Building an online business is a great way to take control of your time and your income. But how do you start a small online business when you don’t have experience?
We’ll talk you through everything you need to know to get an online business off the ground in 2021.
1: Decide on a business idea
Before starting a business, you need to decide what that business will be. Will you sell a product, like printed shirts or art, or will you sell a service, such as writing, designing, or consulting?
To make sure there is a market for your product or service, perform some basic market research before launching. You’ll want to research:
- Who your potential target market is, and how big that market is
- Who your competitors would be
- How you could differentiate from your competitors
- How much your competitors charge for their product or service
- Ways the industry has changed in the past 10 years, and changes expected in the next decade
While researching these topics, keep in mind that you are trying to determine the potential for profitability. If the potential is low, you may need to adjust your offerings.
You can complete this research by looking at competitors’ sites, reading online forums, polling people in person or virtually, or researching government statistics related to your target audience.
If you want to start an online business, you also need to make sure your business idea can function online. Take some time to think through the logistics of how your new online business will operate.
2: Create an MVP (minimum viable product)
With a business idea in mind, it’s time to start working on your minimum viable product (MVP).1 An MVP is a product or service that is good enough to sell, but isn’t quite close to your finished product. If you want to start an online business, an MVP for your business is a website.
But you don’t have to spend thousands on a full website right away. You can start small by creating a landing page, or a website your potential customers can visit to learn more about your product or service. A landing page is simple and focused on selling.
Set up a landing page in order to start sending potential customers to it. You can also use it to survey your target market and ask them what they think about the product or service you are offering.
3: Create a business plan
Before embarking on any big step, it’s important to plan ahead. A business plan helps you lay out everything necessary to build, launch, and grow your online business. It answers questions such as, “how will you fund your business?” and “how will you reach your target audience?”
- How much funding you need to get started
- Your business mission, vision, and core values
- Competitor analysis
- Marketing plan and budget
- Organization structure
Determining how you will fund your business is critical at this stage. You may consider seeking funding from investors or finding other ways to fundraise.
4: Set up a website
Having a functional website is critical for an online business. Start the process by purchasing a domain name for your new website. Then, you can start working on building out the site.
Your website should be aesthetically pleasing and easy to navigate. You don’t have to create the most breathtaking site out there, but you should put some time into the design. You can make your own website using a website builder or you can hire a team to design and build a website for you.
Your site will need to be hosted by a web hosting company, too. Some options are Bluehost, Hostgator, and GoDaddy. Make sure to get an SSL Certificate for your website in order to authenticate your site and protect its information.3
You could spend months (or years) perfecting your website, but you don’t need to when you’re just starting out. Remember that you can always update your site later on. Just get a good foundation by adopting a good domain name, effective security measures, and a clean site design.
5: Make it legal
Let’s make it official! It’s time to register your business.
First, you’ll need to decide which business structure you want your business to be. When we say business structure, we’re talking about an LLC or corporation. There’s no right or wrong when picking a business structure. It all depends on your needs and goals.
Around this time, you should apply for a federal tax identification number on the Internal Revenue Service website and complete Form SS-4, also known as an Employer Identification Number (EIN).4 This number is necessary in order to hire employees, pay taxes, and apply for a business license. Depending on the state where you reside, you may also need to apply for a state tax ID number. Check your secretary of state’s website to verify.
At last, you can apply for business licenses and permits for your business. Read through your state’s requirements and make sure you submit the application with all of the necessary information. Regulations vary from state to state.
But it’s not time to get to work just yet. One more critical step when setting up your business is finding the right insurance for your online business. There are several different business insurance options out there, but when starting an online business, some insurance plans you may want to look into are disability insurance, cyber insurance, and a business owner’s policy. You can learn more about the different types of business insurance here.
Starting a new business is an exciting and nerve-wracking endeavor. You’ll have more freedom over your work schedule, but you’ll also have more responsibilities when you are your own boss. By planning ahead, you can set yourself up for the best chance at success. Good luck!