A man stands over a table in a storage room. He writes something on a piece of paper. On the table around him are packages, a desktop monitor and keyboard, a credit card reader, and various receipts.
Online businesses start by answering two questions: What does this business offer, and why is it based online? — Getty Images/eclipse_images

An online business can be easier to start than a brick-and-mortar store and, by its nature of being exclusively digital, it can offer a product or service that would be otherwise unavailable through physical retail. Follow the steps below to learn the fundamentals of starting your own online business.

Why online?

Whether online or brick-and-mortar, all successful businesses begin as an answer—but an online business begins as two. A business first answers the question of "what": What exactly does this business offer that no others can match? That answer is the unique selling point (USP) of the core product or service. The USP is the reason consumers will be motivated to purchase the product. The second answer is exclusive to an online business: Why is this business based online?

Operating online was once the USP itself for most businesses, but nearly all businesses now offer an online service. Modern online businesses must find a niche within the core processes of the overall online experience. Some areas where online businesses can differentiate are through their core services, distribution models or presentation styles.

Licenses and permits

Even an online business must still file and register with the state(s) in which it will operate. The required permits and licenses will vary by state, so be mindful of the regulations governing new businesses to avoid legal missteps and fines before even making the first sale.

Develop a business plan

The business plan is the overarching guide for all business operations. No business begins without one. It will outline logistics, methods, funding and every step of the process, from initial research to expansion. The business plan is a living document that will help focus growth and identify where different functions of the business intersect.

Website design

The company website is an online business’s base of operations. Much like the entrance of a physical store, it must immediately draw in a consumer and offer them a reason to stay, especially because it’s so much easier to leave a website than a store.

Key components of website development include:

  • Design principles that provide a clean user interface (UI).
  • Code that enables a smooth user experience (UX).
  • Integrations connecting to all social channels and external destinations.

Modern online businesses must find a niche within the core processes of the overall online experience.

While many online services can help beginners create functional websites for their products, it can be worth the time and expense of hiring a team of specialists. Building a website with a team of dedicated developers and designers can often be the best approach, especially if the purchases will be made directly through the website.

An entirely new website can be tailored to fit a specific vision unavailable in the templates offered by online website builders. Additionally, businesses that would prefer to keep customers on their own page to complete a purchase, rather than outsource to another e-commerce platform, will require a secure domain that might not be readily available on the standard website-building toolkits.

Distribution

One of the largest draws for starting an online business is the numerous distribution methods. These varied approaches allow online businesses to function without needing a traditional supply chain or manufacturing infrastructure.

Whether a business ships orders directly from its manufacturing site, receives and passes products from another manufacturer through the white-label approach or serves as an intermediary drop-shipper, the chosen distribution method is often one of, if not the largest differentiator between primarily physical and online businesses.

Create a marketing plan

Much like a business plan, the marketing plan will guide the big-picture strategy for its department. A marketing plan for an online business will emphasize the following:

Competitive analysis

Studying the competition has never been easier, especially when the competition is from other online businesses. A few simple searches will provide lists of the top brands in the industry of various sizes. Compare their websites and decide what works best, and then figure out how to combine those winning ideas.

Customer segments

Conclusions drawn from the demographics and other behavioral factors of potential customers will dictate the various customer segments a business can target. The ways in which those segments purchase and receive their products will dictate the most appropriate distribution model and their online habits will help inform best practices for targeted email marketing campaigns.

Social media

Social networks are an essential promotional channel for an online business and even serve as the primary marketing platform for most. Understanding which networks will be most relevant to a business is key to developing an effective online following. Because of their differing presentation models (such as Instagram featuring images and Twitter offering written content), not all platforms need to be used by every business. The service that best suits one business may not be used at all by another.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.

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Published March 17, 2021