One of the most interesting facts about digital services is that Gen Z, which utilizes the web extensively today, was not even born when online services became accessible to the public about three decades ago. The same generation is now using the Internet to sell their products and services. However, setting up an online business thirty years ago was way different than it is today. Do you know why?
Back in the early 1990s, only the privileged could set up an online business because the starting costs were high and external funding was limited unless a fortunate individual was a part of a family-owned business. Today, individuals can start and scale businesses online with a limited budget, irrespective of their level of business expertise and background.
Starting an online business has become way easier than before (Source: Pixabay)
An online presence for small businesses is crucial in today’s competitive business environment. Check out why having a digital presence has become vital for small businesses.
The fact that 64% of SMEs operate through their business websites and 19% of small business owners believe that a website would boost their business growth by 25% within the next three years says a lot about how important it has become to start an online business.
The best thing about starting an online business is that it has become a simple, step-wise method, with each step serving as a building block of your online business. Let’s get your venture up and running with the following steps:
1. Own Your Business Idea
The first step is to think about a business idea and test it with the following questions:
- Is the business idea providing solution(s) to problems faced by your customers?
- What kind of business have you thought about? Is it a product or a service?
- Who will be your customers?
- Which market will you target?
- Are there any established competitors for your product offering? Who are they?
There are a variety of correct responses that can fill up the question area above, but it is essential to keep in mind the ‘Why’ of your business. Remember that it takes more than just a good idea to develop something truly remarkable. According to data from the McKinsey Global Institute, for every 7 product ideas, only 1.5 launch, and only 1 succeeds. This explains why effective brainstorming is so critical.
Do You Know?
For Every 7 New Product Ideas, Only 4
Enter the Product Development Stage
(McKinsey Global Institute)
New Products Have a Failure Rate of 25-45 Percent
(McKinsey Global Institute)
2. Assess the Market for Your Business Idea
Now that you have found a fine business idea, it is time to identify the unmet needs, product or service niche, and select your target market. You can check out websites that may already provide the products or services you plan to sell online. Remember that these websites are your to-be competitors, and you can evaluate how your product or service will meet customer needs and provide value in a much better way. You can also read customer opinions and feedback on online forums.
Finding the niche of your business idea is also a crucial part of setting up your business online. Demand for niche products is growing, and small business owners will have to use innovation to stand out from other businesses of the same niche.
It’s easy to get lost in the world of brands and forget about the practicality of having a single, straightforward answer to a common problem when there are so many products and services of the same niche that claim to be innovative and ahead of the curve.
Your business idea should be unique to stand out from the ordinary (Source: GIPHY)
Many new businesses launch with the goal of finding a market once they’ve developed a marketable product. For example, for a home exercise equipment product, the target market would be individuals who are interested in staying fit and healthy. Some specific characteristics of this target market would include: age, gender, income, and geographic location.
For an online business, it is crucial to check and analyze the Search Engine Results Pages (SERPs) for your product or service. This will help you to assess the online competition in advance and prepare accordingly.
Another important part of market research is to keep track of the keywords related to your product or service that are searched frequently online. You can use these niche-related keywords to improve the ranking of your product pages on the SERPs. Google Trends and Google Keyword Planner are free tools that you can use to find out high-ranked keywords, while Ahrefs and Semrush are excellent paid options.
Do You Know?
3. Check the Legal Requirements to Launch Your Business Online
In order to meet the needs of your customers, it will be helpful to have a firm grasp on the numerous regulations under which you’ll be expected to operate. It is necessary to obtain a business license if you plan to conduct business online. It is equally important to check state regulations before launching an online business in a particular state of a country.
Moreover, sales tax regulations also vary with the state where you are launching your digital brand. Without a valid seller’s permit in each jurisdiction where sales tax collection is required, you would not be able to conduct business online. A tax identification number will be required for all businesses. In order to file federal taxes, businesses need an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). An EIN can be requested totally free of charge using the IRS’s website, regular mail, fax, or phone.
To be legally recognized as a company in the vast majority of states, you must make sure to come up with a catchy name for your company and register it with the state secretary’s office. Moreover, a specific domain name is required to start an online store for your new company. A domain name is a specific address for a website, and it is what customers will use to locate your company online.
Having a distinct trademark for your online business is just as crucial as selecting a special domain name. You should check the U.S. Patent and Trademark Office database as you choose a company name and a domain name to make sure it is available.
Companies must have clearly articulated return and refund policies in order to comply with federal and state consumer protection regulations. While stores are not compelled to allow returns or provide refunds, they are required by some states to disclose their return and refund policies to customers.
4. Choose the Best Business Structure for Your Online Brand
Explore your options for forming a company before launching your internet venture. Your online business structure can be a partnership, sole proprietorship, Limited Liability Company (LLC), corporation, or an S-Corp.
You can research more about these business structures online and decide which business structure best suits your business idea.
5. Work On A Reliable Product Sourcing and Business Funding Strategy
Product sourcing strategy is perhaps one of the most critical steps when initiating an online business. It is important to remember that you are selling a product or a service because:
i. You are a product manufacturer or a service provider yourself
ii. You are planning to dropship products of other businesses
iii. You are working with retailers to sell their products online
It is vital not to rely on the conventional option of bank loans to fund your business. You should keep your business funding sources flexible and look for other funding options, such as crowdfunding and business grants.
Do You Know?
Equity Crowdfunding provided more than $200 million in business funding in 2020 alone (Crowdfund Insider)
Recent changes in equity crowdfunding cap has enabled firms to generate up to $5 million annually (Crowdfund Insider)
6. Launch Your Business Website
With your business idea and structure finalized, market research completed, and product sourcing and business funding sorted out, it is now time to finally set up your website. One critical consideration in setting up a business website is to keep it simple and user-friendly. You only have a few seconds to grab the attention of a new visitor to your site. It’s crucial that the site’s navigation is user-friendly and easy-to-use.
A key building block of any website is its content. For your website to have solid content, you need to have persuasive copies for your home page and product pages. Always keep the reader (i.e., your potential customer) in mind when writing copies, and assist them in discovering “What’s in it for me?” by writing from their perspective.
Perhaps the most important page of any business website is its Contact Page. This is the page that will allow your customers to get in touch with you. The Contact Page must be easy to spot: usually on the top right or top left of every page of your business website. Ideally, the contact details you should include are the phone numbers for local and international customers, a corporate email address, and a complete address, along with the location on Google Maps.
The Contact Page of a business website should also have links to its social media accounts. These links can be in the form of hyperlinks or social media icons. You can also place these icons on the homepage of your business website.
Do You Know?
Short contact forms and live chats have become popular with customers, allowing them to connect with business representatives instantly.
It is essential to know that website visitors typically make their purchases in stages. Initially, visitors are not potential buyers. Everything from the customer’s initial visit to your site to the completion of the sale depends on how your website is set up.
As an online business owner, you will have to decide which payment modes to incorporate on your checkout page and how you will receive your business payouts. PayPal, Google Pay, and Apple Pay are some of the most common payment methods in addition to credit card payments.
7. Promote Your Online Business
After setting up your online business, you must inform your targeted customers about your business offerings. This is where the final step of marketing comes into play. There are various types of marketing methods out there. However, some of these methods are more effective than others.
Some of the available online marketing options for small businesses (Source: Pixabay)
When talking about marketing, social media has become the most powerful advertising tool for online businesses. Instagram, Facebook, Google, YouTube, TikTok, and many other social media platforms have become popular marketing hubs for businesses. Since 69% of Americans have their social media accounts on Facebook, this social media platform has been identified as the major marketing channel for small businesses.
Paid marketing has also emerged as a popular marketing method for businesses. Pay-Per-Click (PPC) and Influencer Marketing are effective paid marketing channels today.
Do You Know?
More than two-third of marketers believe that paid advertising is crucial to their marketing strategy (HubSpot)
24% of marketers employed paid marketing to increase their brand awareness
In contrast with paid marketing techniques, Search Engine Optimization (SEO) is a technique used to increase a website’s visibility in search engines via free, organic search results. Another popular marketing method used by advertisers is content marketing. It is worth knowing that more than 80% of marketers use content for marketing their products, and 70% of marketers have invested heavily in content marketing. Blogging is one of the most common forms of content writing, as nearly half of the online businesses leverage blogging in their content marketing strategies.
That’s A Wrap
From a unique business idea in your mind to realizing that idea in the form of a product on the screens of billions of web users, this 7-step method has covered everything for you. Each step will serve as a building block for your online business. The only thing left for you is to begin setting up your online business with the first step and make your dream come true!