Back in the early days, only a few have privileged to start their own businesses. But in 2021, that’s no longer the situation. Today anyone can start an online business and scale it up, despite their professional knowledge or past entrepreneurial experience.
In order to maintain your flourishing business, you still require to come up with a viable product idea, figure out your sourcing or manufacturing strategy, and then your sales model.
But all of the above should not restrain you from starting an online business.
If you have dreamed of one day starting your own online business from home, then you’re not alone. There are 38 million home-based businesses in the United States.
Many of these business owners cite reasons such as wanting to be their boss, requiring to pursue their passion, and dealing with the loss of their job due to sudden life events, such as the Covid19, as the main driving forces which push them to get creative and look to online methods of earning their income.
But there’s a reason why many of us don’t go in the direction of online business dreams. Starting an online business from home isn’t easy or effortless work. You might be stuck questioning what you can offer potential customers or where to begin figuring out how to start an online business.
To help you get started, we have compiled some practical steps to guide you about everything you need to know, from successfully start an online business to manage it.
Reasons to Know Why Should You Start An Online Business?
You may be questioning why to start an online business in the first place. Because starting an online business has several advantages.
Here are the three major reasons:
1. Inexpensive to start.
A lot want to start a business but are hindered by the investment needed to get it off the ground. You have to pay for a lease, buy inventory, and budget for employee salaries. What if you invest all that money in your business, but it doesn’t work out? This can break you financially.
However, with an online business, all you need is:
- Computer. No additional expense, as you probably already have one.
- Domain name. You have to spend a little amount of money as you can get one for less than $10/year.
- Website builder: Monthly plans start for $29.90/mo.
In other words — it’s possible to start an online business with $100 as a starting capital. The more starting money you have, the more online business ideas you can pursue.
But the point is that you don’t need to endanger your life’s savings to become a successful online entrepreneur.
2. Potential and growth.
When you have a brick-and-mortar business, you have to deal with the limitations of the “real world.”
Renting in prime locations is expensive; there may not be enough foot traffic some days, and the local crowd doesn’t need stuff all the time.
But guess what? When you run an online business, none of these limitations apply. You can sell to anyone, no matter where they live.
And with each passing year, your pool of potential customers expands because more people are getting comfortable with the idea of online shopping. By 2023, ecommerce will account for 22% of global retail sales.
On top, the global Internet population is growing too. For example, between 2009 and 2020, Internet users in North America alone have increased by 73.3 million people.
But that’s nothing compared with the regions that are still developing!
The number of Internet users in Asia went from 764.4 million to 2.5 billion, which means that an additional 1.76 billion people started using the Internet.
3. Can work whenever you want.
Another advantage online businesses have over brick-and-mortar businesses is that they can stay open 24/7.
Once your online business website is online, you are always “on” to make a sale. Shoppers can order from you at any time.
Since you don’t require a physical presence to make a sale, your business can make revenue with less day-to-day involvement.
How to Start an Online Business?
Here’s our five-step process to start an online business to help you navigate and successfully launch your new business venture.
Find Your Niche and Business Idea
A business niche stands for your “focus area,” a market segment and the target audience you primarily cater to. This can be anyone from sports enthusiasts, athletes, hobbyists, post-stamp collectors, and professional software developers).
You need to pick a niche for your new business. To find a good one, you need to check that your target audience has:
- A problem no one else is solving well enough.
- Willingness to pay for a solution to that problem.
- Sufficient discretionary income to afford the solution.
Avoid niches that don’t meet all three criteria. Because building an online business is already hard. When you go after people who don’t need your products, can’t afford them or aren’t interested, you make things even harder for yourself.
Conduct Product Research
You can sell three main types of ecommerce products online. Each has its own pros and cons.
1. Physical goods.
As the name suggests, these are material objects that need to be manufactured, stored in a warehouse, and shipped to customers. Selling physical goods can be lucrative, but the profit margins can be low if you don’t manage your operational costs well.
2. Digital downloads.
You can also sell digital products — anything a customer can download to their device such as eBooks, audio courses, online courses, etc.
Digital products have higher profit margins (compared to physical goods). But pricing them can be tricky because they are often perceived as having a lower value than physical products.
Almost any service available remotely can be sold online. Selling services is the fastest way to starting an online business (and turning a profit). But it’s a business model where you are selling your time. This means that your earning potential is limited since you have a finite amount of hours each day. That is unless you scale into an agency.
Learn About Online Business Laws
Small business owners may assume that traditional business laws don’t apply to that because they are running an online business. That’s not true.
While an online business requires fewer licenses and permits than a brick-and-mortar operation, you still need to sort out several critical legal details. Specifically:
- What kind of business license (if any) do you need to start operations?
- What legal structure makes the most sense (a sole proprietorship, limited liability company or a corporation)?
- Are there any permits that you need to obtain?
- Are there any inspections that you need to pass?
- Do you need a sales tax license?
- Are there any specific regulations applicable to online businesses only?
- What are the laws regarding hiring contractors and hiring employees?
Learn more about online business laws and regulations for ecommerce companies.
Tip: Each state and country has its own laws. Always verify information with local authorities. Also, seek professional legal help if you can afford to.
Conduct Market Research
Determine what your target audience needs, requires, or lacks by conducting online market research.
Market research is an essential step in starting your own online business. It helps determine the depth, competitiveness, and profitability of the selected company vertical. Because the last thing you want to do is launch an offer no one’s keen on buying. Also, market research helps validate your product idea, pricing and demand.
Here’s how you can get started with market research:
1. Check the variations of your product.
Look up the variations of your product/service keywords and analyze the search engine result pages (SERPs) for them. What type of content is currently ranking on the first page? What are businesses paying to advertise on top of organic search results?
Doing so will help you pre-assess your competition. Plus, get information for a preliminary SEO and digital marketing strategy based on the content your target audience prefers.
2. Analysis of competitors.
You also want to take a closer look at your main competitors (beyond SERPs). What are the most significant business ventures in your niche? How much money are they making? What are their strengths and weaknesses?
By putting a microscope over other players, you can figure out what could give you a competitive edge over them.
3. Track high-performing keywords.
Analyze how the demand for different products changes in your niche and what content ranks best by monitoring niche-relevant keywords.
The good tools for that are:
Define Your Target Audience
To solicit sales and then scale your business, you need to understand who’s your target audience perfectly. To learn about their needs and preferences, research both demographics and psychographics data.
Demographic data includes essential socioeconomic characteristics such as age, gender, ethnicity, income, job title, etc.
Psychographic data includes various psychological characteristics such as values, beliefs, interests, opinions, etc.
These insights help develop a thorough understanding of your ideal buyer needs, preferences, and purchase triggers when combined.
Source Products to Sell Online
You can’t run a successful online business if your products are meh. Because you’ll then hit the trending pages on social media for all the wrong reasons thus, spend extra time considering your product sourcing strategy.
1. Make your own products.
This option is relatively easy if you plan to sell digital products. But physical product manufacturing involves a lot of hard work in design, interactions, material selection, etc. Also, the financial costs are higher too. But manufacturing will always give you an advantage over competition quality, product range and brand-wise.
2. Find a drop shipper.
You can find a manufacturer that allows you to dropship their products. Many small business owners negotiate dropshipping deals with overseas manufacturers (mainly Asia-based) to offset the business costs.
3. Work with a wholesaler.
Or you can find a wholesaler to provide you with a range of products to purchase and curate in your online store. Also, you can find a wholesaler to distribute your products for you too (if you plan to manufacture them).
Estimate Product Viability
You want to holistically evaluate your product(s) viability before purchasing or manufacturing a big order. To do that, ask these questions:
- Is there a successful online business already selling products like that?
- Is the demand for this product sustainable? Or is it temporary?
- Does the math behind this product make sense? Can you sell it at a profit?
Remember, it doesn’t matter how cool the product seems. What’s important is that it’s viable from a business perspective!
Determine Your Brand and Image
A brand is the overall “vibe” of your business. You want everything from your business name to your web design and copy to convey a consistent visual image and ideas. The same also applies to your off-site presence — social media, email newsletter and even packaging.
As you work on your brand identity, pay attention to your:
- Color scheme.
- Page layouts.
- Graphics and photos.
Your brand image should be a result of all these elements working together.
Launch Your Online Store
The next step in your business plan is preparing for the launch. This means setting up and configuring your ecommerce website.
1. Choose your ecommerce platform.
An ecommerce platform is a technical backbone for selling online. Such software provides you with all the features you need — from a product catalog to payment processing.
Here are a few familiar options:
- BigCommerce. An open-SaaS platform provides a wide range of native commerce features yet limits extensions or customization. The out-of-the-box functionality of BigCommerce can save merchants roughly $5,800 – $30,000+ per year in-app subscription costs, compared to Shopify.
- Shopify. Shopify is a SaaS platform with a good range of native features and over 4,100 integrated apps (separate subscription fees apply). It also has over 70 professional and responsive themes to design your website.
Select a platform that gives all the features you need for a price you can afford.
2. Add your products.
Once you have chosen a platform and a store theme, add products to your catalog. As you, do pay special attention to:
- Product images. Provide high-def visuals featuring the product from different angles. Check this guide to ecommerce photography for more insights.
- Product descriptions. Don’t line up features — focus on benefits the customer will get. This post provides a quick formula for writing compelling product descriptions.
Product images and product descriptions have a significant impact on the conversion rates of your product pages. So take the time to get them right!
3. Choose how you will do your shipping.
Fast and free shipping is the number one driver for making an online purchase.
Ensure that all the products will get to your customers without any delays. You have several shipping strategies for that:
- In-store pickup
- LTL freight carriers
- Same-day or next-day delivery
- Free shipping
4. Make sure everything works.
Finally, once your ecommerce store is live, triple-test all the facets. Verify that:
- All pages look good across devices (desktop, tablet, mobile).
- The website functions well in multiple browsers (Chrome, Brave, Firefox, etc.).
- All buttons are clickable/connected to the correct apps.
If you have a budget, hire a QA specialist to run the test for you and report on the findings.
Grow Your Business
Once everything is set up, it’s time to start driving traffic to your ecommerce store. Prioritize the following channels:
- Paid ads. Allocate an ad budget for PPC (pay-per-click) ads on social networks and in search results. That’s the quickest way to improve brand awareness for a new store.
- Influencer marketing. Partner with social media influencers to promote your products. This is another quick way to get them in front of your target audience.
- Social media marketing. Complement paid campaigns with organic traffic by building audiences on Instagram and Facebook.
- Search engine optimization (SEO). Ensure that all your website pages are SEO-optimized. Then create a content marketing strategy for your blog.
- Email marketing. Build an email list by capturing the email addresses of the people who visit your ecommerce store. You can then promote your products to your email subscribers.
Maintaining your online business:
Finally, starting an online business is similar to starting a business with a physical storefront. You will still require to validate your idea, do business planning, and you will benefit from making sure you understand your tax obligations from the start. Just don’t undervalue the importance of putting together a functional website and getting it in front of your target market.