page title icon 7 Things You Need To Start an Online Business

There is no better time to start an online business. Millions of people around the world are working from home and shopping online. To help these workers, technology is being created and updated to make online businesses more accessible than ever to start and run.

We’ve compiled a list of seven things you need to do to start your online business. Some of these things you can do on your own and some you might want help with. Follow them, and you’ll be all set to go.

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  • Develop a business that satisfies a need
  • Structure Business to Reflect Size and Attention
  • Location
  • Unique name
  • Website
  • Marketing Plan
  • Tools to collect revenue

A Business Idea That Satisfies a Need

Businesses don’t exist to satisfy the owner’s desires. That’s not to say that you shouldn’t be passionate about your business. But you should consider if there is a need your business will fulfill. Before you start an online business, you should research different types of businesses. Think about if you want to open a retail business or offer a service.

Starting an Online Retail Business

If you want to go into online retail, you need to decide what you want to sell. If you are a maker, you’ll be selling products that you create. Otherwise, you’ll have to source products to sell. If you have an idea of what you want to sell, look around at other retailers to see if there is a lot of competition.

Once you have your product, you need to determine prices. You not only need to take into consideration what you paid for the product but also how much it costs to run your business. If you don’t sell your products for enough of a profit, you’ll be operating at a loss, and your business won’t be sustainable.

Finally, you need to consider how you are getting the product to the customer. If you are planning on storing it and shipping it yourself, you need to take the cost of that into account. Alternatively, you could do drop shipping, in which a supplier ships the product. This method has its challenges to consider, like lack of control over inventory.

Offering a Service Online

Retail is not the only online business you can set up. Perhaps you have special skills that you want to provide to the public, such as:

  • Consulting, 
  • Web design,
  • Online bookkeeping

There are fewer things to consider when setting up an online service rather than retail, but you will still want to do an online search and see who else is offering these services. You’ll be able to determine the market saturation as well as the price you should be charging.

A Business Structure That Reflects Size and Intention

Businesses are legal entities, and you want to make sure you set up your business the best way for your financial and structural needs. Different types of structures are:

Sole Proprietorship is Great for Single Owner Businesses

If you are intending to be the only person owning and running your business, you should set up as a sole proprietorship. According to the Small Business Administration, this is the most common form of business structure.

Becoming a sole proprietor is incredibly easy, because you don’t need to file any paperwork. You do need to make sure you have any licenses required by your state or industry. You can find out about licenses and permits through online research.

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Taxes are also easy as a sole proprietor. Your income is reported with your regular income tax. If you run your business in addition to a regular 9 to 5 job, you will add your income to the income you receive from that job. Just remember, you will have to make sure you can cover any owed taxes since you won’t have any money withheld.

Limited Liability Company (LLC) Reduces Your Debt Responsibilities

One downside of sole proprietorships is that the business owner is legally liable for the business’s debts and obligations. If you operate a LLC, you would not be personally responsible for any business debts.

LLCs are more formal business setups than sole proprietorships, and they need to be registered with your state. Almost anyone can form an LLC. LLCs have more tax benefits than sole proprietorships. If you are interested in learning more about the tax implications of an LLC, you should contact a tax professional.

Corporations Are a Good Choice If You Want To Raise Money

Incorporating your business provides the same liability benefits as establishing an LLC. It can also make it easier to get financing and attract investors because of the separation of the owner’s business and personal finances.

The difference between an LLC and a corporation is that one or more members own an LLC whereas shareholders own a corporation. When you are deciding which way to go, you should consider what you want the ownership structure to be.

It may be that when you start your business, you decided to establish it as a sole proprietorship, but if your business grows, you can always form an LLC or Corporation at a later date. Choosing to start smaller and go bigger as you grow is a perfectly reasonable decision to make.

A Location to Form Your Business

You might not think that it matters where you form your business since it is conducted online, but if you choose to establish an LLC or to incorporate, you’ll need to file the paperwork somewhere. Most small businesses choose to register in their home state. Doing so will save you the cost of hiring an agent to register out of state.

However, there can be benefits to registering in another state, especially if you are going to have business nationwide or are expecting to attract investors. The things that business owners look for when incorporating in another state are:

  • Tax breaks
  • Privacy laws
  • Favorable business laws

If you do decide to establish your business in a state other than your home state and find that the benefits are not what you expected them to be, most states have the option to domesticate a business and relocate to their home state. This is not an inexpensive or easy process, though, so think all your options through before you begin the registration process anywhere.

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A Unique Name That Catches Your Customers’ Attention

Choosing a name for your business is fun, but you want to make sure that you choose something unique to stand out from the crowd. Things to consider when choosing a name are:

Making Sure Another Business Doesn’t Have the Same or a Similar Name

A unique name is important to make you stand out from the crowd. While business names that include family names are common, you should strive to be creative. If you are selling t-shirts, you don’t want to be confused with a plumbing company.

Another reason to make sure your name is different from other companies’ is to protect yourself from being accused of trademark infringement. As a new business, this type of legal challenge is something you don’t want to have to handle.

Is It Easy To Pronounce and Spell?

In the same way that books are judged by their covers, businesses are judged by their names. If a customer can’t pronounce it or if you are continually having to correct the spelling, you’ve done something wrong.

You want to evoke a feeling with your business name and try to relate it to what you’re selling or offering. If potential customers don’t even know how to pronounce your name, they probably won’t be able to figure out what your business is and will move on to another company.

The Domain Name Is Available

The most important part of being an online business is the online part. If you pick a name and the .com domain name has already been claimed, you need to move on to another name. You want your client to access your website by directly typing in the URL, not relying on web searches.

Once you think you’ve decided on a name, get opinions from your friends and family. Since they are not so involved in the process, they may have input that can help you. You should also do some mockup marketing materials to see how it might look to a customer.

A Website to Present Your Business

After you determine that the domain name is available, you can go ahead and begin the process of building your website. The steps you’ll need to take are:

Register Your Domain Name For Maximum Visibility

When you have your name and find a domain that is available, the first thing you should do is register your domain name. Once you’ve done that, you won’t need to worry that someone will come in and snap it up before you.

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Select a Web Host To Put Your Website Online

A web host is a service that hosts your website on their server for a fee. Web hosts will assist you with registering your domain name. Different web hosts offer many of the same services, but you’ll need to review them to make sure you get everything you need. Some of the popular web hosts are:

Design Your Website

With an online business, your website is the only impression you have to make on potential customers. Therefore, it’s important to make sure that it is eye-catching and well designed. You can choose to design it yourself using a website builder, or you can hire a designer. Easy to use website builders include:

The most important things to keep in mind as you design your website are:

  • It should be easy to read and to find information, 
  • It is customer friendly
  • It only includes information pertinent to your business. 

Above all, remember that this is not a personal blog to share your likes and dislikes. Don’t get distracted from the real purpose of your website, to find customers and make sales.

A Marketing Plan to Attract Customers

After you’ve set up your website and are open for business, you need to develop a marketing plan to attract customers. Your marketing plan should include:

Ways To Make Your Business Visible on Search Engines

As a new business, the most likely way that customers or clients will find you is through a search engine. You’ll need to make sure that your website comes up on web searches.

The first thing you want to do is submit your website to the two major search engines, Google and Bing, for indexing:

You should also take the time to learn about search engine optimization (SEO). This is a way of using keywords to direct web traffic to your site. Guides exist online that can help you become more knowledgeable and figure out how to use it effectively.

A Plan to Build an Email List of Clients and Customers

It’s easier to keep an existing client than find a new one. Once your website is up and running, and you’ve had some sales, you want to make sure customers remember you when they are shopping or when they need your expertise again.

Click here for a free ebook and training to start an online business

Building an email list of clients and customers will allow you to reach them with online marketing. Have an opt-in method to collect email addresses, so you are reaching the clients who want to hear from you.

After you have collected email addresses, develop an email marketing plan. Send out notices of new products and services. If you are discounting products, make sure to let your customers know. Keeping in contact with your clients will help maintain your visibility, and they will return to you when needed.

A Budget for Online Advertising

Some marketing tools, such as email lists and SEO, are free. You can’t totally rely on free marketing, though. Make a budget that reflects the costs of where you want to advertise.

You can advertise on social media and search engines. If you are offering a service, such as consulting, consider advertising on trade specific websites. You want to be deliberate with where you choose to advertise to make sure you get the most bang for your buck.

Advertising in the most important way to gain and keep clients. Take your time researching the different ways to advertise and set up social media accounts to attract new customers. You don’t want to be quick and sloppy with this part of your business plan.

Tools to Collect Money and Organize Your Accounts

You are establishing an online business because you want to make money. Therefore, you need to be able to collect that money. There are various online services you can use to accept both credit card payments and online money transfers. It is in your interest to accept as many forms of payment as possible, but that comes at a cost you’ll need to budget.

Don’t forget to set up a bank account for your business. You want to keep your personal and business finances separate for easy accounting, especially if you are forming an LLC or corporation. Keeping a clear division between personal and business will be especially helpful when it’s tax season.

Finally, you need to invest in accounting software. Here are a few options:

This will help track your expenses and your revenue, as well as any outstanding bills you might have or that might be owed to you. There is a plethora of software out there, so do your research and determine which ones fit your needs.

You Don’t Have to Do This Alone

Setting up an online business is a big step to take, and it may feel like more than you can handle on your own. Remember that there are professionals available to assist you.

Hire a web designer if you don’t think that your technical skills are enough to build the website that you are picturing in your mind. Business consultants will help explain the technicalities of the different business structures and give their advice. Tax professionals can help you set up all your tax payments. Banks are there for other financial advice.

Now the Real Work Begins

Following these steps and opening your online business might look like a lot of work, and that the actual running of your business will be easy in comparison. In reality, this was the simple part. Running your business will take a lot of your time and energy. Your work will decide if it is a success or not.

However, if you have set up your online business correctly, you’ll be in a good position to wind up with a thriving business. Remember, it’s unlikely to be wildly successful overnight, but don’t be disheartened. Keep putting in the effort, and you will eventually see the customers and clients come in.

If you’re ready to get started, click here for a free ebook to start an online business

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