How to Start an Online Business: A Step-by-Step Guide

Before we start our in-depth guide on how to start an online business, let’s first cover why this is an excellent idea. First of all, an online business doesn’t require a substantial financial investment. In fact, most of the ideas for small businesses in our guide require no investment at all. Second, you don’t need to quit your day job to start your own business online. Instead, it can just be a part-time job that boosts your income. Finally, running an online business means freedom—you can work regardless of where you live. With all of this in mind, let’s take our first step toward creating a profitable online business.

Step 1: Come up with an Idea for Your Online Business

One of the crucial aspects of launching a viable online business is identifying the market. You can always choose a business idea that many other companies are already using. If you consult Google on how to start your online business, you’ll get 5.5 billion results in a little over half a second. This figure tells us that there are a lot of people who want to start a business online. You’ll also notice that there’s a wealth of business ideas.

Some of these ideas will be so good that they’ll test our moral values. Is it okay to steal from others? No. Can I steal a business idea from someone else? Yes. Before you start feeling bad about it, let us ease your mind. If you find an idea that you like, it doesn’t necessarily mean that you’re stealing it. Instead, you’re making it your own by modeling it according to your needs and preferences.

To illustrate the range of options you have at your disposal, here are the top ten online businesses:

  1. Affiliate Marketer
  2. Blogger
  3. Freelance Writer
  4. Web Designer
  5. Online Course Creator
  6. Domains Reseller
  7. YouTube Personality/Vlogger
  8. eBook Author
  9. Advertiser
  10. Online Merchant

Online Sources for Learning New Skills

We’ve written this guide without limiting who can use it. Whether you have any of the skills mentioned above or not, you can always learn and improve. Search engines are a great place to start, as they offer plenty of useful resources, such as business articles and videos. The research part is essential, though.

Let’s say you want to start a podcasting business. A simple Google search may guide you to the leading podcast companies and tools for creating podcasts. Most of them have a blog, so you can start collecting tips and tricks from there. As your search becomes more in-depth and more frequent, you’ll notice that Google will start returning the same websites. You should pay attention to these websites, as, based on Google’s parameters in this instance, they provide users with relevant, high-quality information. This whole search-and-repeat process might take some time, but in turn, you’ll get valuable information, and you’ll be a step closer to actually starting an online business.

Aside from the good old research, there are platforms offering free online courses that can help you learn more about specific topics. One of these platforms is Udemy, which offers both free and paid online courses. Other popular platforms for e-learning include Khan Academy, Alison, and so on. Make sure to get the most out of these online learning platforms.

Step 2: Learn About the Different Types of Online Businesses

Next on our agenda are the four most common online business types.

Freelancing

According to the most recent gig economy statistics for 2020, freelancers make up 36% of the US workforce. That’s around 57 million US adults who work as independent employees. This makes freelancing undoubtedly one of the most common types of online work. In fact, based on the freelancing market forecasts, this figure is projected to jump to 86.5 million by 2027, when it’s expected that freelancers will make up roughly half of the US workforce. These numbers and projections indicate that the freelance market has a broad user base.

If you’ve never done any work online, let’s go through some basics about freelancing. Freelancing is at the core of all home business ideas, as it revolves around being self-employed and working online. We already know the different types of online businesses include affiliate marketing, blogging, web development, etc. A freelancer can work in any of these fields, and you can look at all of these online business types as a subset of freelancing.

To start working as a freelancer, follow these steps:

  1. Define your skills (e.g., writing, website development, marketing, etc.).
  2. Create an online portfolio.
  3. Create an account on freelance platforms such as UpWork, Fiverr, Freelancer, and 99Designs—or define your target market and reach out to potential clients on your own.

Freelance Work vs. Having Your Own Business

When thinking about new business ideas, keep in mind that working as a freelance affiliate marketer, for instance, and having your own affiliate marketing business are two different things.

Freelancing is for many a stepping stone. The next step is starting your own business as opposed to working for others. As a freelancer, your financial gain depends on how much you work, i.e., how much time you invest in your work. Additionally, this business model is quite limited when it comes to scalability. In other words, there’s not much room for growth.

In contrast, as a business owner learning how to start an online business, your goal is to create a sustainable business model. Your priority is to market your brand as opposed to marketing yourself. You’re learning about systems and automation, as well as about outsourcing as many of your tasks as possible. As a result, your business gradually grows and remains streamlined even without your active involvement.

Affiliate Marketing

For many would-be small business owners, affiliate marketing is one of the most profitable home-based business ideas. You don’t need many resources to start building your affiliate marketing empire. Above anything else, you need to have a firm grasp of how affiliate marketing works.

Affiliate marketing is a revenue-sharing business model. It focuses on an advertiser, seller, and consumer. In this story, you’re the advertiser. The seller is an individual or an online business that has a product or service they want to sell. Their goal is to promote their products and increase sales. To achieve these goals, sellers offer financial incentives to advertisers, i.e., affiliates.

Consumers are at the end of the cycle, and they’re your target audience. So if a consumer buys a product or service as a result of your marketing efforts, you get a chunk of the profit the seller earned.

Another piece of the affiliate puzzle is the affiliate network that acts as an intermediary between an affiliate marketer and a seller. But first, you need to know how to start an online business as an affiliate marketer. And here’s how you can do it:

  1. Choose your niche. The first thing you should do is decide which products or services you want to promote. Ideally, you should choose something you’re familiar with.
  2. Choose the product type you wish to promote. There are three types of products you can advertise as an affiliate: physical products, information products, and services. Choose the one you’re most comfortable promoting.
  3. Build your business website. Your website is where you can place product or service ads. If you have a large social media following, you can use your social media channels to display sellers’ advertisements as well. 
  4. Select an affiliate network. Even though you can work with a seller directly, it might be simpler to join an affiliate network, especially if you’re new to this business model. Some of the most popular names in this industry include Amazon Associates, CJ Affiliate, and Shareasale, among others.
  5. Add affiliate links and display ads to your website. The final step is to add affiliate links to your site content (i.e., blog posts), as well as display ads that will show in your site’s sidebar.

These are the five simple steps to starting a business as an affiliate marketer. As you become more experienced in this field, you’ll learn plenty of skills to boost your affiliate business.

Ecommerce

By 2021, ecommerce sales will reach $4.8 trillion, and there are plenty of other stats showing just how lucrative this market is. Thanks to online store builders such as Shopify, Volusion, and Wix, creating an online store is now a simple task. Shopify alone is home to over half a million online stores. However, unlike freelancing and affiliate marketing, ecommerce requires some financial investment. So before we get into detail about how to start an online store, let’s take a look at this business idea from a financial perspective.

Self-Hosted Store Builders vs. Store Builders Hosted Online

If you don’t have any technical knowledge, and you want to start your online store with a store building tool such as Squarespace or Shopify, you’ll have to set aside around $25 a month to keep your business up and running. These store builders include hosting in their ecommerce packages, as well as a wealth of features to optimize and customize your online shop.

An online shop still qualifies as the best business to start with little money, as there are significantly less expensive solutions for getting your store’s products online. Website builders with ecommerce functionalities offer attractive prices for online stores at around $12–$15 a month. If you opt for a platform such as Weebly or Wix, you’ll cut your expenses in half. For a better illustration of what you would be getting with these platforms, you’re best off reading a detailed Wix review.

An even more affordable option for launching an online shop is a self-hosted online store platform such as Magento, WooCommerce, or PrestaShop. When using these platforms, you’re responsible for finding a hosting and domain provider. Since starting an online store is among the best business ideas to make money, some kind of a financial investment appears to be inevitable if you want to get your business online. In this scenario, domain name and hosting services could cost you around $70 a year, which is about two times cheaper than the previous option.

Apart from the financial investment, you’ll also need some technical knowledge. Frankly, setting up an online store with a self-hosted ecommerce platform would be more complicated than using a hosted platform. Luckily, there are hosting companies that specialize in Magento, WooCommerce, and other self-hosted ecommerce platforms, and they can help you launch your online shop more easily.

How to Start an Ecommerce Business Selling Physical or Digital Products

As is the case with each of the online business types we’re focusing on in this guide, before you can start selling products online, you need to do some research. Your starting point is the type of products you want to sell. The first choice you have to make is whether you’ll sell physical or digital products.

A physical product is any tangible product that exists in the real world (a watch, sweater, hat, etc.). In contrast, a digital product is intangible (an ebook, online courses, software, website services, etc.). Both of these products have their upsides and downsides.

For instance, if you decide to start an online business that sells digital products online, it could take quite some time to start making a profit from it. You’ll need to establish your online presence and build your user base first. This process requires creating a website and adding content relevant to your products while also being active on social media channels and forums. Plus, the digital market is more competitive than the e-retail market, partially thanks to the absence of shipping fees and inventories, not to mention the market’s vast scalability potential.

On the other hand, physical products have a higher perceived value than digital products. Additionally, physical products are purchased often, whereas digital products are usually one-time purchases.

Once you select the type of products you want to sell online, you should think about the specific products you want to add to your online shop. The most successful online businesses offer either products that are in high demand or unique products such as handmade jewelry.

Choose a Store Builder

Your last stop: choosing a store builder or a marketplace. Ideally, you should launch your online store with the store builder of your choice and connect it to marketplaces such as Amazon and eBay. By doing so, you’ll reap the benefits of the omnichannel sales strategy. This strategy adds your products to various sales channels, and, at the same time, provides your customers with a seamless shopping experience.

Blogging (or Vlogging)

Both blogging and vlogging fall into the category of profitable startup ideas. Not only is creating blogs and vlogs fun, but, as evidenced by the current stats on blogging, it can also help you generate a steady income. To monetize your blog, you can use CPC/CPM advertising campaigns and affiliate marketing, as well as promote and sell products yourself. 

In the vlogging sphere, the most popular platform for sharing videos is YouTube. When it comes to monetizing your YouTube vlog, you can apply for a YouTube partnership, find sponsors for your channel via YouTube sponsorships, and connect your video channel with AdSense.

Vlogging is one of the most popular side business ideas. Apart from YouTube and other video channels such as Vimeo and Twitch, you can also run a vlog on your own website, which you can create with site builders such as Wix and Squarespace.

Once you decide which platform you want to use for your blog, you need to create engaging content that adds value for your readers—and be persistent. The same applies to vlogs, except that you’ll also need a camera. Most mobile devices have a decent enough camera, as well as video editing software that will help you make any final tweaks to your videos before publishing them online. With that in mind, we can include vlogging on the list of business ideas that don’t require large financial investments. One of the few investments you’ll need to make is buying a tripod or a gimbal stabilizer.

Our advice when it comes to monetizing blogs and vlogs is to use the 80/20 rule. Make sure that quality educational content makes up 80% of all your content, and leave 20% of the content for promotional purposes.

Step 3: Find Your Market

Now that we’ve gone through the most common online business types, we can jump into market research. There’s an insanely high number of small business ideas out there, but before you actually choose one, you should first find your market. Only then should you research your potential market and competition. If the market is overwhelmingly competitive, your online business is likely to remain unnoticed, as there are many businesses out there offering the same services or products as you.

What you should focus on are the consumers—more precisely, what problems do they need solved? Put yourself in their shoes. Is there a product you wish you could buy online, but it hasn’t been created yet?

For many an entrepreneur, ideas come from taking an existing product and exploring its downsides. Let’s take top hats as an example. If you read enough reviews about this product on different shopping platforms, you’ll find that customers who weren’t satisfied with the product said it didn’t fit them. It was too small. Knowing this, you should do some research to see if there’s a demand for large top hats. If the answer is yes, your next step would be to step away from the one-size-fits-most hat category and focus on the large top hat offering.

These two approaches might help you check whether you have a good idea for an online business. If you’re passionate about this idea too, you’ve likely found the best business to start online.

Step 4: Research the Market and Your Competition

Now that you have an idea for an online business, it’s time to check its potential. The following steps will help you determine if your business idea stands a chance in the selected market.

Keyword Research

One of the essential tools for optimizing your content for search engines is keyword research. Search engine optimization (SEO) focuses on finding keywords (i.e., the words or phrases people use when looking for a product, information, or anything else that interests them). So before starting a website and adding content to it, you need to find the words and phrases that will direct people to your content. However, you should keep in mind that even the best-ranking keywords won’t put your content at the top of the search results (SERPs) if the content isn’t valuable to your audience.

How to Perform Keyword Research

First, find a keyword explorer tool. Google Trends and Google Suggest fall into the group of free keyword tools. Moz Keyword Tool has a free and a paid version, but if you want to use the free version, you should create an account on Moz. The free version only includes ten keyword queries per month, but it can, nevertheless, help you gain insight into a couple of good business ideas via keyword research.

The central areas you should focus on when exploring keywords are as follows:

  1. Search Volume (the number of searches for a particular word or phrase during one month)
  2. Competition (high vs. low)

Ideally, you want to find keywords with a high search volume and little competition, but never use keywords that aren’t related to your content.

Define Your Target Audience

After you’ve found keywords for your favorite of the many home-based business opportunities out there, you should revisit your business idea and think of how it benefits the customers. Let’s say you want to start an online domain reselling business, and you’re offering premium domain names. You’d need to ask, who needs a premium domain, and how would they benefit from owning one?

Premium domains have the potential to raise brand awareness, as they’re usually easy to remember. Your potential customers could have just started learning how to start an online clothing business, or they already own a developed web design business. In both instances, the chances are they’d want a catchy domain name for their business to increase brand awareness.

Additionally, this type of domain is likely to attract a high volume of website traffic. With this in mind, you’d be safe assuming your target audience consists of online business owners who want to stand out from their competitors and increase their user base and sales. This might be too broad of an audience, but the more precise you are in defining the benefits and possible applications of your product, the more specific the target audience will be.

After you decide what the best online business is for you, and launch it, you’ll be able to define your target audience with even greater accuracy. By using a website analytics tool, you’ll be able to see your current customers’ buying behavior, age, location, education, etc.

Analyze Your Competitors

Analyzing your competition will be the next step in launching your internet business. Here’s what you should do to gain insights into your competitors’ businesses:

  1. Determine who your competition is.
  2. Check the keywords they rank for in search engines.
  3. Analyze the type of content your rivals have on their websites and its quality.
  4. Study their social media channels to see how they interact with fans and customers.
  5. Define your competition’s strengths and weaknesses.

Competitor analysis is one of the most valuable sources of information about your market, so make sure to take advantage of this type of data before learning how to start a website.

Step 5: Find the Product

We’ve already covered the basics of finding an idea for your online business. The next phase is to link your website idea with a specific product. To illustrate this step, let’s say you chose online courses as the best home-based business to start online.

Assuming you’ve already researched your market and competition, and identified customers’ pain points, you should then choose what category of online courses you plan on creating. This should, of course, be a category you excel at.

Next, based on your expertise, narrow the category you’ve chosen down to a specific subcategory and then focus on a single topic within that subcategory. For example, if your list of website ideas focuses on different types of marketing, this should be your primary category. Search engine optimization could be a subcategory. As it’s impossible to explain all the aspects of SEO in an online course, choose one SEO topic that suits you best, such as link building.

Step 6: Test Your Product

We’ve come to the part where you’ve already chosen what is the best businesses to start and found a specific product or service to focus on. The next step is to test your product.

If you decide on selling physical products, you can offer free products to a small number of people who are willing to try and review them. Alternatively, you can create a business page on a social media channel and organize a giveaway on a first come, first served basis in return for an honest opinion on your products.

With digital products, getting customer feedback is much simpler. Let’s say you’re learning how to start an online business with no money. As online course creation fits this description, you can get your customers’ opinions by offering an online course for free.

You could also create an online survey following a free course or product giveaway. Use this survey to ask about your product’s downsides, areas for improvement, etc. Regardless of how you decide to test your product, it’s essential to act on your customers’ feedback.

Step 7: Build Your Website

As you’re learning how to start an online business from home, you’ll discover that having your own website is a must. The days when we had to create a website from scratch are behind us. Thanks to numerous website building solutions, you don’t have to hire a website developer to do this task for you—you can do it on your own. Moreover, many website builders offer a free plan, so you can launch your site without having to spend any money.

However, once you decide on the best small business to start, we recommend switching to one of the website builder’s basic paid plans to remove any ads that have been placed on each page. Removing ads gives your business more credibility and authority.

Now, let’s see what you should do to launch your website.

Come up with a Business Name

Building a website is a fun experience once you become familiar with a site building platform. But before you start browsing website templates and adding content to your site, you should come up with a name for your business. Whether you want to learn how to start an online business for free or by investing some money into your startup, your business needs a name. A business name should be memorable. Here are a few suggestions on how to choose the perfect name for your business:

  1. Don’t use words that are difficult to spell.
  2. Avoid limiting your business name to one product or service. If you decide to expand your business and add more, a single service or product in the name won’t properly illustrate your business. So if you start with an online store that sells dresses, it’s best to stick with a broader term such as women’s clothing.
  3. Try using abbreviations or acronyms.
  4. Use foreign or Latin words. Let’s say you wanted to highlight your brand’s uniqueness. You could use the Latin word for unique: Unicus.
  5. Think about what makes your products or services special. For instance, if you are here to learn how to start a business online for clothing, and your focus is retro clothing, consider a business name like Retric.
  6. Use a business name generator tool, such as Namelix.com or Oberlo.com.

Once you find the name you like, go to the United States Patent and Trademark Office website to check whether that name has already been taken.

Choose a Domain Name

The next step in launching your online business is finding a domain name provider. Some of the most popular domain providers, among others, include Bluehost, GoDaddy, Namecheap, and HostGator. Keep in mind that website building tools have a variety of domain names on offer, and they even provide special discounts for buying a domain name from them.

However, if a website builder doesn’t offer the name you wanted, you could check if that name is available with the providers that focus solely on domain name and hosting services (GoDaddy, HostGator, etc.).

Let’s say you want to learn how to start an online personal training business. What domain extension should you use? The .com extension is the most commonly used one, but .org and .net extensions are widely used too.

So on the one hand, you could opt for any of the extensions mentioned above. On the other hand, you could also check which domain extension your competitors use. We looked at ten online fitness websites and found that nine of them used the .com extension, while one business opted for the .io extension.

Additionally, some domain extensions are obvious choices for specific types of online businesses. Restaurants and catering businesses often use the .menu extension. Those of you looking to learn how to start an online retail business are highly likely to opt for the .store domain. These are niche extensions that tell visitors what your site is all about right away.

Find a Web Hosting Provider

If you decide to create a site for your online business using a website building tool, you don’t need to worry about a hosting provider. If you want to, for example, learn how to start an online T-shirt business using a self-hosted online store platform like Magento, here’s what you should have in mind when choosing a hosting provider.

Hosting Types

Based on your website’s size, you can choose between shared, dedicated, and VPS hosting. Shared and VPS hosting allow numerous websites to use the same server resources. The difference between shared and VPS hosting is that the latter option has fewer sites relying on the same server resources. With dedicated hosting, on the other hand, only your site uses server resources.

Features

Some of the essential hosting features include SSD storage, bandwidth, the number of websites you can host, and, optionally, an SSL certificate. To find a host that provides all the features you need and is still affordable, going through a list of cheap web hosting providers will probably go a long way.  

Customer Reviews and Reliability

If you’ve just started learning, for instance, how to start an online marketing business, the chances are you aren’t familiar with the ins and outs of the web hosting industry. One of the things that can help you decide which hosting provider you should choose is the uptime of the hosting providers, which should be between 99.9% and 99.97%.

Customer reviews are also helpful, giving you an insight into how satisfied customers are with a particular web hosting provider.

Choose a Website Builder

If you’ve done your research on how to start an online business with no money, you probably came across a list of the best website builders today. These tools offer the option of creating a website free of charge, such as Weebly, Ucraft, Wix, etc. As opposed to the website development solutions that offer a free plan, some website builders, such as Squarespace and Shopify, offer paid plans only.

So the first step in finding a perfect site builder is determining your budget. After that, you want to choose a website builder that’s easy to use. The builder should also have a knowledgeable and professional customer support team that you can reach through multiple channels. Next, if you’re learning how to start an online clothing business from home, for example, you should look for a website builder that supports ecommerce functionalities. Finally, SEO options are essential for getting your website on a search engine’s front page, so make sure to see which SEO tools are available with different site builders.

Other questions to ask when choosing a website builder:

  • How many website templates are available?
  • Is there a built-in blogging functionality?
  • Which integrations does it support?
  • What do other users say about their overall experience with a particular website builder?
  • If I want to start an online business, does the builder offer useful resources, articles, and video tutorials to help me get started?

Step 8: Learn How to Optimize Your Content for Search Engines

One of the crucial steps in starting your online business is search engine optimization. Your website could look nice, feature high-quality content, and offer products and services of unparalleled quality. However, because as much as 93% of online interactions begin with a search, if you don’t optimize your content for search engines, it has minimal chances of turning up on the first page of search engine results. So the question is, how do you start an online business that is optimized for search engines?

You should first learn about different types of SEO: on-page, off-page, and technical SEO.

Technical SEO requires you to do the following:

  • Create a robots.txt file for your site. This file instructs search engine robots on which URLs and files they shouldn’t index.
  • Create and optimize your site’s XML sitemap. The XML sitemap includes all content on your website. To optimize it, remove pages with no original content from it. Once your sitemap is finished, submit it to Google and Bing.
  • Optimize your site’s URLs so they describe what the page they refer to is about. It’s also a good idea to make them easy to read. For example, if you write an article on how to start an online business in California, the URL of the article page should look something like this: https://www.yourwebsite.com/start-online-business-california.
  • Manage 404 pages.

For On-Page SEO, you’ll need to do the following:

  • Add keywords to your site’s content.
  • Add meta descriptions to web pages.
  • Use subheadings (H1, H2, H3, etc.), and different text formats (bold, italic) in your content.
  • Optimize your website for mobile devices.
  • And of course, write relevant, information-rich content. For example, if you write about how to start an online T-shirt business, make sure to provide relevant info on that topic with practical examples, and don’t use plagiarized or low-quality content.

Off-Page SEO focuses on link building. Here’s how to do it right:

  • Link to reputable websites featuring relevant, high-quality content on a particular topic. 
  • Refer your readers to other sites that can give them more information about the topic you’ve written about. 
  • If you establish a good reputation for your website and write informative quality content, others will link to your website too.

Step 9: Set up Social Media Accounts

One of the last steps in this how to start an online business guide relates to expanding and strengthening your online presence. Building a website for your online business is the first step. Creating accounts on different social media networks is the next. Why? There are 3.4 billion social media users, and if you reach even 1% of them, your business will gain a broad audience.

Here’s how social media can help your business:

  • It can boost brand awareness.
  • It helps your business become a thought leader.
  • It generates leads.
  • It increases your website’s traffic and sales.

Social media is also home to many groups that strive to answer the question, how do I start an online business? So apart from all the benefits mentioned above, social media channels might give you additional information on getting things started.

Step 10: Connect with Influencers in Your Niche

As evidenced by different influencer marketing stats, one of the main benefits of connecting with influencers is that they can promote your brand and increase your brand’s audience. They’re your brand’s advocates. To get in touch with influencers from your vertical, create an email outreach strategy. Depending on how you approach an influencer, you may want to try the following:

  • Get advice on your online business. Do I need an ABN to start an online business? How do I know if I’m targeting the right audience? These are only some of the many questions you can discuss with influencers. They’ll likely have lots of useful information about your niche.
  • Publish a guest post on an influencer’s website. In turn, you should allow them to post a guest article on yours.
  • Get a backlink to your site.

We’ve come to the end of our guide on how to start an online business. We hope this information will help you get your business up and running in no time. Also, whichever type of online business you decide to start, remember to always be persistent and listen to your customers’ feedback.

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