means you can sell physical items online without ever having to stock up on inventory or suffer the cost of managing it.

4. Start a blog

If you’ve got a way with words, then I highly recommend you start blogging. It can help you build an audience, and from there, you can sell your stuff, promote affiliate products, or snag brand deals for some easy, passive income.

5. Provide web design solutions

In case you don’t have a background but are interested in offering web design and development, you can still learn the basics through online courses or just by diving in and experimenting. Then, set up a portfolio site to show off your work and start landing clients, or sign up on freelance sites like Upwork.

Even the best online business ideas can tank if there’s no real demand. If people aren’t ready to pay for the solution you’re pitching, you’re just burning cash. Seriously evaluate your concept—does it really hold water? Here’s how to do exactly that:

Once you’re confident in your idea, the next step is to create a solid blueprint before starting an online business.

You might feel like you’re wasting your time at this point, but trust me, it’s not. This will help you a ton in the long run with so many aspects, including tackling any challenges that come your way and setting yourself up for long-term growth.

Here’s a quick checklist to map out your strategy:

Once you’ve laid out your strategy and set your financial goals, including your budget, it’s time to secure the funds you need to get things moving. Are you thinking of funding this yourself, looking for investors, or considering small business loans?

Expert tip: Don’t forget to explore the Business Benefits Finder to see what government grants, programs, and services fit your business in Canada. If you’ve got a truly innovative idea, crowdfunding could be another route to bring your vision to life with the help of community backing.

Now, you need a memorable name that will stick with your customers.

Here’s a handy guide on picking the right online business name.

Make sure the name you want isn’t just available as a domain for your website, but also as a username across social media platforms, ensuring it doesn’t step on any existing trademark rights.

Most importantly, double-check that you can register it as an official business name in your province or territory. A good start is to search through national name databases like:

• The Canadian corporate names and trademarks database
• The Canada’s business registries

Before starting an online business, you’ll need to choose the structure that best suits your company’s goals, and eventually, this will determine your legal and tax requirements. If you think it’s a tough decision to handle on your own, I highly recommend contacting your attorney or consulting a tax professional.

Tip: Small business owners and self-employed individuals in Canada are entitled to free tax help using the Canada Revenue Agency (CRA)’s Liaison Officer service. You can request a personalized in-person, phone, or online visit to learn about tax obligations, potential deductions, and bookkeeping basics while guiding you on avoiding common tax mistakes and leveraging CRA’s tools for better financial management.

Canada offers the following three main types of options:

Once you’ve decided, you’ll need to register your business name with the government here.

Designing Your Website: The Basics

We all know how important a website is for a physical store, let alone an online business. After all, it’s the one place, alongside social media accounts, where your customers find you, see what you offer, and ultimately make purchases.

When creating your digital storefront or store website, I highly recommend starting off with using one of the best website builders for Canadians, like Yola, Wix, and Squarespace. Most of them don’t require any coding knowledge or expertise, but instead use pre-made templates and intuitive controls like drag-and-drop controls.

Otherwise, if you prefer more flexibility and customization, you can use one of the most popular content management systems (CMS) like WordPress or hire a developer to create a fully customized website for your online business, though at a much higher price tag. This means you’ll be able to benefit more from unique widgets, aesthetics, or even themes compared to the pre-set ones used by website builders.

Hosting Options for Your Site

If you choose to build a custom site, you need to pick one of the best web hosting services in Canada with a reliable uptime guarantee and high-speed browsing. Essentially, you’ll rent server space to store the website, so visitors can access it 24/7.

Now, it’s time to start drumming up attention for your new online business by developing effective marketing strategies. Start by choosing the right channels to connect with your audience, such as:

You’re nearly there! By this stage, you’ve fine-tuned your business idea, done your market research, set up your website, figured out production and delivery, and lined up a marketing strategy to spark interest in your launch.

Now, it’s crucial to test it all out. Go through every part of your online business thoroughly. This means checking that every feature works as intended and that the whole customer experience lives up to what you’ve envisioned.

While you won’t need giant scissors for this launch, hitting ‘publish’ on your website and going live is just as exciting as opening the doors to a physical store.

As soon as your online business starts taking in its first orders, your business plan will eventually show you its first challenges—any pain points you may have overlooked during the creation process. Therefore, you need to actively and readily collect and review any client feedback, no matter how positive or negative it may seem.

Every customer reaction is a data point you can use to make your website more intuitive or user-friendly, your production process more seamless, and your marketing efforts more targeted. Plus, you can brainstorm new ideas or services that your audience will love.

If you’re still on the fence about how to start an online business in Canada, here’s why it’s worth diving in.

• ✔ Low startup costs – There is minimal upfront investment compared to a physical store.
• ✔ Flexibility – Run your business from anywhere with an internet connection.
• ✔ Broad customer reach – The online world allows you to reach customers globally, not just locally.
• ✔ Scalability – Growing and expanding your business without needing physical space is easier.
• ✔ 24/7 availability – Your online store can generate sales at any time.
• ✔ Variety of platforms – There are plenty of tools and platforms, like Shopify or Wix, to help you get started.
• ✔ Adaptability – You can easily adjust your product offerings or marketing strategy based on customer feedback.

Launching an online business doesn’t need to feel daunting, but I understand there’s much to absorb here. I highly suggest you break the process from research and development to launching your website into manageable steps. Most importantly, get feedback from real customers as soon as possible. Testing your ideas early will help you fine-tune your product, improve your site, and save you from expensive mistakes later on.

Here’s to your success—good luck getting started!