With the COVID-19 pandemic radically changing the way we work and live, a lot of people have been trying to figure out alternative ways to make money. If you have been laid off due to economic uncertainty or you’re tired of your day job, you’ve likely thought about whether or not you should start an online business from home.
Running an online business can be a profitable and rewarding endeavor, but learning how to start an online business is a bit of a task in itself.
Before you pick a domain name and build a website, there’s a lot of research and soul searching you’re going to need to do.
Let’s take a look at what the steps to starting an online business are so that your business can be as successful as possible.
Define and Validate Your Business Idea
When you’re starting an online business, you want to make sure you aren’t putting the cart before the horse. Before you do anything else, you’ll want to determine your business idea and validate that it will be profitable.
Find Your Online Business Idea
The absolute first thing you need to do when you start an online business is brainstorm business ideas. Start making a list of possible business ideas, and at this point don’t censor yourself or edit at all. Write down all the wacky thoughts that come to your mind so as not to block yourself from that one golden idea.
There are a truly endless number of business ideas out there, but if you’re doing this, I’m pretty sure you’re willing to build a business that is meaningful to you, not just a business.
Another good tactic is to start by listing what your strengths and weaknesses are. You can also list out what your goals are in starting a business (for example, are you looking for something you can scale and eventually sell or just something to make a little passive income?) This can help get the juices flowing in terms of what some viable business ideas might be for you.
Once you have your list, you can start redlining it. Weed out all the less favorable options until you are left with one business idea. Next, you’ll do the work to validate the idea. If you determine that this business wouldn’t be viable, you can return to your list and start again.
Choose the business model that is right for you
Each type of business requires a different set of skills; Fortunately, you have proven online business models to choose from. For example, maybe you want face-to-face interactions with your clients, in this case, a model business based on google ads or affiliate marketing is not the best option for you.
Be careful selecting a business model that matches your personal preferences and your skills. If you don’t have a good understanding of search engines, maybe you should avoid a pure based internet business or an online store.
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Validate Your Idea
Having an awesome, creative business idea is one thing. Starting a business that makes money is another.
You might have the most interesting idea in the world, a truly remarkable feat of human genius, but if there’s no market for it, your business will fail.
Successful small business owners who have figured out how to solve other people’s problems. Those people willingly show up to pay that guy money to help improve their lives.
One of the first things you will need to do is determine whether or not your business idea solves a problem that enough people have and would be willing to pay to fix.
Take a deep dive into this idea. Do enough people have the problem your product or service solves that you could cover your operating costs and make a profit? Is your solution cost-effective enough that people would be willing to pay you to solve their problem?
Is this a problem that people are willing to solve? Or would they rather keep their money and work around the problem because it’s not that big of a deal?
Then you’ll want to contemplate who your typical customer would be. What are their buying habits? Would they be likely to spend money on the product or service your offering?
Later on in the article, we’ll look deeper into creating your buyer persona.
You’ll also want to take a look at the competition. Competitors can be a great resource and also a sign that your business idea is, in fact, valid. However, too much competition and you might be trying to wiggle your way into an overly saturated market.
Get to know your competition like the back of your hand. Where are they succeeding? Where are they falling short?
By looking at your competition, you can learn what you should emulate and what you can do better. You don’t want to start a copycat company, but there’s also no point in reinventing the wheel when someone’s handing it to you on a gold platter.
It’s also important to take a look at the economic mood of your target demographic as well as the overall market. Becoming a professional in the world of luxury real estate right after the 2008 housing collapse would be a move that’s pretty blind to the economic mood.
When you’re trying to validate your idea, you’re trying to tear it apart from every angle. Find every potential flaw with it right from the get-go. That way, you can be confident with the idea you choose and you’ll also know what problems you can expect to face along the way.
At this point, don’t get too tied up trying to find the perfect domain name for your site or the most eye-catching logo. Save the fun stuff for later and make sure that you’re building your online business on a solid foundation.
Calculate Your Online Business Startup Costs
Even though starting an online business might mean that you don’t need a brick-and-mortar store, you are still going to incur some startup costs. Calculating your startup costs can help you estimate your profits, secure loans, do a breakeven analysis, save money with tax deductions, and even attract investors.
Another thing you will want to do right away is open a business bank account. This can help you keep your business expenses separate from your personal expenses, which can make taxes and accounting much more manageable as well as ensuring that you’re doing everything above board.
What’s Your Monthly Budget?
It doesn’t matter whether you’re starting an online business as a side hustle while you’re in college or a full-time gig to support your family. Either way, you’re going to want to set up a monthly budget before asking the big question: When should I work full-time in my business?
The most important resource of your online business will be your website. Beyond paying to build a website, you’ll have to pay for web development, hosting, inventory, and maintenance. If you choose to become a seller on an existing site such as Amazon, Etsy, or eBay, you won’t incur the costs of website building but you will have to factor in fees.
Take the time to determine what your recurring costs will be.
Be honest rather than optimistic about your business model. At this point, all you’ve invested is time. Doing an accurate job projecting your monthly costs is going to be a major part of whether or not your business is successful.
Other costs you’ll need to take into account are marketing, internet service, workspace costs, taxes, and payroll expenses if you’re hiring employees.
Calculate the Minimum Monthly Cost to Get Started
Once you have a sense of what your monthly budget will be, you’ll need to determine how much it’s going to cost you to get started. If you’re building a website rather than using an existing eCommerce site, there will be costs associated with building the website that you’ll need to factor in.
Figuring out how much it will cost to get your online business off the ground can ensure that you don’t run into funding issues halfway through the process. Once you have determined the minimum amount it will cost to get started, you can look into whether you will need to look for investors or apply for a loan.
Define a Profitable Niche Market
Your next step is going to be determining a profitable niche market. A niche market is a market that is a focused subset that exists within a larger market of businesses or consumers.
If your original business idea was to sell t-shirts, now it’s time to find a niche within that larger market. While niching down can make some new eCommerce business owners wary that they aren’t appealing to a broad enough demographic, it’s actually better to have a fairly specific niche that you’re appealing to rather than trying to attract the attention of a larger group with varied interests, needs, and desires.
During this time, you can take some of your personal interests and passions into account. While it can be a bad idea to start a business based on passion alone, this can be a good breeding ground for determining an appropriate niche. Think about what skills come naturally to you, what you know a lot about, how you spend your free time and the topics that interest you.
The most profitable niche market isn’t always going to be something that you’re passionate about. That being said, having an interest in the niche can ensure that you stay motivated and incentivized to invest in and grow your business.
Once you have some niche ideas, it’s time to start doing some market research.
What Is the Buyer Persona?
The buyer persona is a semi-fictional portrait of your most ideal customer. You can paint a picture of your buyer persona through thorough market research and available data.
A buyer persona is more than saying that you’re marketing to women between the ages of 45 and 60.
Who are these women? How much money do they make, what are their interests, what is their life circumstance? How do they spend their free time and what are they most passionate about?
The more information you can gather about your buyer persona, the better. This is a time to get incredibly detailed. You’ll want to put yourself in their mind, rather than looking at them from the perspective of a business.
Details including age, location, interests, spending power, spending patterns, stage of life, and patterns, are all important for your buyer persona. Pinning down this information is how you will be able to offer an appropriate product or service and always how you can learn how you’ll reach them.
You’ll also want to focus on what social media channels your target market spends their time on. If you’re marketing to affluent American women between the ages of 45 and 60, you probably don’t want to be spending money advertising on Tiktok.
What’re the Biggest Problems That Your Buyer Persona Has?
When you’re selling a product or a service, you’re attempting to offer a solution to a problem that your target market has. Understanding the biggest problems of your target market is therefore essential to your marketing campaigns as well as the overall success of your business.
For example, if you’re offering a mobile app that’s built for people that see themselves as activists, you’ll want to think about your target demographic. Your buyer persona might be a young woman between the ages of 18 and 35 who is social, outgoing, motivated, and driven to create change in the world.
Her goals might be to help change the world in a positive way and meeting other like-minded people. Her challenges, though, might include organizational problems and not being quite sure how to go about making real change.
In this example, you can then answer how your product helps this buyer persona. Your app might help connect people based on their interests, provide a platform for her to get organized, and provide the contact information for political officials who they could contact to work towards creating the change they wish to see.
Understanding your buyer persona and their biggest problems is crucial to running a successful business. Defining their biggest problems is how you can understand how to reach your audience and market to them in an effective way.
Where Will You Find Your Clients?
If you’ve created a detailed buyer persona, you’ll also have learned where your target audience spends their time. Which social networks do they use? What more traditional media sources do they consume?
Targeting your advertising in this way is essential. Some demographics might spend all of their time on Facebook, while others might not even have a Facebook account. In this day and age, it’s important to go where your target customers are rather than waiting and hoping that they will come to you.
Design an Irresistible Offer
Now you know what you’re selling, how much it will cost you, and who you’re selling it to. The time has come to create a truly irresistible offer.
What Can You Sell Online?
When you’re starting an online business, it’s important to understand that there are more options than selling physical products. Your business might sell some combination of the following products and services. Depending on your niche and buyer persona, you can decide which makes the most sense for your business.
For all of these options, you will need a number of things, including:
- A brand name
- A website
- A unique selling proposition
- The ability to collect payment
- Qualified traffic
- The ability to deliver the goods
Now that we’ve taken a look at the basics, let’s take a deeper dive.
Online Services: Coaching, Consulting, Training
Starting an online services business could be one aspect of your business or the whole she-bang. If you have expertise in a certain area, it’s possible that people will be willing to pay you for it.
A good option here is to start a coaching business online or offer your consulting services to your potential clients.
Informational Products: Online Courses, Ebooks
Informational products are another great potential when it comes to online businesses. One of the best parts about selling informational products is that these products can provide relatively passive income.
When you’re selling informational products, they might come in the form of webinars, a membership website, ebooks, or more. Relatively cheap and easy to create, all you need is mental energy and time. When you have expertise but not a lot in the way of startup capital, selling informational products can be an excellent strategy.
This can be a great product to sell in combination with one of the aforementioned online services. Your customer will have the option of becoming a regular consulting client, purchasing your online course material, or both.
Physical Products: eCommerce
Lastly, the most obvious option when it comes to starting an online store is selling physical products. You can do this through existing sites or you can build your own eCommerce website.
Starting an eCommerce website can take some more startup capital than the previous two ideas, but not always. Because of the availability of online platforms, it’s possible that you can still have a relatively passive relationship with your eCommerce site.
What’s the Best Solution For Your Target Audience’s Problems?
Now that you know these different options, you want to think about which of these or which combination of these best solves your target audience’s problems. If your target market is made up of individuals who want to start a life coaching business, informational products are likely the best solution. If your target market is people who are looking to catch mice that live in their barn, selling physical products in the form of mouse traps is the best solution.
Setup Your Website
Now the time has come to set up the hub of your business. Your website is your headquarters, it’s where you are ultimately trying to bring your target audience.
You’ll have to decide which of the mean website builders to use. You can check out elementor.com or a number of other viable options to determine which makes the most sense for your business.
An important aspect of setting up an eCommerce site is the user experience. You want your site to be intuitive, easy to use, attractive, and functional.
Additionally, you’ll want to start a blog to help drive organic web traffic to your site. You can drive traffic to your site with paid advertising, and this is often a good idea, but blogging can help you gain more email list subscribers, web traffic, brand recognition, authority, and more.
Promote and Scale Your Online Business
Finally, it’s time to start marketing your business. Having done all of the upfront work of identifying your target market and what makes them tick, this should follow fairly naturally.
This is how you can grow and scale your business. Firstly, and most obviously, you’ll want to make sure that you make it as easy as possible for your customers to buy your product or service. Have a landing page that points them in exactly the right direction when they show up at your site.
You’ll want to have a solid promotion strategy when it comes to marketing. Important parts of digital marketing include search engine optimization (SEO), content marketing, paid advertising, social media marketing, email marketing, and more.
Blogging will become an essential part of your digital marketing strategy. This isn’t necessarily a place to hawk your products, but rather a place to gain loyal customers through offering them valuable information. Blogging is a great way to build an online presence and help scale your business.
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Now That You Know How to Start an Online Business, It’s Time to Get Going!
Learning how to start an online business can feel like a job in itself. Once you learn the ropes, though, you’ll be glad you took the time to research and plan out your idea before jumping in.
Unfortunately, there aren’t any shortcuts to getting rich from having an online business. It takes hard work, dedication, motivation, and drive to build any business from the ground up. Of course, the benefits are many like the freedom to work online from anywhere, financial independence, and working on something that really matters to you.
Are you looking to learn more about how to build your business? Are you in search of proven tactics and strategies for building a successful online business? If so, check out more resources on the topic here.