How to Start an Online Business
From choosing a business idea to starting and scaling up an online business, here, you can find all the information you need to start an online business.
Who is this guide for?
- Those who are planning to start a brand new online business in 2021
- Those who are planning on expanding their brick-and-motor stores by selling online
- Those who have a good product idea and thinking of how to sell that product
Let’s get started learning how to start a business online.
This information is general in nature and for educational purposes only. And, it does not constitute formal financial, investment, or business advice. You can always seek personal business advice that is tailored to your specific needs before investing your money.
10 steps to starting an online business
Starting a business online is incredibly easy, and there are plenty of canned solutions nowadays. However, it might sound complicated for those who are not familiar with certain terms, services, and technologies. So, we decided to keep everything simple and give you the easiest way to start an online business.
- Find the product(s) to sell online
- Do market research to validate your online business idea
- Define your target market and target audience
- Find suppliers or plan the manufacturing process
- Plan how to deliver the products to your online customers
- Design your brand identity
- Set up an online store
- Start marketing your online business
- Analyze data and adjust your process
- Plan on scaling-up your business
Your budget for starting a business online
Assuming that you already have the product(s) to sell, here I will show how to start a business online without having to spend more than $200.
When you start something new, without any prior experience, keep things simple and small. Invest a little amount of money, see how it goes, adjust, invest more, and keep going. So, you won’t get stressed over money. Even if you lose, it will not hurt you a lot.
In this guide, I will show you how to start a business online with minimal effort and budget without compromising the success. Of course, once you can sink your teeth into it, you can scale it up as fast as you wish.
Find the perfect product(s) to sell online
If you already have a product idea, you can skip this section. Otherwise, let us find out how to decide what to sell online.
Online businesses are growing fast. It is getting crowded and competitive every single day. Therefore, it is essential to select a great product that can open up space for your online business in these saturated product markets.
Two types of products to sell online
There are two basic types of products to choose from.
- Everyday products
- Niche products
Everyday products are like toothpaste, food, or clothes. They are popular and have a higher demand. And at the same time, they are easier to find online or offline.
Niche products are unique and specific to certain user groups. It can be handmade, harder to find, and have a less demand. However, these are easier to sell online. Let me tell you why.
It is easier to sell niche products online
Let’s say you want to buy some batteries. What you usually do? Probably, you will add that to your weekly or monthly shopping list. Or, some of you might order that from Amazon.
Let’s say you do not want batteries right now. But, when you are scrolling up on Facebook, you see an advertisement selling batteries 20% off. Great deal, huh? But, would you buy them and stock? Probably not.
Now, as you can see, people have already established ways to purchase everyday products. And, it is not easy to entice them to buy them online too. If the sellers really want to make an effort, they will have to offer big fat discounts, which is not economical in long run.
So, what if you sell niche products, like phone cases, cakes, candles, handmade soap, or socks?
These kinds of products can trigger impulse buyers online. When someone sees an advertisement for jewelry when scrolling up on Facebook and Instagram, there is a higher tendency for them to click that ad and make a purchase.
These products are one of a kind and not available everywhere. So, people see those as valuable deals online.
And, most importantly, people don’t compare product prices or specifications when it comes to niche products. If the price seems reasonable, they click on “Buy Now”.
Check our startup guides for beginner friendly business ideas:
- How to make custom phone cases and sell them online
- How to make and sell candles
- How to make handmade soap and sell them online
- How to sell jewelry online
- How to sell socks
- How to sell customized t-shirts
Are you looking for something else? Try reading these 15 online business ideas for beginners.
The best products to sell online
Here are the qualities of the perfect products to sell online. Take a look. You can click on the topics to read more.
Products that solve a problem
Products that solve a problem
It is a lot easier to sell a solution than a product. When you sell a solution to a problem, you can create resonating advertisements for your target audience.
Let’s say you are selling lumbar supports for office chairs. People suffer from back pains, and as soon as they see a sensible solution to this problem, there would definitely click on your ads and enter your sales funnel in no time.
Guilty pleasures, like eating ice cream, chocolate, takeaway food, expensive lingerie, cakes, jewelry, or even toys are addictive. Meaning, you can say hello to repeat customers. And, these can trigger impulse buyers in a split second with the right ad creative. So, what else should be there to make them perfect to sell online?
Create something new
Create something new
If you follow Kickstarter or Indiegogo projects closely like me, you would be amazed to see how these new product ideas can create temptation. There are projects that were backed by thousands of people overnight. Similarly, if you can start an online business to sell something new, you can easily build an audience around your product.
Doing market research before starting an online business
No matter how confident you feel about your new business idea, you must have to do market research before starting an online business. Honestly, spend some time gathering facts and testing waters before you start spending your hard-earned money.
The internet is full of data. So, doing market research before starting an online business is easier than it sounds. I am going to tell you two ways to check the market, and one way to test it before investing some serious money. Let us see how.
Do a keyword research online
We are going to talk about “Keywords” a lot. The keywords are basically a set of words that your potential customers use when they are searching for your product.
For example, if you are thinking of starting an online business to sell handmade soap, your keywords would be something like, “Buy handmade soap, best handmade soap online, premium handmade soap, handmade soap near me, etc.”
Just google for different word combinations and see which phrases gives you the most relevant results similar to what you sell. Then create a list of such words/phrases and your top competitors.
Next, you can use Semrush to spy on your competitors and to do keyword research. It unveils a ton of data about your competition, how they are marketing their products, market size, target customers, and so on. There are different subscription plans, but here you can try Semrush for free first.
Once you create an account, plug in the keywords and competitors that you found earlier to get an idea about the market. They also have a special competitor overview report that you can try for free. We will talk more about all these in step 8 when we talk about how to create a strong marketing strategy for your online business.
Check audience engagement on social media
If the competitor analysis report from the Semrush shows that a majority of the traffic to your competitors is generated through social media, head over to their social media profiles (Facebook, Instagram, etc.) and see what is going on there.
Check the how many people follow them, engage with their content, and their interests. Now these are your potential customers too. So, knowing them and their interests is essential to build a strong marketing strategy for your new online business.
Start Facebook and Instagram accounts, and create a narrative for your product
Do you know that you can start building an audience for your online business even without having the final product ready?
I usually use this method to test my product ideas before investing money in starting an online business. For example, if you can build enough engagement and interest on social media before launching your product, you can use it as proof of success. Plus, it will help you to attract some pre-orders and investors too.
Social media is the best way to create a narrative for your product. Create social media accounts (Start with Facebook and Instagram) and start creating content for what is going on behind the screen. Mark milestones, like developing the first prototypes, testing, and alterations to keep your audience engaged.
Take a look at this post on Instagram for example:
If you would like to start getting per-orders during this stage, you will need to have an online store. And, we will discuss how to create an online store for your business in Step7.
Define your target market and target audience
Have you ever tried playing darts blindfolded? Starting an online business without knowing your target market and target audience is just like that. Don’t ever do that.
What is target market?
Your target market is the end-users of your products. For example, if you sell kid’s meals, your target market is obviously the kids. So, by knowing their likes and dislikes, you can develop your product, packaging, and user experience to fulfill their preferences and make them fall in love with what you sell.
What is target audience?
The target audience is those who you should address in your marketing campaigns. For our kid’s meals example, your target audience can be both parents and kids. When you address the parents, they would care more about the nutrients, safety, or quality of your products. So, you have to adjust your advertisements to fulfill what they are looking for in your products.
Create a set of buyer personas for your online business
You may feel like these are all unnecessary steps to follow when starting an online business. But, trust me, these steps can save you from a costly failures down the road.
A buyer persona is the characteristics of your target market and audience. For example, by knowing what they do, their age, gender, likes, dislikes, where they hang out mostly, what type of content they read or watch, you can pinpoint your perfect buyer.
If you use Semrush, as we have suggested in step 1 to do market research, you can get an insightful set of data about your competitor’s target audience. Otherwise, it is all manual work to select your target market and audience.
Find suppliers or plan the manufacturing process
There are many different ways to source your products. Many sellers use DIY, dropshipping, print-on-demand, or wholesale as sourcing options when starting an online business.
Creating your own products and services
Handmade goods – like candles, knitted or wooden toys, clothes, or handmade soaps are some great examples of DIY online businesses. By creating and selling DIY products, you can start building your very own brand while having full control over what you sell.
This method is pretty much straightforward, and you might be an expert in that industry. So, there is nothing much for me to say here.
If you are just starting an online business, and if you do not want to go through all the hassles of contacting Chinese wholesale suppliers to find raw materials, check Amazon to find good deals on raw materials. If you have Amazon prime, here you can get a 30-day free trial, you can save a ton of money from exclusive discounts and a ton of time from next-day delivery.
Then, as your online business grows, you can find exclusive suppliers with better prices. Until then, keep things simple, and focus on starting your business as soon as possible.
Using dropshipping to start an online business
Dropshipping is an online order fulfillment method. It is easier, cheaper, and faster way to start an online business.
When you use dropshipping, you don’t have to maintain a physical stock of products. Instead, you use a third party wholesale supplier to send that product directly to your customers from their inventory. So, you don’t have to worry about storing, picking, packing, or shipping. It is all handsfree.
Dropshipping is a long story, and here we have a complete dropshipping startup guide for your to learn the whole process.
Using Print-on-demand to start an online business
Using print-on-demand is the easiest way to sell customized products online, without having to worry about production, inventory management, and shipping. It is somewhat similar to dropshipping, but here you can design and sell unique products.
There are some great POD services that offer worldwide delivery. And, you can manage the whole thing through a website. How convenient is that? We have a comprehensive guide on “what is Print-on-Demand” where you can read and learn how to start an online business with POD. Have a look.
Re-selling products from wholesale suppliers
If you have the resources to buy and stock products in bulk, then you can keep the best profit margins by re-selling products from wholesale suppliers.
There are different ways to find wholesale suppliers locally and internationally. However, when you start an online business, you should make it prone to emergency situations. As we have recently experienced, many businesses went out of business due to global shipping restrictions. Therefore, do not put all your eggs in a single basket, and keep different options open to source your products.
Plan how to deliver the products to your online customers
Let us find out how to sort out the delivery options for your online business. Remember, your delivery strategy can make or break your business.
By the way, if you are using dropshipping to fulfill orders, you can skip the first part of this section and start reading from the pricing strategy for delivery.
Different delivery options for online businesses
Depending on the order value and destination, there are different ways to manage shipping and delivery for an online business.
- Using postal or carrier services (UPS, USPS, FedEx, DHL, etc.)
- Local package delivery services (Uber eats, Postmates, etc.)
- In-house delivery (Managing your own delivery team)
If you offer international shipping, you will have to use postal or carrier services to deliver the orders from your online store. The delivery cost can vary depending on many factors, and you will have to use their pricing calculators to compare prices.
If you use Shopify to create your online store, which we will discuss in step 7, you can have shipping discounts up to 70% from almost all major carrier services for your products. I will tell you more about this later.
Local package delivery services are convenient and flexible options for those who are planning on selling locally. Then you do not have any commitments and choose a service or deliveryman as required. The cost of such delivery services can be higher than the other options, but it can be the quickest way to get this started.
Developing an in-house delivery team can be costly. But, if you have the resources and capital, having a dedicated delivery team can help you to have full control of your process. Then, you can mitigate most of the unpleasent user experiences of shipping delays.
Calculating the delivery cost
There are three ways to add the delivery fee to your online shopping cart.
- Free delivery
- Flat rate or table rate shipping
- Live delivery cost calculation
Free delivery is easy to understand and it can improve the conversion rates on your online business. People love free delivery, and they do not get too much stressed over longer delivery times. So, if you have a good set of costing data, you can adjust the product prices to include the shipping cost and offer free delivery for your customers.
Offering free delivery for orders above a certain value can increase your order value and conversion rate at the same time. For example, you can offer free delivery for all orders above $100, or flat rate shipping for every other order.
Flat rate shipping is again easier to understand and implement. Rather than including the shipping cost to your product price, here you can list it as a separate cost.
Table rate shipping is like offering different price tiers based on the destination or the order value. For example, you can offer different shipping costs for different cities or different order values.
If you are using carrier services, most of them offer a pricing API to get live shipping costs on your online store. So, when your customers enter their details, it displays the actual delivery cost from the carriers.
Design your brand identity
A strong brand identity design can set you apart from all those generic competitors and help you to sell more. It creates authority, trust, and memory.
After you started an online business and launched your marketing strategy, people will come and visit your site. And, if they see a cheap looking website, logo, and graphics, they will immediately close that tab thinking that this is some kind of scam.
Have a good logo for your online business
I do logo designing as a hobby (you can see my profile on 99design here), and you will be surprised to know how much new businesses spend on creating their logos.
I am a mid-level designer there, so I only have access to see logo contests up to Gold Package. And, every day, there are hundreds of design contests for Gold logo packages, which costs $899 per logo. And if you go for a platinum package, it will cost $1200 per logo.
That means new businesses are dead serious about their brand identity.
So, if you decide to have the logo that your nephew, who can “paint well”, has designed on “Photoshop”, it is not going to go well for you.
I am not asking you to spend $1200 per logo. But, you can hire an experienced logo designer from Fiverr to get a reasonably good logo for under $25. And, trust me, it is worth investing that money to get a good logo.
Colors and fonts are important in an online business
Even the simplest brand choices like color palate or fonts of your business play a major role when it comes to conversions.
Colors can provoke certain moods, and there is a complex psychological aspect behind the colors. And, I know for sure the fonts can build trust. You may feel like these are some silly facts, but I have been developing online stores for years now, and I have seen how the colors can affect your sales. It is better if you can read more about how to build a brand identity for your business.
Set up an online store for your business
When you start an online business, your online store is going to be the face of your business. Therefore, it is important to have an online store that can sell. In this section, I will tell you the best and the easiest way to create an online eCommerce website
There are so many canned solutions to setup an online store for a business without having to go through any hassles. And, these solutions won’t cost you a fortune. In fact, you can have an amazing, fully-functional, online store for less than $30 a month. The best thing is, you don’t even need to hire a web developer to create your store.
There are many eCommerce shop building platforms available, but, here I am going to introduce you to a solution called Shopify.
Why you should use Shopify to create an online store
- It is affordable. They offer a $29 a month plan, which is more than enough to set up a fully-functional eCommerce site to start your online business.
- It is beginner-friendly. If you can point your mouse and click on buttons, then you can create your Shopify store without needing any advanced technical knowledge.
- There is plenty of room to grow. You can upgrade your plan to from $29 to $79, $299, and even $2000 a month to increase features and resources as your business grows.
- It is cross-platform friendly. With Shopify, you can sell on the web, mobile, on Facebook, Instagram, Amazon, eBay, Etsy, or you name it. You can sync your inventory to sell on multiple sales channels.
- You will not get stuck. There are plenty of amazing themes and plugins that you can use to customize your website and to add custom functions without having to write a single piece of code.
So, go ahead, and create your Shopify account now. Here you can get a 14-day FREE trial to test it before making any commitment.
Here is a FREE service for our readers
If you guys ever get stuck when creating your Shopify store, you can simply send me an email to firstname.lastname@example.org and tell me where you get stuck. Then, I will personally check your website and help you resolve the issue.
This is completely a free service that we offer to our beloved readers. So, we got your back.
When you create your online store…
As we have mentioned, creating an online store on Shopify is easy. However, there are a few good practices you should follow when creating a website. You can read more about these practices from this article about the best Shopify store examples with UI/UX designs.
Once again, if you ever get stuck creating a Shopify store to start an online business, just send us an email, and we can help.
However, if you feel like you need to hire someone to create a Shopify store for you, so you can focus on other business areas, you can even do that too. There are plenty of freelance web developers who can help you to set up a Shopify store.
Start marketing your online business
After going through all the above steps to start an online business, now we came to the final, yet the most challenging part of the process. Marketing an online business is not easy. And, many online businesses fail due to the lack of a strong marketing strategy.
As a rule of thumb, I spend 70% of my time and 70% of the cost of running my businesses for marketing. And, I know for sure, you will have to do the same for your new online business.
So, how to get started?
First of all, you need data to create a strong marketing strategy for your business. I cannot stress this enough. There is no room for guesswork here unless you are happy to waste your resources doing trial and error.
How to find data to start marketing
What sort of data do we need to build a strong marketing strategy?
- First, we need to know who are your competitors.
- Then, you should know about their targeting. Because, you have to target them as well.
- Also, you need to find out where you can reach your target audience. For example, should you run your ads on Facebook or Google?
- Then, what about average ad expenditure of your competitor?
- What sort of ad creatives are most popular among your target audience?
- You have to know the when your customers are most active online.
The list goes on…
So, how can you find all these information to improve the efficiency of your marketing strategy? We have already given you the answer. Do you remember that we have introduced you to this tool called Semrush?
It actually gives you a ton of marketing insights to develop your online business. Of course, you can spend days doing research and find all these information. But, it will cost your time, which you could have used on more important things, when starting your business.
What I suggest is, use Semrush for at least a couple of months until you get a good grip into the market. Once you know your competitors, top keywords, trends, and audience information, you know which channels to follow. Then you can ditch this tool.
Using social media marketing for your new online business
For most of the online businesses, social media marketing is going to be the cash-cow for them. And, out of all the social media channels out there, I would suggest you to try Facebook and Instagram to get started.
Facebook and Instagram have the highest amount of audience engagement, and they have super amazing businesses tools, like ad managers, audience insights, and engagement analytics for your start and grow your marketing strategy.
Therefore, spend some really good time and money on Facebook and Instagram marketing when starting an online business. Remember our rule of thumb? 70% time and money on marketing.
Sell, but don’t try to be too salesy
Check any of the official Facebook or Instagram pages of popular online brands. You will notice that none of them use their social media channels only to promote their products. Instead, they post social content that can build audience engagement for their business.
There is a reason behind this strategy. People visit Facebook and Instagram not to buy stuff. They use these platforms to connect with people, watch memes, videos, and argue. So, to build an audience for your business, you have to create content, which people are looking for. This is called content marketing.
So, your goal should be to create an engaging brand narrative to build an audience for your products.
Step 9 & 10:
Scaling up your new online business
Let me ask you a quick question. How fast are you expecting profits from your business?
You cannot plant an apple tree on Saturday and expect apples on Sunday. It takes time for a small plant to root, grow, and provide you with apples. Same goes for an online business. You will not get profits the very next day, next week, or even for a full year.
I have given up so many businesses just because they were not generating profits soon. However, now I wait, and I try to understand what I can do to make a new business profitable. Most of the time, there is nothing wrong with the business idea, it is a problem with marketing. Once you figure it out, and make the necessary changes, it will start giving you the golden eggs.
I wrote this blog for nearly two years without generating any profit (Yes, blogs are businesses too.) My wife was so angry with me, because for everyone it seems like I was wasting my time and money on something useless. But now, this blog generates around $1000 a month as profits.
So, be consistent with what you do. Use and invest in the right tools when you start an online business. You have to sink your teeth into the whole process. There will be sleepless nights, losses, and an angry wife/husband. If your new business is not working, repair it. See what it wrong, and make it working.
Now you know how to start an online business
Here we have explained every step of starting an online business, except how to get the legal stuff done. The legal requirements depend on the country you live and the regulations of your local authorities. Therefore, it is hard to generalize the legal requirements when starting an online business.
However, if you are from the United States, you can follow this link to the SBA website, where they provide some valuable information into legal clearances, funding options, and many more.
So, start your online business right now, and if you come across any question, just shoot it to email@example.com and I will try my best to answer it as soon as possible. And, you can use the same email address to get free support building a Shopify store to start an online business.
Wish you all the best! And, do not forget to like us on Facebook and Share this article with your business partners.
P.S about affiliate programs:
If you have noticed, I have promoted some services in this article. And, I have only mentioned the services or products that I personally use for my businesses. So, I know for sure that these are actually worth looking into. And, some of these services pay me a commission for promoting them here, and this commission will never affect your purchasing cost anyway.