How to Start an Online Business – A Definitive Guide

Starting an online business is not that easy, however…

Starting an online business may seem like an overwhelming task. However, we have broken down the whole process into four parts to make it a lot easier for you to understand the complete process of starting an online business.

Welcome! This is your definitive guide to starting an online business.

According to statistics, there are almost 4.5 billion active internet users. This means if you open up an online storefront to sell your products or services, technically, you can reach a vast amount of potential customers without any geographical boundaries.

Compared to the higher costs and number of resources required to set up a brick-and-mortar store, the costs and resources needed to start an online storefront are almost negligible. If you are looking for the exact numbers, you can start an online business under $200 in 2020. We’ll show you how.

Therefore, the internet offers you a great opportunity to sell your products or services to a substantial amount of customers with a minimal expense. All you have to do is, build an online storefront, promote your products and services, and sell them on the web.


In this definitive guide to starting an online business, we will talk about:

PART 1 – Things to do before setting up your online business

  • Identifying your skills to start an online business
  • Researching the demographics of your target market
  • Validating a business idea
  • Naming and creating a business theme

PART 2 – Where you can sell your products or services

  • Pros and cons of selling on online marketplaces
  • Building your own online storefront

PART 3 – Free and low-cost business services and tools to use

  • The essential business services and tools to use
  • Using analytics tools to measure your progress

PART 4 – How to handle marketing for your online business

  • How to build a fail-proof Facebook marketing strategy

You can click on the above topics to scroll down to the relevant sections.


PART 1 – Things to do before setting up your online business

In the following section, we will discuss the steps to setting up your online business. These steps will help you to build a strong foundation for your future business. Therefore, carefully go through the instructions and make sure you understand the whole process before start investing your hard-earned money on an online business.

Identifying your skills to make money from an online business

Online business is a great way to make an additional income. Also, for some people, it can even be a full-time career. Therefore, it is important to find the right niche to start an online business, which fits with your interests and most importantly, the skills!

Create a list of your hobbies and interests

Start creating a list of your hobbies, interests, and skills. Remember, most probably your online business can be a full-time career for you. So, it would be best if you found something that is interesting and enjoyable to do for the rest of your life.

You can use a pen and paper, a Word document, or a Google Doc to create your list. Google Doc is pretty much similar to Word, but it is saved online. So, you can access your documents from anywhere. If possible, use a Word document or a Google Doc to create your list. So, you can keep everything in place.


Think about how to build a business out of your hobbies and interests

Now think and create a list of possible ways to translate your hobby to a business idea. There are two types of things that you can sell online.

  • Products – Products are tangible items, such as candles, socks, t-shirts, and cupcakes.
  • Services – Services are intangible. For example, tutoring, plumbing, coaching and consulting are service.

Try to derive business ideas from your interests. It can be either a product-based or service-based online business.

 Here are some examples.

  • Good at teaching maths – Starting an online tutoring business
  • Passionate about wildlife photography – Start an online business to sell photos and videos, maybe you can make money through by selling or promoting camera equipment as well.
  • Like making candles – Start an online business to sell candles online
  • Good at making cupcakes – Start an online cupcake business

Likewise, try to find business ideas that match your hobbies. If you need help, here is a list of online business ideas to get some inspirations.

List your resources to start an online business

In the same document, add another section to list the resources you already have. These can be your skills, money, availability, or equipment.

For example, say that you have added photography as a hobby, now you can say:

  • You are good at taking photos
  • Can do photo editing
  • List of the camera gear you have
  • and the number of hours you can allocate for a business

As another example; If you love collecting jewellery, maybe you can start an online jewellery store. So, you can say:

  • You have a good eye for fashion
  • Can spend $700 as the initial investment
  • You are free on weekends and can spend two hours every day for your business

Next, based on the resources you have, try to narrow down your list to a maximum of three ideas. It’s completely up to you to choose your priorities. For example, even though you have less number of resources, you might love photography than anything else. So, you can add more weight to your passion. However, try to make rational decisions. Sometimes it can be lovely to pursue your dream hobby, but it won’t be practical unless you have enough money or resources to start.


Identifying the demographics of your target market

The next step is to find out the target market and audience for your online business. This step will help you to find some essential information to validate your online business idea, and to build an effective marketing strategy that can attract your potential customers.

Start by identifying your target market

Your target market is basically the end-users of your product or service. For example, if you sell t-shirts, think who is going to wear them. Are you targeting men or women? What is the age group? Where do they live? What are their likes and dislikes? Try to find answers to these questions to find your target market. If you need help, have a look at this guide about selecting a target market and audience for eCommerce.

Then, identify your target audience

Your target audience is who is going to purchase your products and services. Most of the time, your target market and the audience will overlap each other. However, if you sell baby clothes, since babies (your target market) won’t be able to pay and buy your products, your target audience will be the parents. Then, try to find answers to the questions given under the previous section to find the perfect target audience for your online business.

Create a buyer persona

A buyer persona is a hypothetical person that you are planning to sell your products and services. Name that person and try to create an ideal customer profile for your target market and audience. For example, if you sell jewellery, your buyer persona can be Emily, who is 28 years old, lives in Texas, working in a… just complete the profile. So, when you build your marketing strategy, you can create advertisements that can resonate with the likes of your potential customers.


Validating the ideas to start an online business

Now, it is time to validate your online business ideas to see whether any of them are going to be successful or not. In this section, we are going to talk about some free tools that you can use to measure the market conditions for your online business idea. So, go ahead and start a new document to record all your findings. In this section, you will learn how to measure the popularity of an online business idea from SERP analysis, one-on-one surveys, competitor analysis, and trend analysis.

Using SERP analysis to validate your business idea

We are planning to start an online business. So, the best place to collect data to validate your idea is the internet. And, the best tool to validate your idea is Google. Simply type in the keywords of your business idea on a Google search and have a look at the following elements.

  • Paid ads
  • First five organic search results
  • What is on the featured snippet
  • Video suggestions

Check the below SERP screenshot for “Pet Toys”. What information can we get from this image?

Conducting one-on-one surveys to validate an online business idea

If you want to get a comprehensive data set to validate your online business idea, it is better to talk with actual people. Since you have already figured out your target market and audience, find people within your target demographics for the surveys. Ask them questions between the lines of the following suggestions to validate your idea before starting an online business.

  • Their ideas about existing businesses/products/services
  • What do they think as useful value additions
  • Would they think that your business propositions can help them to solve their problems?


Using competitor analysis to validate an online business idea

Doing a competitor analysis will help you to reveal some useful information about the likes and dislikes of your potential customers. The best place to do a competitor analysis is the reviews and comment sections of their product pages. For example, you can check the reviews sections of the top competitors that you have identified under SERP analysis.

Have a look at the below screenshot taken from Amazon for a dog toy. By looking at the user ratings and number of items sold, you can see that it is a popular product. However, if you go through the reviews section, you will notice that there is an obvious customer pain-point. In this case, it is the durability of this product.

So, you can identify what is missing from your competitor’s value propositions, and try to fill in that void with your business idea. For example, you can create a durable pet toy, or offer a money-back guarantee as to the value proposition in your online business (This is only an example).

Using trend analysis to see the consistency of demand

People’s likes and dislikes change over time. It will be a waste of your time and money if people lose interest in your product or service niche with a few months. So, it is a good idea to make sure that you are starting an online business, which has a consistent trend pattern.

You can use Google Trends, a free tool to measure search trends, for this purpose. Have a look at the below two screenshots about how search trends can vary over time and how to find a healthy trend pattern to start an online business.

Select the best option from your list of business ideas

Now you have enough information to make a sensible decision about your future online business. You know what you like and can to do for the rest of your life. Also, you have enough market information to decide what works well. So, make a good decision and select one idea to start an online business.


Finding a name and creating a business theme to start an online business

Now that you have selected an idea to start an online business, it is the time to design the looks and feels of your online business. Many small business owners often forget or skip this step. However, we strongly believe that having a well-defined theme for your online business helps to build an authority for your business from day one.

Come up with a proper name to start an online business

Having a memorable business name helps your customers to think and find your business when shopping online. There are many ways to come up with a proper business name. However, in this post, we are going to discuss a three-step method to select the perfect name for your business.

The first step

Brainstorm a list of possible names for your online business. Try to come up with simple and short names. So, people can easily remember the name of your business. You can make up a business name based on what you sell, types of material you use, or you can even name your business after yourself. Here are some best practices for naming an online business.

  • Make it easy to spell and tell – Helps to make it memorable, and helps your customers to search for your online business easily.
  • Don’t go for the abbreviations – It will be hard for you to rank your site even for the name of your business.
  • Don’t go for wordplay names – It might be tempting to have a name out of the blue. But, make sure that you can stick to that name for a very long time.

The second step

Check whether that name is a registered trademark of another company. If it is a registered trademark, don’t try to use it. One thing is that it is illegal to do so; Secondly, you will have to compete with another company to rank your storefront on Google even for your business name. You can check on the patent and trademark office database to see if this business name is already taken. However, it can be an exhausting process to do so. Therefore, simply run a Google search with the name of your business within the quotation marks. So, it gives the exact matches. Unless you get an empty result page, simply find a new one.

The final step

Check the domain availability. Sometimes, even though the name doesn’t show up on Google, someone can have already purchased that domain name. So, simply go to a free domain lookup site like GoDaddy, and plug in the name of your list to see if those domains are available to purchase. If you see that dot com ( domain is unavailable, that probably means that business name is already taken. So, try another one. Likewise, find an available name to start your online business.

Choose a colour pallet for the online business

Having a properly defined theme for the online business helps when it comes to building a web store, or when creating advertisements for the business. At this stage, you don’t have to invest in creating a fully-fledged branding guideline. All you need is the basic brand identity elements such as a logo, a colour palette, a set of fonts, and a tone for your brand message.

First, select a suitable set of colours to start an online business. Colours can stimulate certain feelings among your customers. Check this colour pallet and see what works well for your business.

Pick a tone for your business

You can use the below list of words and pick three words that define your business scope. Those are called brand-adjectives. This will help you to define a tone for your business.

Create a logo for your business

Your logo is going to be everywhere. It will be on your storefront, facebook page, and ads. So, it is better to get it done right. Don’t use any sloppy, cheap-looking logos. So, people will think that your business is not legit. Unless you are a designer, try to hire a professional freelancing logo designer on Fiverr to get a good logo. It won’t cost you more than $30. Also, make sure to provide them with your chosen colour palette and the brand adjectives to get a perfect logo design.


PART 2 – Start an online business by creating an online store to sell your products or services

There are two ways to sell your products or services online. You can either list them on well-established online marketplaces like Amazon, eBay, and Etsy or start selling them on your own online eCommerce store.

So, in this section, we are going to discuss the pros and cons of starting an online business on popular marketplaces and the benefits of creating an online store.

Advantages of starting an online business on popular online marketplaces

Starting an online business on popular online marketplaces like Amazon and eBay is the easiest, fastest, and cheapest way to get started. It won’t take more than a couple of hours to create an account and list your products and services on these marketplaces.

Also, by creating product listings on such established marketplaces, you get a chance to piggyback their marketing process. For example, you can get a chance to be included in their ad campaigns, and your products can get featured on their cross-selling and up-selling suggestions.

Starting a product listing on these marketplaces won’t cost you a dime. For example, if you start selling on eBay, you can get 50 zero insertion fee listings. That means you can create 50 listings per month for free.

Disadvantages of starting an online business on popular online marketplaces

One of the biggest disadvantages of creating a product listing on those marketplaces is the lack of customisation opportunities. For example, when you use such marketplaces, you have to stick to their shop templates and structures.

Also, such online marketplaces have a ton of rules and regulations about selling. Usually, they are more focused on buyer protection policy. Of course, this is fair and understandable. However, after you start an online business and start selling, you will realise that there can be some buyers who are irrational and tries to take advantage of the buyer protection policies. For example, even if someone allegedly reported that they didn’t receive the product, these marketplaces can automatically lower your visibility by downgrading your listings.

Benefits of starting an online store for an online business

Even though starting an online store won’t usually cost you more than $7 a month, it can take time to build one and start getting the visibility. However, if you are planning to start a long-term business, it is a good idea to start working on your online store from the very beginning. So, you will have enough time to get things done.

Starting an online store is not a complicated process. If you have basic computer skills, you can do that as a weekend project. Otherwise, you can even hire a freelancing web designer for under $50. You can learn more from this complete blueprint to starting an online store.


PART 3 – Selecting the best business services to start an online business

Thanks to the latest developments in web services, now there are plenty of free and low-cost online tools that can make your life easier when starting an online business. In this section, we are going to discuss some of the best (and, essential) tools and services that you can start using.

The essential business services and tools to use

Business services related to financing and payment handling

  • You can use crowdfunding platforms like Kickstarter and IndieGoGo to find money to start an innovative online business.
  • Lending services like LendingClub and Kabbage offers small loans for small business owners.
  • You can start using PayPal and Stripe as online transaction gateways of your online business.

CRMs (Customer relationship management) tools for your online business

CRMs offer you a wide range of tools that you can use to build customer engagement in your online business. Services like HubSpot and SugarCRM are the popular CRM tools available for this purpose.

Tools to handle customer services

Start using communication services like Facebook messenger, WhatsApp, Google chats, or emails to handle customer services. Remember, When you start an online business, your customer base is more likely to break any geographical boundaries. So, start using the services that are commonly used among your customers.

Tools for internal communications and planning

If you are working with a team, it is better to start using collaboration tools like Slack and planning tools like Asana to manage the communication between your team. So, you can easily assign tasks for your members and monitor the progress.

Using analytics tools to measure your progress

Analytics tools let you understand the customer behaviours on and off your online store. Knowing this information helps you to refine your processes to increase engagement and attract a lot more customers.

Therefore, make sure that you are effectively using the analytics tools like Google Analytics and Google search console for your eCommerce store. Also, if you are using popular marketplaces to sell your products or services, almost all these platforms offer free analytics tools to measure the performance of your listings. So, make sure to explore and learn the proper usage of such tools.


PART 4 – How to handle marketing for your online business

Marketing is the hardest part of starting an online business. There are hundreds of ways to handle marketing for your business. However, learning all these methods is impractical and a waste of time. So, in this section, we are going to learn one easy way to build a fail-proof Facebook marketing strategy.

I fear not the man who has practised 10,000 kicks once. But, I fear the man who has practised one kick 10,000 times.

Bruce Lee

So, let’s learn one good way to handle marketing when starting an online business. You can always research and find other ways as you move forward.

How to build a fail-proof Facebook marketing strategy

When we discussed about the SERP analysis to validate your business idea, we have seen that eCommerce juggernauts already dominate the first page of Google. Unless you have a substantial marketing budget, there is no point of trying to compete with those businesses. And, that is why we need to start using social media for our marketing. It is much effective and cheaper to get started.

People wake up to social media. So, there is a big chance that most of your potential customers are hanging out on social media as well. Therefore, by having a powerful social media strategy, you can build an engagement with your customers even before they want to buy your products.

So, as soon as they want to buy something, the first thing that would come into their mind is your online business. That is the underlying idea of the social media marketing strategy that we are planning to build.

The following steps are explained in detail on this guide about how to build a powerful Facebook marketing strategy for your business. The following section gives a brief overview of the whole process.

Step 1 – Find the right demographics for the target customers of your online business

We have already learnt how to find the right demographics of your potential customers at the very beginning. So, now you can map that data on Facebook Audience Insights tool and create your audience groups. You can use these audience groups to target your ads and other content.

Step 2 – Learn what types of content your potential customers enjoy most

You can find out the most popular pages and groups of your potential customers using the audience insights data. Then, you can join these groups and follow the pages to study the likes and dislikes of them. Try to find out what type of content they enjoy most.

Step 3 – Create a Facebook business page

Start a Facebook page for your business. You can start inviting your friends and family to like your page but try to keep this to a minimum. Because, when people start liking your page, the Facebook algorithm will think that your page more popular among people with similar interests. So, it will start suggesting your page to people with similar demographics. But, if your friends and family don’t fall into your target demographics, this can hurt the quality of the organic reach.

Step 4 – Start creating content in your online business niche

Now, it is time to create content. Since you already know what your customers would enjoy most, you can start creating similar content. These can be photos, memes, videos, stories, or whatever. Also, it necessarily need not to be related to your online business. Follow the best practices of content marketing when creating content pieces. For example, follow a content calendar, and post them when your audience is most active.

Step 5 – Run a couple of paid ad campaigns

Run at least one ad campaign every month. You can use the demographic groups that you have selected in the first step as your target audience. Running ad campaigns help you to boost the number of followers, allowing you to engage with a wider audience.

Step 6 – Transform your content readers into paying customers

The whole purpose of running a Facebook marketing strategy is to drive sales to your online business. So, time to time, publish product-related posts with a bold call-to-action button like “Buy Now.”

Starting an online business – Let’s wrap it up for now

As we told earlier, starting an online business is not an easy process. However, if done right, it can help you to build a steady revenue stream every month. Also, for some of you, it can even be a full-time career. So, in this post, we have tried to summarise the whole process of starting an online business to give you a comprehensive idea about the complete process.


Compared to the past, now starting an online business is a lot easier and a lot cheaper. Some low-cost services and tools help with every single step of starting an online business. All you need is clear guidance of the real usage of such tools. Therefore, in this post, we have included a list of the essential business services and tools that come in handy when starting an online business.

Finally, we discussed how to build a strong and fail-proof Facebook marketing strategy for your online business. When you first start an online business, focus on one good and practical marketing strategy that will help you to make your first sale. Later on, you can start researching and expanding your online marketing strategies. So, we believe that having a strong Facebook marketing strategy is the best way to get started with digital marketing as you start an online business.

Starting an online business is not a one time process. You need to stay updated about the latest tips, tricks, and news to further develop your online business. So, stay in touch with us on Facebook, and get notifications about what really matters in eCommerce.