Owning and running a successful business is everyone’s dream. After all, who doesn’t like being the boss and setting convenient work hours? There is also the benefit of profiting from a niche that you are passionate about. Ecommerce platforms have become a powerful driving force in retail and made owning an online business a more attainable goal.
But like any other venture, starting an online business requires a well thought-out approach. While there is no right way to start a business, you can adopt certain strategies and practices to improve chances of successes. What matters is how you combine different aspects with your personal experience to create a truly unique product or service. In this guide, we teach you how to start an online business.
Benefits of Starting an Online Business
There are plenty of benefits that come with starting an online business. Some of them are listed below.
Set your own hours: If you are the kind of person who hates mornings or slumps in the afternoons, you’ll appreciate the convenience of setting your schedule around when you’re most productive.
Work from anywhere: As long as you have an internet connection, you can work from anywhere. This leaves room for travelling and other things you love to do. You don’t have to be tied to a physical location to run a successful online business.
Higher income potential than traditional jobs: Rather than fight tooth and nail to get a 3% salary raise, you can take the limitless possibilities offered by an online business. There is no limit as to how much income you can generate from an online business. You get what you put into it and more. Of course, you have to work hard.
Generate a passive income: If you love the idea of making money in your sleep, an internet business opportunity will appeal to you. The right business models can offer a passive income and supplement what you get from your day job.
Direct and immediate impact on people’s lives: Internet moguls like Neil Patel (Kissmetrics, and Crazy Egg), Sean (Location Rebel) have helped thousands of people in their respective fields, all while living a life they enjoy. Why not start an internet business and live such a fulfilling life?
Are There Any Drawbacks to Starting an Online Business?
Anyone with a successful online business has, at least once a month, thought to themselves:
“I should get a day job.”
Because as great as the lifestyle may be, there are times when so much responsibility gets to them and they wish things were easier. After all, the procurement skills acquired when running this kind of business are valuable and lucrative to the right firm.
And while the tradeoffs are always worth the hassle, you can expect the following downsides when you venture online.
Lack of a social life: You don’t get to see your coworkers and have a few drinks or chat. The inability to interact with a community and socialize can take its toll after a while.
Emotional roller coaster: Regardless of how passionate or successful you are, running an online business will have high highs and low lows. If you cannot handle the emotional roller coaster, then an internet business is not for you.
Responsible for all business aspects: Even if you delegate some duties, the fact is that you are solely responsible for ensuring everything runs smoothly. This includes accounting, taxes, order fulfillment and more. This is particularly stressful if you are in a location that doesn’t favor small businesses.
Inability to turn it off: There are times when you long to stop thinking about work but can’t. After all, there is always something you should or could be doing.
What Type of Business Can You Start Online?
An online business, regardless of the type, can be good fit for anyone depending on what their goals are. Check out the different types to get an idea of what options you have.
Information product: You can create a membership site and teach people how to do something.
Ecommerce website: Build an online store and sell physical products. They can be items you’re an affiliate for, dropshipping or manufacture.
Freelancer: You can freelance in almost any industry, including online marketing and B2B writing.
Social media influencer: If you have a large social media following, especially on YouTube and Instagram, you can create content and popularize personal brands. It’s tough in the beginning, but your efforts pay off in time.
Affiliate marketer: Create a site with special links and make money when visitors click on them or purchase a product.
Coach/consultant: Start a consulting business in a niche that you are knowledgeable about. People will pay to learn from your expertise.
Blogging: This is one of the easiest online businesses to start. Simply create a niche website and post articles.
Start an Online Business in 6 Steps
#1 Step: Find a Product Niche
Because of the fierce online competition, finding the right products to sell is a strategy in itself. It impacts every other aspect of business including company name, website theme and shipping options. There are two types of products you can offer i.e. niche products and commoditized products. The latter are ones everybody needs, making them the most popular products sold online. They include food, clothes, gold clubs, gardening tools and kids toys. Think anything sold at Amazon and Wal-Mart or popular brands like Levis, Fisher-Price and Heinz.
Niche products are usually made on demand and may include handmade jewelry, leather iPad cases handmade frozen yoghurt. Most brands offer niche and commoditized products, thus maximizing their profit margin.
Take a look at ASOS, for instance.
The site aggregates clothing products from independent brands like Adidas, MissGuided and Love Moschino. It offers unique ASOS products as well.
Commoditized products that are already on sale on major platforms like Amazon make it extremely difficult to build a successful internet business. But if you offer niche products and team up with makers on Instagram and/or exploit Etsy Marketplace, you’ll be able to build a great brand and set yourself up for eventual success.
The downside is that coming up with a unique product to sell can be difficult. So how do you get it done? Here are a few pointers on how to generate ideas for unique products.
Necessity is the mother of invention: People buy products that solve a problem they’re having. Opportunities can be in the form of improving existing products, unique marketing or markets not yet realized or exploited by competitors. Anything that puts a hitch in your everyday life can prove a lucrative business opportunity.
Products people are passionate about: Running your own business means long hours and going to bed everyday extremely exhausted. However, offering products that you and your target customers are passionate about will make all of these hardships worth the pain. It will also help build a brand that speaks to your audience in a meaningful manner.
Products with branding potential: Surviving the competitive ecommerce industry requires one to craft a memorable and recognizable brand that resonates with the target audience. Ask yourself what issues your target audience wants addressed, and how you’ll position your product.
Exploit new trends before everyone else: You need to stay up to date on trending products and services, and then capitalize on them before they hit peak popularity. While lucrative, this business tactic can prove tricky because most trends last for a short period of time. On the other hand, you’ll be able to establish yourself as an industry leader from the onset.
Niche segments: Another way to eliminate competition is to identify and serve segments of your niche. For instance, CopyScape offers plagiarism checking services that are unlike any other tool. Similarly, there is hardly a grammar-checking tool that’s more effective than Grammarly. Other niche products that you can offer include leather iPad cases, baby clothes, organic beard oil and fidget spinners.
#2 Steps: Evaluate Market Viability for Products
Important factors to consider when evaluating market viability of products include;
- How practical is the business idea?
- What support services will you use to guarantee customer satisfaction?
- What hardships should you expect along the way?
These are the basic aspects, and one shouldn’t overlook the more tactical aspects of your business and product. These include;
Product size and weight: This will impact the selling price and shipping costs. The latter are a top reason for cart abandonment and to increase conversions, most retailers offer free shipping. Offer small products to minimize the shipping cost and increase the profit margin.
Product fragility: Fragile products like electronics and mirrors require extra attention during shipping if they are to arrive in good condition. This means extra inventory, shipping and customer service costs. Durable products reduce these costs.
Product lifespan: Selling disposable products provides a good opportunity to earn customer trust. The repeat purchases make it easy to build your business. Consider making it possible for customers to sign up for periodic deliveries and payments. This helps increase the average customer lifetime value while reducing overall costs.
Seasonality: There are different factors to consider when offering products whose demand fluctuates throughout the year. These include location of target audience, business downtime, and costs during different periods. Seasonality is not an exact science, with some businesses experiencing increased revenue during the holidays and others during back-to-school events.
Competition: Items sold on major platforms like Amazon, Target and Wal-Mart are a pain to promote from the start. This doesn’t mean you can succeed in selling a certain product, depending on how niche it is. After all, competition can be great for your venture if you let it inform market research.
#3 Step: Conduct Online Market Research for Products
The main difference between a struggling hobbyist and a successful mogul is that the latter understands that even with expertise and passion, you can’t always sell something you love. You’ll often have to rely on what the target market wants, hence the importance of market research.
Use a combination of business tactics and online tools to ensure that you get an accurate picture of who the target customer is.
Keyword research tools like Google Keyword Planner offer a deeper understanding of what people search for. Some even provide related keywords to help you identify words to use in product names, product descriptions, blog posts, social media copy, Meta descriptions etc.
Be sure to identify trends using tools like Google Trends. The information gathered gives you a directional keyword search demand. You can compare search volumes between geographical locations; assess how specific events affect search for a specific keyword and more.
Another effective way to learn more the target market is examine social media. This gives you an idea mentions around your business idea and conversation volumes. It also helps uncover details that’ll beneficial for your marketing strategy later on. You should also consider leveraging your digital networks including Facebook and Twitter. Online forums like BigCommerce Community and Marketers and Founders Facebook Group are a great place to get honest feedback.
Competitor research is a must before launching an internet business. Questions to answer when scoping out the competition include;
- Is the market saturated with marketers?
- Is there are a gap left by competitors that you can exploit?
- Who is your primary, secondary and tertiary competitor?
- What kind of customer experience do they offer? Can you improve on it?
- What is your competitor’s market positioning?
- How do they price their products and services?
Additionally, take a peek at their shipping policy, customer reviews and social media activity.
#4 Step: Learn Online Business Laws
Knowing business laws associated with selling online ahead of time will help you work through any legal hardships you may experience.
Consider the legal restrictions associated with the following:
- Payment processors
- Trademarks, copyrights and patents
- Age restrictions
- Licenses and permits
- Business insurance
- PCI compliance
#5 Step: Source and Manufacture Products
The next step is to attain products for sell. There are many ways to achieve this, including drop shipping, custom manufacturing and print of demand. You can hire a dropshipper, offer DIY products and services or even collaborate with a wholesaler or manufacturer.
If you are offering DIY products and services, take the following into account;
- Where to store inventory
- Timelines for crafting and delivering a product
- How to ship orders
- Where to get materials
The main advantage offered by collaborating with a wholesaler or manufacturer is that you get plenty of assistance with product. Unfortunately, it requires you to invest heavily upfront. Before choosing a manufacturer or wholesaler, check their references. The Better Business Bureau offers great information in this regard. Evaluate your options and consider the following factors to make an informed decision:
- Length of time it takes to ship products
- Support offered and communication
- Minimum order quantities
- Total costs
- Shipping and inventory management
- Terms of the contract
#6 Step: Create, Setup and Launch an Online Store
The final step is to create and launch an ecommerce store. Like other aspects, this isn’t something that should be rushed. Choose an ecommerce platform that not only provides the necessary functionality, but also allows for third-party integrations and fits within your budget. It shouldn’t have technical headaches or costly development. A good platform should also provide a scalable framework that grows with your business.
Ecommerce platforms are not free, so be sure to consider the pricing models. Pay special attention to the features offered with each package. Keep in mind that on-premise solutions like Magento are pricier compared to SaaS platforms like Shopify.
The theme or template you choose should resonate with your brand. It should also be customizable enough for continued growth and instant differentiation from the competition at launch. Ease of use is a must. After all, everyone wants to run their online business without becoming a technologist. Things to look for include:
- Easy setup flow when it comes to domain name registration, setting up taxes, processing payments etc.
- Uploading products in bulk to your catalog should be allowed, especially if you have a large catalogue.
- A collection of built-in integrations and one-click applications will go a long way towards boosting business growth without hiring developers.
- A centralized channel management platform makes it easy to manage price points, sell products on multiple channels etc.
As your business continues to grow, you’ll need increased support from your ecommerce platform. And while it’s hard to predict how much support you’ll need, you can use API to customize and automate your online store based on your needs. This is something you should plan ahead for if you intend to scale the business.
Whipping a website together only takes a few hours but before launching, make sure you tick off the following checklist:
- Online store looks professional and has calls to action
- Setup a payment gateway
- Setup up shipping integrations
- Choose a brandable domain name
- Setup taxes
- Setup Google Analytics to measure progress
Now that you have created the right foundations, you can launch your online store and watch the revenues start flowing in.
Long after launching your online business, you will need to take additional steps to ensure continued success. A top priority should be driving traffic to the ecommerce website, which can be achieved by combining multiple strategies like social media marketing, SEO marketing and lead generation just to name a few. Reinvesting profits in the business will make it easier to scale. Also consider setting up a rewards system to increase customer loyalty and ensure repeat purchases. More importantly, keep growing. And regardless of how successful you become, never forget the passion or voice that drove you to launch the business.