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How to Start an Online Business


Gary Stevens — Last Updated on May 5, 2021

How to Start an Online Business iconThese days, it seems like everyone is starting an online business of their own.

Whether it’s your friends or family members, you might have looked at them launching a new commentary blog or online store and thought: “I can do that!” Even better, you probably also thought that you could do it better.

In truth, you probably can. It’s a great thing that more people than ever before can start online businesses.

But this also means that the bar for what constitutes a great business is more achievable. With some hard work and the right initial idea, you can start an online business that turns a real profit. Which may even lead to a lucrative career as an online entrepreneur.

Giving It a Shot

But not so fast. While you might think you have a great idea or have the business chops necessary to carve out your own online empire. The truth is that starting an online business is still pretty difficult. In fact, it’s because of the difficulty that most online businesses fail within less than a year.

Yet that striking truth shouldn’t necessarily prevent you from giving it a shot. Let’s break down how to start an online business from the very beginning. Even if you don’t have any business experience.

Phase One – The Idea


e-commerce businessAny type of online business begins with an idea. In fact, any business period begins with a solid idea. The only trouble is that not all ideas are worth your time and effort.

Before you start diving into the details of starting your own online business, you first need to figure out a few things:

  • ☑️ What the business is going to provide in terms of either products or services
  • ☑️ How you’ll provide those products or services
  • ☑️ How the rest of the business will be run

For instance, it’s not enough to come up with a general idea to make an eCommerce store and rush to Shopify to make a website. ECommerce stores are a dime a dozen. What is it specifically about your eCommerce store that will get people to click on your links? To follow your ads? And to purchase your products above all of the competition?

It’s important to come up with these answers beforehand, since the online marketplace is incredibly competitive. Remember, anyone can start an online business these days. That’s great for you, but it also means that your competition is much more numerous.

Your business idea has to be unique compared to the competition. By making the name of your brand memorable and interesting, you may attract more customers, here is our guide on How to Pick an Online Business name.

Great Ideas Aren’t Cheap or Common

great ideaComing up with an excellent idea is much easier said than done. That’s because winning business ideas are a lot rarer than you might think.

Businesses fail all the time, both in the real world and in the online sphere. That’s just because marketplace competition is incredibly high. Only the best of the best ideas have enough initial interest and staying power combined to make it to the end of the marathon that is starting an online business.

How exactly do you come up with a great idea? There’s no one-size-fits-all formula for you to rely on. Instead, it’s a better idea to:

  • ☑️ Start with a general idea for a business that you might be interested in pursuing
  • ☑️ Once you have the kernel of the idea then you can start working on what makes it unique or different from the competition
  • ☑️ To stick with the t-shirt company idea, your online business might allow users to submit their own graphics with certain thumbnail limits. This would, in theory, make your t-shirt business much more interesting than competitors since it allows for more personalization

Basically, this example shows how you can come up with a basic idea. However, you need to give it a more interesting twist to set yourself apart from your competitors.

Collaboration – Yes or No?

You should also think early about whether or not your business will be more or less collaborative. There are pluses and minuses to both sides.

When collaborating:

  • ☑️ You’ll get the extra brainpower and creative resources of one or more other people.
  • ☑️ This could help you come up with a winning business idea more quickly
  • ☑️ Similarly, collaboration means you can split the workload when starting an online business between multiple people. And there’s a lot of work to be done

However, there are some advantages to starting an online business mostly by yourself:

  • ☑️ You don’t have to compromise with anyone else, which could be helpful if you have a solid vision you want to stick with
  • ☑️ You also have the final say over any business decisions

Ultimately, both collaborative and individual online business efforts can be successful. It just largely depends on your personality and business goals. Try to consider whether you want to bring one or more business partners into your idea before launching things.

Phase Two – Research, Validation, and Financing


After coming up with an excellent business idea, the next phase of starting an online business is to research your idea. You should always make sure that it’s something that can make you money, at least in the long run.

We’ll stick with our t-shirt company idea for the duration of this guide so we can reference a continuous example.

Research Your Idea – Is It Practical?

It’s time to do some product research. With online businesses, as with brick-and-mortar businesses, you need to know if your business idea is actually practical to carry out.

You might have a phenomenal idea to create something impossible – like spaceships. However, that’s an impossible goal and not a business idea you can see through.

tshirt selling themeOur t-shirt idea seems solid enough.

For example, you can start an online business producing graphic t-shirts by contacting suppliers, creating a website that allows users to submit their own graphic designs, and forging relationships with manufacturers while working out a business deal so they get a percentage of the profits you make from every sale.

But you have to do this process with any excellent online business idea you have. Don’t go any further unless you know that the business is actually manageable.

Do People Want What You Want to Sell?

minimum viable product iconFurthermore, you’ll need to do market research.

This involves diving deep into the current market trends and statistical data to see if it’s likely that your business idea will take off and be popular enough for it to be worth your time and effort.

This, in turn, involves creating an MVP or minimum viable product.

The MVP doesn’t have to be the perfect example of your future product or service.

It just has to act as a proof of concept, and it’s often very affordable to start. Think of it as a prototype for your future online business should they succeed.

In our hypothetical t-shirt company example, the MVP would be a t-shirt with a graphic design uploaded to a server website from another user. That’s pretty simple to bootstrap using a basic web interface and a friend. Then, so long as you have access to a t-shirt printer or clothing manufacturer, you can create the prototype t-shirt yourself.

How to Use the MVP

Then you should take that MVP to a place where you can get a lot of public feedback. Examples include coffee shops, street sides, or even asking your friends and family for their opinions.

Try to gauge what the public interest in your product or service might be. At this point, you might also ask your audience or testers what they might pay for such a product (to use later when you consider pricing).

But biased opinions are only one part of the story. You should also investigate raw web-based data to get a full picture of your business’s potential.

sign up for google adsbutton for signupTo do this, sign up for Google Ads and similar services and start researching keywords that you might think you’ll use one advertising for or marketing for your business.

You should also google for companies that are pretty similar to your initial idea – remember, your idea isn’t likely to be unique at its core. The details will make it stand out from the competition.

Try to see if there seem to be a lot of (to use our example) graphic t-shirt companies. If there are, you at least know that the idea is popular enough that there’s a market for another fish in the proverbial pond.

Financing

money-iconLastly, you also need to consider how you’re going to pay for all the different parts of your online business to get it up and running. This number can vary wildly from business to business, and you have to make peace with the fact that you likely won’t know your full budget or costs until everything has already begun.

However, you should still try to project your general expenses and figure out how long your business can last before you make your first profits (that is, how long you can sustain your business before making a profit since you’ll likely have to pay down debts or pay for operating costs for quite a while after launch).

Business costs can include:

The cost of your website. This can be cheap, but excellent websites often run into several hundred dollars. Similarly, web hosting for a solid online business may cost you $100 or more per month

The costs of manufacturing your goods or services. The prices for this depend heavily on your industry, but the lower your manufacturing costs go, the greater your profit margins will theoretically be

The salaries for any employees, including yourself

When all is said and done, at the end of this phase you should know:

  • ☑️ if your business is a viable idea in terms of practical achievability and profitability
  • ☑️ if there’s enough public interest to make starting the business worth your time
  • ☑️ how much everything is going to cost in the long run and how long you can sustain your business without making a profit

Phase Three – Website Building


Once you have an excellent business idea and you feel confident enough in the concept that you believe you can make a solid profit by running it well, it’s time to move on to phase 3: creating your digital storefront or store website.

Website Builders

website buildingThe good news is that building a website for your online business is relatively straightforward, even though you have multiple pathways to success.

The first and most affordable option is using one of the best website builders, which are essentially subscriptions or products you can purchase to build your own website from scratch.

But commercial website builders don’t require you to have any coding knowledge or expertise. Instead, most of them use premade templates and intuitive controls to help you create a website from premade themes, widgets, and digital assets.

In fact, many website builders use drag-and-drop controls, allowing you to literally assemble a website from lego-like pieces.

Website builders are great choices if you don’t have any coding experience or just want a functional, great-looking website with a minimum of fuss and cost. The good thing about website builders is that most of their assets and themes are professionally designed, so you can at least rest assured that you’ll have something reasonably professional-looking.

However, website builders don’t always allow for the customization you might prefer, and they may not be scalable as your business takes off. That’s why it’s also important to consider the other option.

Hiring Developers

For a much higher cost (on average), you can hire developers to build a website for your online business. Hiring developers comes with its own advantages:

For one, you can tell developers exactly what you want and get a website tailored precisely for your online business or business model. This means you can benefit more from unique widgets, aesthetics, or even themes compared to the premade templates used by website builders

For another, developers can code for special additional products or services that you may want to include in your online business to set it apart from the pack. For our t-shirt company example, you might use one or more developers to write a website for you that includes the ability to download and store user-provided graphics

However, developers are usually quite expensive, at least if you pay for a good job. There are certainly plenty of cheap developers out there, but they tend not to be worth your time and money. You can either hire professional developer teams or hire freelancers.

Website Type and Hosting

You’ll also need to think about your website’s “type” and overall functionality. For instance, many online businesses use WordPress websites for their online storefronts. But you can also use alternative platforms depending on what you have experience with or prices.

WordPress is generally considered to be a great choice for newcomers to the online business sphere since these sites are easy to set up and are reasonably scalable. You’ll be able to upgrade them as you get more traffic and higher profits.

You’ll also want to consider the hosting services you’ll use for your store website. Hosting providers essentially rent server space and resources for your digital storefront, storing the data and the website so that visitors can access it 24/7. Some hosting services are better for eCommerce stores or other goals than others.

Different Types of Hosting

Shared hosting, otherwise known as top cheap hosting, is the most affordable but comes with a very limited amount of resources

Dedicated hosting is more expensive but you get to use all of a server’s resources, including bandwidth (which determines how quickly your page content loads) and storage space (which determines how much stuff you can put on your website before needing to delete existing stuff)

hosting-types-ca

VPS hosting is sort of a cross between shared and dedicated hosting, using virtual private servers to give you a smoother experience and more resources without being quite as expensive as dedicated hosting, find more about them on our top VPS hosts review.

Lastly, look into managed hosting, particularly invest time into researching top WordPress hosting.

Managed hosting means you pay a little extra for a hosting service, and in return that service monitors your website for downtime, automatically updates both the general site and its security functions, and more

It’s no stretch to say that your hosting service can have a big impact on the overall viability of your online business.

Don’t skimp on price, but it may be a good idea to go with shared or VPS hosting to start out, then upgrade to dedicated hosting if your online business takes off.

As a bonus, many excellent web hosting services come with website builders for free.

Phase Four – Production and Delivery


It’s important to think about website planning and get all of those ducks in a row before you move onto the next phase: determining how to produce and deliver the content or products your business will offer.

Products or Services – Either Way, Figure Out How to Make What You’re Selling

product Naturally, when your business promises something – whether it’s a digital-only service or a physical product that people can touch in the real world. You have to think about how you’ll actually make your product.

For our t-shirt company example, this would involve contacting t-shirt manufacturers and figuring out a business deal so that you could give them orders regularly. In exchange offer them either a flat rate or a percentage of the profits.

Alternatively, say that you wanted to make a website that offered online and video-based lessons for certain school subjects. Or even for something more specialized like computer programming. In that case, you need to figure out how you would make the videos, what learning software you would use, how you would distribute the videos, and more.

There are answers to all of these questions and practically anything can be made for the right price. But that’s the sticking point: there’s always a price you’ll need to think about. This is why it’s important to come up with a minimum viable product so you can get a sense of how much it costs to create one unit of whatever your business provides.

Of course, the more you make of your product or service, the cheaper costs usually go. The benefits of economies of scale kick in pretty quickly. But you still don’t want to produce so much of your products that you go into heavy debt before you know if your business will really take off.

Delivery – Consistency, and Affordability Are Key

delivery iconYou should also consider how you’ll actually deliver your products or services to customers. This is relatively trivial. Depending on what you are providing: online-only products or services, like classes, seminars, or even programs, all of which can be disseminated digitally and in an instant.

However, things become a little more complicated if you want to build an online business that provides real products. In that case, you’ll need to make deals with shipping companies and determine where you’ll be shipping your products.

New online businesses frequently only provide products to people in their host country instead of internationally to avoid certain fees or the difficulties of international shipping. As you grow, you can always add these places to your shippable areas later down the road.

Phase Five – Marketing


You’ve made it this far – you’ve come up with an excellent business idea, you’ve done plenty of research and validation, figured out your finances, created a minimum viable product, started to build a digital storefront, and figured out how you make and distribute your product. Now it’s time to start drumming up attention for your new online business through marketing.

General Marketing and Advertising

general marketing and advertisingMarketing can make or break online businesses, especially since competition can be so fierce. The good news is that getting advertising for your online business is simpler than ever.

It’s relatively easy to just buy online ads from agencies. You can design these yourself or (more often) choose from premade templates.

These are basic ads and banner advertisements or other intrusive marketing gimmicks that don’t usually have a great rate of return.

It’s a much better idea to rely on social media marketing, especially when you’re just starting out.

Social Media Marketing

Social media marketing is arguably more important than other types of marketing, at least for smaller and newer businesses.

Social media marketing involves creating and managing multiple social media accounts to provide content and ads for your new business. Platforms you should use for your social media marketing include:

  • ☑️ Facebook
  • ☑️ Twitter
  • ☑️ Instagram
  • ☑️ YouTube

All of these platforms have slightly different styles and advertising requirements. But all of them can be interlinked with one another, allowing you to create a marketing campaign that spans most social media spheres. This is the best way to get as many pairs of eyes on your new business as possible.

Of course, you’ll need to create a good marketing campaign to take advantage of all that social media presence. After all, just announcing that you have a new website and online business starting soon isn’t enough to get people to click.

SEO

That’s where SEO or search engine optimization comes into play. SEO research involves checking what keywords are most searched for in your niche or industry. You should weave those into the content you create for your social media marketing and the content for your website.

SEO marketing seems dense and tricky to understand at first. However, practically anyone can become well-versed in it with a little practice.

google search console toolFurthermore, tools like Google Search Console are readily available and are free for everyone, so you should sign up for an account with those tools to start doing some keyword research for your industry.

For instance, in our t-shirt company example, you’d want to look for keyword density and popularity for words like:

  • ☑️ graphic t-shirts
  • ☑️ customizable graphic t-shirts
  • ☑️ user-generated graphic t-shirts
  • ☑️ graphic t-shirt delivery

From there, you could tailor any written content to include those keywords. They will significantly boost your site’s rankings within the Google search engine.

Furthermore, you can take those keywords and weave them into your social media marketing. For instance, dropping a few hashtags with your latest Twitter posts is a good way to tie your SEO research into your social media marketing and help Google bring people to your new online business.

Marketing for a new online business is one of the most complex and in-depth topics you can find. It’ll take some time to get right, but the good news is that your marketing can evolve and become better over time as you get customers and see what approaches gain you the most traffic.

Phase Six – Launch and Feedback Analysis


By this point, you should have:

  • ☑️ developed an excellent business idea
  • ☑️ done plenty of market research and determined that the idea is practical
  • ☑️ come up with a website for your new online business
  • ☑️ found ways to produce and deliver the content or goods you plan to offer
  • ☑️ come up with a social media and general marketing campaign to create interest in your new site

Even after all of this, the work of starting an online business has really only just begun.

Launch Your Site

Launching your site can only happen if your website is in perfect shape and has been tested multiple times to make sure that every aspect of it works flawlessly. You can do this yourself or hire people to do it for you. Either way, make sure that your site is ready to go before officially launching it (and preferably before announcing a launch date with your social media campaigns).

Collect and Review Feedback

send us your feedback templateEven as your online business starts taking in its first orders and your business plan is shown its first challenge, you’ll need to be actively and readily collecting and reviewing any feedback you get.

Hopefully, you included a place for customers to give you feedback, either on your site or through an email address.

People may also comment or post in response to your social media content to provide their feedback through those channels.

Either way, collect everything, no matter how positive or negative it may seem.

Every customer reaction is a data point you can use to further make your website a more intuitive or user-friendly place. Use that information to streamline your production process, to come up with new ideas or services that people might like, and more.

Feedback during the initial weeks of launching your online business is crucial. It may help you identify any pain points that you might have missed during its creation.

Furthermore, immediate feedback can help you identify any serious bugs or issues that you need to take care of ASAP before traffic drops off after the first swell of interest.

Start Drawing Up a New Plan…

Once you have all of your feedback, you’re not done! Your website may have launched, but now it’s time to move into the next phase. Implementing all that feedback and drawing up a new plan.

With online businesses, things are always evolving. Whether it’s for updating your website, creating new products, expanding your business, or launching a new business idea. But that’s part of the fun and joy of it all, too.

Conclusion


If you’ve made it this far, you’ve successfully started an online business. But the journey of running it has only just started. It’s important to keep all of the above lessons in mind. Refining and further improving your business over time is the key to success.

Additionally, the above guide is the barest overview of the detailed plans and efforts that it takes to create a dedicated digital storefront that stands the test of time and is actually successful. Different circumstances or business requirements may mean that you need to think outside the box and come up with novel solutions not outlined above.

Keep in mind the six phases discussed – ranging from an initial idea or business conception all the way to launching your online business. It will go a long way toward helping you hit all of the major milestones and goals you need to finish before you open the digital doors. Good luck!

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