How To Start Your Online Business – Digital.com

Starting an online business is easy. You can sign up for an account on an online marketplace, such as Amazon, eBay, or Etsy, or create a website, and you’re set. But if you want to set one up for success, you need to do much more work.

Since creating a small online business can involve physical or digital products and services, this article focuses on both.

Key Takeaways

• Starting an online business can be as simple or as complicated as you want, the business structure can affect your personal liability as to the owner significantly.
• An online business is much easier to start than an offline one, you can start by spending little to no money.
• To ensure sustainability, find a product or service that you can continue selling for a long time.

Steps for Starting an Online Business

The steps for starting an online business that succeeds in the long term include:

1. Conducting market research.
2. Defining the target audience.
3. Writing a business plan.
4. Deciding on a business structure.
5. Seeing to legal requirements.
6. Sourcing products.
7. Creating a brand.
8. Launching the online business.
9. Growing the business.

Coming up with the next million-dollar online business idea is essential, but it is also usually the easiest. Assuming you have an idea for your online business and have nailed down the general concept, it’s time to roll up those sleeves and get ready to do some work.

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Conducting Market Research

Most people who go into business think they’ve hit on a brilliant idea that makes them the next Jeff Bezos. Unfortunately, only about half (55%) of new companies make it to the five-year mark, and the top reason the other 45% fail is that they were unable to validate demand for the product or service.

If there is no demand, a business is doomed to fail. You need to find out if enough people are willing to buy your proposed product or service. Before anything, internalize it. Ask yourself the following questions:

• Does the product or service provide a cost-effective solution to a problem?
• Would you care enough for the product or service to buy it?
• Do you know anyone willing to buy the product or service right now?

If your answer to all the above questions is yes, then you might have something worth pursuing. You should then try to find out if other people think the same way.

Talk To People

You might think putting your great idea out there is risky because someone might jump in ahead of you. But talking to people who form part of your target audience can help you avoid wasting time and effort on something that simply won’t fly.

Online survey platforms, such as Jotform, can help you reach out to people outside your immediate circle. Jotform offers a free version with all features included, and it integrates with Facebook so that you can start getting feedback right away.

Check out our guide for validating demand on other aspects of doing preliminary market research for any online business in the making.

Use Crowdfunding

If you intend to develop a book, gadget, tools, software, game, or service for which you can show a prototype or minimal viable product (MVP), an excellent way to validate demand is to put it on a crowdfunding platform where people can show their support for a particular idea.

This game, for example, exceeded its goal in raising $10,000 by a large margin pretty quickly, a clear indication that it’s a good idea to bring to the market. Crowdfunding is also an excellent way to raise funds to develop a product or service because you don’t have to pay the money back (in most cases) unless you have a reward-based campaign.

Check out our definitive guide on how to crowdfund a business idea.

Do Product Research

If you plan to sell a product on Amazon, for example, that you source from a third party, the best way to find out if there is a demand for it is to do product research. Product research tools provide analyses and trends on the sales and performance of a particular product, so you’ll have a pretty good idea if your product is likely to sell on the platform at a nice profit.

The top Amazon product research tools are AMZScout, Jungle Scout, and Helium 10, with AMZScout being the easiest to use if it is your first time. These tools are specific to Amazon but worth investing in, considering the platform has the biggest e-retail market share in the U.S. at 41%. Also, the market insights you get probably apply quite well on other platforms, including an independent e-commerce website.

Define Your Target Audience

Ideally, you should conduct market research on your target audience, but it can be a sort of chicken-and-egg situation when starting an online business.

To conduct market research on your target audience, you need to define your target audience. To do that, you need to conduct market research.

Nevertheless, your preliminary research can be for the general market, sort of casting a fishing line to see what bites you get with your bait. You can use that information to create buyer personas and identify your target audience.

The buyer persona typically includes the following:

• Name and title
• Personality, such as psychological traits, professional background, demographics, sources of information, awareness of your product, attitudes, and beliefs
• Challenges
• Goals
• Buying behavior

You can create your buyer personas quite easily with the right tools. Hubspot is among the best marketing tools for creating buying personas for small businesses. You can use the free buyer persona guide and templates to organize the market research information you gather.

Creating buyer personas is crucial to help you understand what makes prospective customers tick and their needs and concerns so that you can tailor your product development and services accordingly.

Write a Business Plan

Now that you have a viable business idea and a target audience that represents potential customers, the next step is to write a business plan.

If you’re groaning, thinking it’s like that despised term paper no one’s ever going to read, think again. A business plan is vital for the positive outcome of any online company because it outlines what needs doing to achieve your goals. Think of it as a roadmap from point A to point B in the quickest possible time at the least cost.

Business plans come in many flavors. For instance, if you want to start an e-commerce business, you might want to check out our guide for writing an e-commerce business plan.

You can also use any of the best business plan tools to create a customized one based on your input.

Upmetrics, for instance, provides an affordable and comprehensive service ideal for startups who might want to get investors in the future. More importantly, it offers paid plans you can cancel at any time.

If you want a business plan for your eyes only, get started using our one-page business plan.

But if you eventually intend to get investors, you’ll need to include the following elements:

• Executive summary: An overview of the business and ideally a standalone document that provides highlights important to investors
• Products and services: Details about the problem, your solution, the competition, and your competitive edge
• Market analysis: Includes information about the target market, potential growth, and expected changes in the industry
• Marketing plan: Details how you plan to reach and sell to customers, the costs, pricing plans, and strategic partnerships
• Company organization: Tells who is who on the team and the company legal structure
• Financial projections: Includes sales projections for the next six months, profit and loss (P&L) statements, cash flow statements, and balance sheet

Some portions of the financial projections section might pose a bit of a problem if you haven’t yet started your business. But you can replace them with the following:

• Startup budget
• Startup costs worksheet
• Projected P&L statement
• Projected balance sheet

If you plan to get investors or a loan, you also need to include:

• Sources and uses of funds statement
• Break-even analysis

Determine a Business Structure

Note that your business name doesn’t necessarily need to be the same as your brand name. You can also create a logo with free tools like Wix.

If you want a professional to create your brand identity, you can also check out our list of best branding agencies of 2023. It costs between $50 and $200 per billable hour, but it might be worth it.

What To Do Next

Launching your online store from the ground up with powerful website builder tools helps in building a good foundation for a successful business online. It is easy when you follow the simple steps above. After thorough planning and determining your business’ branding and trajectory, bringing your business online needs a low-cost upfront that allows you to start in no time.

Invest in your business’ social media accounts and ensure that your website offers a good buyer experience and is easily accessible. Your social media engagement posts act as the storefront that represents your business in the online world. An organized social media management strategy using online tools is a game-changer for every e-entrepreneur. Be on the lookout for new e-entrepreneur tools that help businesses thrive online. These tools make your online entrepreneurial journey as smooth and enjoyable as possible.