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The Complete Guide To Starting An Online Business

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Starting a business is sometimes scary and almost always challenging. It might seem overwhelming at first, but that is completely normal. And we owe you a massive congratulations. You have an idea good enough to share with the world, and that’s a big deal! You’ve officially gone further than most hopeful entrepreneurs. You’ve made the decision to get online and figure out how to turn this idea into a money-making business. So, let’s talk logistics. 

When I first started my own business, I panicked over taxes, finances, and marketing. I felt so behind that first year because I didn’t have anything figured out before launching my site. Then, when I did launch, I had to check all these boxes while I was knee-deep in the stress of maintaining my business. I had no idea which holes I hadn’t filled until they imploded and quadrupled my stress, since I had to put out fires that were completely preventable. 

To help you avoid the same mistakes I did when I launched my business, we've put together this guide to starting your small business online. Read through our eleven steps below to officially start your business off on the right track.

How to Launch a Small Online Business

• Vet your idea
• Identify your audience
• Choose your business name
• Write your business plan
• Sort out your branding
• Build your website prototype
• Test and validate your product
• Nail down your processes for delivering your product
• Make it legal
• Deal with your finances
• Launch your business

1. Vet your idea

First things first: you gotta vet your idea. 

Before jumping in head first, you need to be 100% confident (or at least 90%) confident that your idea is worth it—worth the time, sacrifice, stress, anxiety, frustration, and ego hits. 

It’s worth remembering that no matter what type of business you own (or how good your idea is), you’ll definitely experience ups and downs within the first 10 years. Some of these ups will be sky-high, and some of these downs will be depressingly low. 

But if you believe in your idea enough, you will persevere—you can absolutely come out the other side with an awesome business, which is an amazing way to spend your time and earn a living. On the other hand, if you’re shaky about your plans, this will be a tricky first decade for you. To make sure you’re on the right track, let’s talk about how to vet an idea:

While vetting your business idea, ask yourself these five questions: 

• How big is your potential audience? Are enough people interested in this type of product or service that you have a stable audience for sales? 
• Is your product or service something customers buy once and move on? Or is there a chance for building a repeat customer base? 
• Is your business idea going to be a passing trend like low-rise jeans, or does it have a long-term possibility like pencils? 
• What is your competition? For instance, if you are setting up a fry bread cafe, are there other fry bread cafes in the area? If there are, what unique element will set your business apart from the competition? 
• Will your business have any legal issues or limitations? For instance, are you creating something with strict regulations that make it trickier to market? Are you passionate enough about your idea that you’re willing to deal with the ups and downs and chaos of starting a business?

Once you’ve vetted your idea by asking yourself the questions above, getting advice from people you trust, and even speaking with an accountant or business banker about your business’s viability, it’s time to move on to the fun stuff—like choosing a name for your budding business.

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2. Identify your audience (or your target market)

Arguably, the most ignored aspect of building a business is identifying a specific audience. A lot of fresh entrepreneurs hesitate to hone in on one demographic because they believe their product or service can and should help everyone. Depending on the product, that might be true—but it still creates a watered-down, generic brand that doesn’t catch anyone’s attention of anyone. 

Our advice? Don’t fall for the trap of thinking everyone is your audience. There’s no way you can market to everyone and still have a unique brand. 

In contrast, if you are clear on who you are selling to, then you will attract people who actually want your product—which means your business is likelier to last. 

To take this a little further, remember that the best brands are aspirational. In other words, while you should start with the people who want your product, you should eventually expand into finding people who want to want your product. This means you will inherently cast a wider net than just your target market—but you will not catch much of anyone without a target market. Start there.

If you can really hone in on exactly who your dream customer is, you then know how to market your product to them. A good exercise to do here is to write your dream customer’s profile or buyer persona: 

• What is your ideal customer’s name? Age? Occupation? Hobbies? 
• What food do they like? What food do they dislike? 
• Do they have a family? 
• How much money do they make, and how much disposable income do they have? What are their hopes and goals? 

Now, ask yourself: Does a person like this actually exist? If so, now you know which social media platforms to target, where to buy ad space, and what tone your advertising should take. 

Having a hard time answering the questions above? Start by identifying who is not your audience. List the qualities of the person who is not your target audience, and narrow things down from there.

Again, you can have more than one target audience, but you should try to be as specific as possible for each one.

3. Choose your business name

Choosing a business name is where the fun starts. For one thing, your business’s name is the first point of contact between your business and your consumers. It also gives customers the first glimmer of your personality and is the place where your branding will shine. 

Remember, your name is also how the legal world will note your business. It also helps Google determine how to position your website when someone searches for your product or similar product on the internet. If your name is confusing, long or even too similar to other business names, you might be positioned at the bottom of the search results page. 

In other words, your business’s name is important. 

When it comes to business names, entrepreneurs tend to overthink, overthink, and, overthink some more. Sometimes, it feels like the trickiest part of starting a business, so here are some tips for figuring out the perfect name.

Keep it simple and short

Shoot for one to two words. You don’t want the name to be a chore for your customers to remember. Make it as easy as possible for your customers to think only of your service or product when they hear your name. You also want the name to fit neatly on a price tag or as a hashtag (always keep that social media marketing in mind)

For a good example of a short, simple brand name, consider Macintosh computers and Apple products. When someone says the word “apple,” most people now think of the computers before they think of the fruit. It’s a simple name, but with excellent marketing, the company completely co-opted the fruit.

Dare to get personal

Don’t be afraid to think of something quirky, weird, and maybe even a little kooky. For instance, many small online clothing businesses include the name of the owner’s grandmother in the title, or maybe of the owner’s children who inspired the clothing. 

Or if something from your hometown (or even a particular food) means something to you, consider including that as part of the name. This type of personality flair makes marketing the founder’s story even clearer (read: makes you more marketable). It’ll also provide an easy framework for storytelling within your marketing plans. 

These personal details will also help customers feel a sentimental connection to the brand. Sentimentality is an effective tool for building loyalty.

Be original

Make sure there are not other companies filed under the same name or an adjacent name.  You don’t want to confuse your potential customers or investors, and you also don’t want to confuse Google, which might pull up your company’s name and location while filling in product information from a completely unrelated company that happens to share your business’s name.

Search domain names, URLs, and social media handles for your would-be business name. Don’t forget to simply Google the name either. If you are dead set on your chosen name, consider tweaking it a little just to set it apart.

4. Write your business plan

Your business plan is a structured document that gets all your brilliant ideas down on paper. You’ll show it to investors (like angel investors or traditional lenders like banks) to demonstrate that your ideas are worth investing in. While you can modify your business plan from year to year, try to think about it as your business’s foundational document—this is how you design the path to making your dream work. 

You can create your business plan as early or late as you want before launching your business, but I highly recommend doing this early because it will reveal any flaws in your idea. The plan itself might feel redundant, but don’t speed through this. Consider it a proposition for the world to take your idea seriously.  

Executive Summary

This is your elevator pitch. Simply sum up what your business is, how it will function, and what success you anticipate. It should be brief and to the point. 

Company Description

This section should be a detailed description of what problems your company solves. It should also focus on who your company is serving and how you are serving that population.

Market Analysis

Who is your competition? Your investors will want to know you’ve done the research to find out that yours is a good idea, or that there is even a demand for this service or product. Along with showing that there is competition, this section of your business plan should point out what the competitors are doing better than you—and what you plan to do better than your competition.

Management and Organization

What kind of business is this? Is it an LLC, INC or DBA? How big is your business, and what is its structure? Most any business structure is fine—but remember: remember...stay away from pyramid schemes. (We say this mostly because they’re pretty similar to illegal pyramid schemes, but also because they can take advantage of women and marginalized populations.)

Products and Services

What exactly are you selling? List out each product, including each variation of your main product or service, as well as your pricing. Keep this portion of your business plan as clean and organized as possible (a spreadsheet will likely be a useful tool here). You will probably add to this list as you launch your business and continue to grow.

Marketing & Sales

How do you plan to let people know what you are selling? Many business owners use social media, local newspapers, radio ads, billboards, or even a combination of everything. The point is that you need to have a plan. 

Another angle to consider is what medium your audience primarily uses. For instance, if you’re focusing on a product that primarily serves older communities, you’ll want to focus on Facebook advertisements. If you’re focused on a younger population, TikTok ads will probably serve you better. Consider how you can use your audience’s preferred same media to get your message across. And what sort of posts or commercials will you create that both fit your brand and speak to your dream consumer? 

Funding Requests

Outline your funding requirements. This is where you get specific on how much you need and how each dollar will be spent. It’s also where you explain the lending and investment terms you would like and whether you are looking for debt or equity. The more specific you are, the better. Answer basic questions like how long you’ll need funding and how exactly you’ll use it. Most importantly, be overly detailed and incredibly tedious with this information—investors prefer more information when making a decision about whether or not your business is worth their time and money.

Financial Projections

Because you haven’t launched your business yet, this is where you will keep track of your monthly and/or quarterly projections. Throw in graphs, charts, and anything else that will tell your financial story as easily and quickly as possible. This section can be updated and added upon after you launch, but you should definitely keep track of your financial projects throughout the life of your business. Set routine goals to keep yourself motivated and on track.

Keep your business plan close by and allow it to remain a living document as you grow and learn new things. Even if you never end up presenting it to anyone, it will keep you focused and aware of when things are not lining up for you.

5. Define your brand identity

Last year, I taught a business class to high schoolers., These were Gen Z brilliant students who knew the internet forward and backward. They used the word “branding” casually, but they didn’t quite understand the ins and outs of branding a company. So we did what I like to call “the Starbucks exercise.”

I asked them to get out a piece of paper and write their answers to my questions: If Starbucks were a person, what gender are they? Do they smoke? What age are they? Do they have a family? A partner? Kids? A dog or a cat? What kind of outfit is Starbucks wearing? 

The majority of students had the same answers. To them, Starbucks was a white middle class lady who used to smoke cigarettes. She is a straight cis female with a couple of kids and a cat. She is stressed and she wears yoga pants a lot. 

These students were all from different homes and all had different relationships with the coffee brand— but they all had the same general understanding of what this brand was. And that’s the power of strong, consistent branding. 

If you can create a set understanding of what your company is if it were a person, you are golden. Creating a brand like this means you know exactly who you are marketing to. And having such a specific focus also means that you can attract the right customers. You will know which aspects of your company to negotiate in order to attract your target audience and expand from there.

What gender are they? Do they smoke? What age are they? Do they have a family? A partner? Kids? A dog or a cat? What kind of clothes do they wear? What is their income bracket? What type of music do they listen to?

Another helpful exercise is to try to describe your company with one word. Examples include: sleek, economical, efficient, retro, conscious, powerful, and rejuvenating. Practice this with your own business, and then make branding decisions based on that word. 

Now that you have an understanding of what your brand is, consider your unique selling point, words, colors, and logo.

Figure out your unique selling point

What makes your brand different from other brands? Why should people choose your service or product over others? Is there an emotional reason (for instance, you’re a local, naturally sourced brand), a practical reason (maybe you’re more affordable or offer higher quality products), or a combination of both?  Frankly, if there is an emotional pull, run with that—people love an emotional connection to the product they’re buying.

To put it simply, think about your origin story and what YOU bring to the table. Then go from there.

Colors are important! They should work together to make a good story. They should not be in a contest with each other. If you look at your branding and feel confused or disturbed, it means that the colors are not doing you favors. 

Not sure what we mean by that? Well, there is an area of study called color psychology. This is how our brain responds to certain colors. 

For example, yellow is a trigger for discomfort and red is a trigger for hunger, which is why most fast food places use red and yellow in their branding. These colors are intended to inspire patrons to come and eat a lot (red) and then leave quickly because the yellow is so glaring. Blue is calming which is why most therapy offices paint their walls blue. 

Consider what emotions you want your clients to feel and Google which colors best make that happen.

Red - enhances human metabolism, increases respiration rate and raises blood pressure; associated with energy, strength, danger, war, determination, passion, desire, and love -- it attracts more attention than any other color

Green - slows human metabolism and has a calming effect, associated with tranquility and calmness, symbolizes growth, freshness, rebirth, fertility and is associated with nature (all things organic). 

Blue - Peaceful, honest, compassionate, authentic and sympathetic 

Brown - reserved, dependable and resilient 

Yellow - joyful, happy, intellectual, a lot of energy, stimulates mental activity and muscle energy, can bring feelings of anxiousness when overused, and is definitely an attention grabber. Commonly used to mean loyalty and in other settings cowardice. 

Pink - calming and vulnerable. Signifies gentleness and youthful innocence, very sweet and tender feelings

Purple - power, nobility, luxury and ambition, wealth and extravagance. Reminds mystery, creativity, independence and magic 

White - signifies safety and cleanliness. Reminds of purity, light, faith, innocence and goodness

Black - power, death, formality, fear of the unknown, often feels negative and reminds of grief

Color theory also tells you which color combinations are most pleasing to our eyes. A fun resource is the Adobe color wheel . This site allows you to jump in and look at different combinations of colors that work within these theories of which colors are most compatible.

This is where you get to tell your story. Use words that fit the tones of the colors you choose (or vice versa). Words like sleek, organic, fresh, and honest all feel good with greens, light pinks, and whites. Words like powerful, strong, and forthright match the tones of reds and blacks. Consider which words best describe the mood you are trying to convey.

Unless you have a design background and are good with graphic design, consider hiring someone else to design your logo. Before hiring someone, your job is simply to figure out a basic idea of what you want. This will require you to look at different branding, websites, and fonts to think about what really resonates with you. 

When I was trying to sort out my own branding, I came across an Instagram profile that posted old Russian products with pre-1990 branding. My family comes from Eastern Europe and many of my family members speak Slavic languages, so seeing these unique logos and fonts felt familiar to me. I decided to hire a designer who created a font that could have come straight from old cheese cans from Moscow 1955, something with a Slavic touch and retro vibe. You never know where you will find inspiration.

• Old branding. Look at old magazines or old boxes and just study those fonts and how the logos were made.
• Notice t-shirts. 
• Whenever you find yourself in a waiting room or watching tv, jump on Pinterest and create different boards of ideas or tones.
• Start following different designers on social media. A popular one is Aaron Draplin, and from him you should be able to find an entire community that posts different design and logo ideas. This should inspire you as you figure out what you want. 
• Album covers. Go to a record store and sort through different old school album covers. You will see some of the best branding there has ever been. 
• Instagram, Instagram, Instagram. We love to hate it, but if you tap into the design community, you will be blown away by the options. 
• The grocery store. Andy Warhol found art in advertising and sold his Campbell’s Tomato Soup renderings for millions of dollars. He described the soup can as brilliant art and branding. Go to the grocery store, pretend to be Andy Warhol, and look for art in the mundane.

6. Build your website

Whether you’re offering a newsletter or a physical product, you need to start creating a site so you can fund your business and find customers. 

To start creating your ideal website, start by asking a few key questions. What is the purpose of your site? Are you selling or just giving information? Does your site include a call to action like signing up for a newsletter or service? Or do you need an e-commerce site to collect credit card information and shipping? 

A ton of different website building platforms are built for small online business owners like you. With services like Wix , Squarespace , and Weebly , you can create a site and keep it dormant before launching for testing. 

Not sure how to build a website from the ground up? Find other websites that are doing similar things to you and follow their lead. It is okay to gain inspiration from multiple sources. (Just don’t copy and paste an entire site. Plagiarism will not go well for you.) 

Start simple. You don’t have to have a perfect product right away. Create a basic website, then have a friend go through it and tell you what they would love to see or use. 

As you start creating your site, Just make sure you have these basics: 

• A site map 
• High-quality images 
• A call to action on each page (“sign up for our email,” “click to purchase,” etc.)
• A contact page

You’ll also want to use proper SEO ( search engine optimization ) for any blogs and sites you create. If you’re not sure what that means, no worries—most website builders include some sort of SEO recommendations that will help optimize your content. 

SEO is an acronym for “search engine optimization.” It is the method in attracting a higher quality and quantity of traffic to a site. 

The goal of SEO is to make it easier for Google to recognize what your site pages are about and then help users find the best solutions to their needs.

• Figure out where your site stands in terms of Google rankings. Use the Google toolbar or other monitoring tools (there are a lot). 
• Use keywords or phrases organically throughout your pages. Use keywords that people might be including in their searches. Feel free to Google your topic and see what other people are posting or searching. 
• Include these search terms in your URLs. 
• Attach descriptors to your images. 
• Use internal links to guide users to another page on your site. 
• Link to other sites or the site you are sourcing information from. 
• Make sure that your website is updated regularly and actually has high-quality information.

7. Test and validate your product

Test your product.

Before launching and advertising, you must test your product and see if it is actually meeting the needs it is setting out to meet. You can do this in the form of focus groups, which means sending the product to a few choice people who you know will be honest about their impressions. Then you can start sending and giving to others. Find a bigger audience by inviting people from your focus group to pass your product along to their friends and ask for their feedback as well.

Validate your product

Before really going crazy with scaling and production, you must validate the product . This means setting up pre-orders and selling in person (read: starting off small before you buy 6.000 scrunchy leopard print bracelets that will just sit in your garage). Produce a few items and try to sell them. If you can’t move those few, there is no way you will move 6,000. 

Validating your product tests whether your idea actually does have legs and whether you are the right person to move it forward. This can also be done by setting up pre-orders, launching a crowdfunding campaign, or selling person to person. Each of these tactics can act as a thermostat of where you are in meeting a need or want of your dream customer. 

If your product is not a tangible thing and is content– or service-based, start promoting it through advertising. Consider offering a free service to get feedback before you start to sell. See what happens. Once again, if no one bites, it’s time to find another idea for your small business.

8. Nail down your processes for delivering your product

By now, you should have a good sense of your business’s organization, branding, and purpose. Now, it’s time to dig deeper into the nitty gritty part of building a company. 

Let’s start by asking a few questions. 

If you are using an online store to sell a product, ask yourself:

• Where are you going to store your inventory? 
• Would you rather mail each product yourself, or should you outsource via dropshipping ? 
• Who is making your product? 
• Are ethics and sustainability a part of your brand?  
• Do you need design help and how long term do you need the help to be? 

If you are selling a service, ask yourself: 

• Exactly what service are you offering? 
• What are your price points? 
• What size of jobs are you accepting? 
• What are you willing to negotiate with clients? 

Whether you’re selling a product or service, we recommend getting support that can help you save time and money as you hammer out the logistics of running your business. Here are some of the most crucial tools to consider:  

• Accounting software. We live in a wonderful time when there are trillions of options for different accounting apps. Different programs are tailored to different needs and include different price points as you grow. Check out our  list of the best accounting software for small businesses . 
• Email marketing. Email marketing benefits your SEO and builds trust with your customers—potential, past, and current. This is the one chance you have to speak directly with the people you are hoping to impact with your service. This is where you can ask them questions and remind them that you exist.
• Project management. If you are anything like me, you tend to procrastinate and get frazzled when things get off track. Just like accounting apps and software, finding the right project management tool can make a huge difference. We all work differently, so find the tool that makes the most sense for your brain and also your company’s needs.

9. Make it legal

Research licensing and government regulations.

Different states have different laws on what’s legal to sell, where, and how. These regulations can be quite complex, and there may be legal problems if you make a wrong move. 

Go ahead and Google your state laws. If you find any regulations that might affect your business,  definitely reach out to your county officials and they can guide you. If you feel like your business is in a gray area, consider investing in a lawyer as you set up your business.

Pick a business structure

A business structure is integral both for filing your taxes and your own liability.

10. Get your finances in order

Dealing with finances is usually where first-time entrepreneurs start panicking. They have an awesome idea, but they didn’t major in accounting and have no idea what to do about money . 

The first move is to figure out what accounting software you want to use(hopefully you figured that out in step seven). 

Next, we need to draw the line between your personal self and your business self. Your business profile needs to stay distinct from your personal finances.  

How do you separate the two? Just like how you have a social security number, your business needs its own identification number (this is called an employer identification number , or EIN) and bank account. Not only does this make sure you are not going to get into a jam with the IRS, but setting up a business EIN and bank account helps prove that your business is, well, yours. You will get your business identification number when you register your business with your state. 

Next, you need to get a business bank account and credit card . Open an account that will work best for you, whether that is through using a high yield savings account or an account with limited fees. Make sure that you are checking your credit card statement and your bank account weekly so you can stay on top of cash flow. 

Go to your bank and speak with someone about opening the right account for your needs. Your business banker will be your best friend—they can offer much better advice on different accounts and their benefits than anyone else. 

Be mindful that most of your money will go quickly in the beginning. You will be spending it on building your inventory and trial and error with marketing. If those startup costs are too big for your pocketbook, consider finding angel investors or crowdfunding . 

Starting at $0/month, Lili offers a checking account with time-saving tax optimization and accounting features specifically built for entrepreneurs.

11. Launch your business

You’ve done it! You’ve gone through all the major steps to get your business off the ground, and now you’re ready to launch. Publish your website and start getting the word out by leaning into social media and other advertising methods-. Using your brand identity and chosen colors and logo, be liberal in sharing your new project with the world to find customers. 

Most importantly, be confident . There will undoubtedly be ups and downs, but remember—you are providing something that people want. You’ve been through vetting and product testing and you know yours is a good idea. Hold onto that while you are weathering these early storms because yes, the initial phases are hard, but you’ve got this! 

Phew, you made it to the end—nicely done! Thanks for sticking with us, and best of luck to you with your small business. We know you're going to do great.

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Market Research

Business planning, website development, product or service selection, marketing and promotion, is it a good idea to start an online business, can i start an online business with $100, what are different types of online marketing strategies, the bottom line.

• Small Business
• How to Start a Business

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

Crafting a Winning Business Plan: Setting Goals and Strategies

Katie Miller is a consumer financial services expert. She worked for almost two decades as an executive, leading multi-billion dollar mortgage, credit card, and savings portfolios with operations worldwide and a unique focus on the consumer. Her mortgage expertise was honed post-2008 crisis as she implemented the significant changes resulting from Dodd-Frank required regulations.

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Oscar Wong / Getty Images

If you want to get into the online business game, it’s a good time to start. The COVID-19 pandemic reshaped online consumer spending, including how people shop online and how they research products.

Today, 76% of Americans buy products online. Furthermore, roughly a third of people purchase items online weekly. From setting up an ecommerce business to offering web design services, there are countless avenues to explore as an entrepreneur.

Below, we’ll walk through each step to building an online business.

Key Takeaways

• When starting an online business, comprehensive market research is critical for identifying your target audience and learning how to resonate with your customers and understand their needs.
• Creating a business plan is an important step for outlining your business goals. It also includes your product description, target market, and financial projections, among other core components.
• Building your website involves setting up a domain name, finding a hosting company, and designing a strong website with consistent branding that allows your customers to navigate it intuitively.
• Choosing the right product or service to sell is essential. It’s important to think about how you’re addressing an unmet need.
• Several digital marketing strategies can be utilized, from content marketing to paid advertising, to help your business grow.

Successful online entrepreneurs study hard in order to have a thorough understanding of their market. This is important for knowing exactly how to reach your target market , because these are the people who will buy your products and drive your business growth.

At its core, market research is about understanding your customers’ needs, pain points, and solutions. It is designed to help your business better meet these needs.

Steps to Conduct Market Research

Market research involves understanding key aspects of your current and future customers. To get a clear sense of your target market, outline the characteristics of your audience—for example, age, location, gender, income, job title, and key pain points.

Once you have identified your target audience, conduct research on the following topics, which will tell you about how they make decisions and how you can better position your business:

• What are the challenges that your target market faces?
• Where do they research a given product or service?
• What are their views on pricing for this product or service?
• What factors influence their decision to make a purchase?
• Who are your competitors?

To put this market research into action, there are a number of different avenues you can take:

• Focus groups
• Competitive analysis
• Brand awareness research
• Market segmentation research

Consider the following questions that may be asked in an interview or focus group to learn more about your audience:

• “How do you search for that product?”
• “How useful was it?”
• “What words do you use when you search on Google?”

When you have completed your market research, identify what you have learned as well as your next steps based on these insights.

Creating a business plan is a key first step for all business owners . It is important for companies looking to secure funding resources. It also serves as a blueprint to summarize your key business objectives and goals.

To write a business plan , incorporate these eight main sections, which are often found in traditional templates:

• Executive summary : This is typically a one-page section that explains your objectives and includes your mission statement, core team, and why your company is positioned for success.
• Company description : This describes what you offer, your competitive advantages, and your business goals.
• Market analysis : This is where you explain your target market, market size, market trends, and competitive landscape.
• Organization and management : Explain who is working on your team and their professional background and experience.
• Service or product line : Describe the product or service you are offering, including any copyright or plans for patenting.
• Marketing and sales : Discuss your marketing and sales strategy. Discuss your pricing, key metrics, and sales plan.
• Funding request : If you are a company looking for funding, here is where you outline the capital you are requesting and where it will be allocated.
• Financial projections : Include projections for your company’s revenue and expenses. Consider including an income statement, balance sheet, and cash flow statement in this section.

A business plan is important because it helps clarify your action points, who you are, and what you offer, all in a coherent template.

Getting your business online is the next key step. In an ever-changing environment, it is important to know the tools, trends, and strategies for building a strong online presence to allow your business to grow.

Registering Your Domain

The first step is registering your name, or your website address. This can be in the form of your business name “.com.” To purchase your domain name, you can go to sites like GoDaddy or Namecheap . If you decide to build your website using WordPress, you will need to use a site such as these to host your website.

Web Hosting Companies

Alternatively, you can buy your domain name at a hosting company. These are companies like Shopify , Wix , or Amazon Web Services , that may also offer tools to build your website and release content on them. 

Website Design

A well-designed website is important for many reasons. Using a website builder, such as Mailchimp or Squarespace , can allow you to choose a theme, customize your pages, create relevant content, and set up a payment page.

Other key aspects of your website design include its functionality, simplicity, and ease of use. Allowing your potential customers to navigate the site intuitively will be key to their experience. Brand consistency—in your logo, colors, and typeface, for example—is also key to creating a unified brand.

Another essential part of website design is its mobile application. You’ll want to ensure that your website runs smoothly on mobile, that images load properly, that the text is legible, and that buttons are intuitive to click.

This step focuses on how to choose the right product or service to sell. At the heart of this choice is the goal of solving a customer’s problem. But there are a number of strategies you can use to identify your product idea.

For example, you might consider analyzing companies with high-profit margins, products that align with your passion, burgeoning trends, items trending on online marketplaces, and/or customer reviews.

With this in mind, analyze how this product will get to your customers. Additionally, you may consider products that are not available in stores in your local market but are offered in communities such as Europe or Japan, for example.

Marketing strategy and promotion is an essential driver of business growth. As the digital landscape evolves, it’s important to have an effective marketing plan that resonates with changing consumer preferences and needs.

BIPOC and LGBTQIA+ small business owners can now apply for a chance to win $250,000 in advertising and consulting services from Good Impressions.

Here are questions that companies can consider as they create their marketing strategy, navigating today’s environment:

• Impact, value, and growth : What are the goals and key performance indicators (KPIs) that will measure success for your business? How will you explain the value that the business provides to its customers and/or society? Create an “elevator speech”—a 30-second description of what you offer and why it’s special.
• Customer need and brand promise : How does the brand meet a customer’s need through its products and services?
• Customer experience : How will the business deliver the best experiences at each stage of the customer journey?
• Organizational model : How will the business operate to serve the customer with the most impact?

These will help you understand what types of strategies can have real impact.

Types of Marketing Strategies

Consider the following digital marketing strategies that can be used for your online business:

• Email marketing
• Social media marketing
• Paid advertising
• Search engine optimization (SEO)
• Content marketing
• Influencer marketing

Each of these presents a different way to reach your target audience, drive conversions, or build brand awareness, depending on your marketing goals.

You need to determine that for yourself. But before starting an online business, it’s important to assess the time, investment, and resources you’ll need to get it off the ground. While the barrier to entry can be quite low, it’s worth considering your goals and strategies for making it a reality.

However, compared with starting up a traditional brick-and-mortar business, the risks of launching an online business may be reduced due to lower upfront costs such as rent, staff, and materials, among others.

The short answer: yes. While it depends on the type of business you hope to pursue, there are many ways to set up an online business at very little cost. For example, you could offer your services doing freelance work, photography, bookkeeping, or personal training. The primary costs involved include setting up your business website, which can cost as little as $2 to $20 each year with companies such as GoDaddy.

There are a number of digital marketing strategies that online businesses can use, such as content marketing, email marketing, paid advertising, SEO, and influencer marketing. Each of these strategies can be useful, depending on your product and goals.

Starting an online business can be a powerful way to launch a new product or service while reaching a wider audience. With market research, a solid business plan, a strong website, and a digital marketing strategy, you can get started in growing your company effectively. As customers increasingly make decisions virtually, building an online business is vital to any business owner’s success.

Pew Research Center. “ For Shopping, Phones Are Common and Influencers Have Become a Factor—Especially for Young Adults .”

U.S. Small Business Administration. “ Market Research and Competitive Analysis .”

U.S. Small Business Administration. “ Write Your Business Plan .”

Ogilvy. “ Getting Future Ready with Marketing Transformation ,” Page 15.

GoDaddy. “ How Much Does a Domain Name Cost? Find Out! ”

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How to Start an Online Business in 5 Steps (2024 Guide)

Brian Connolly

December 16, 2023

Table of Contents

Step 1: research your product idea , step 2: build a financial plan for your online business, step 3: create compelling product listings , step 4: market your product, drive traffic, and build brand awareness, step 5: optimize your online business and plan for growth.

Aspiring entrepreneurs have looked for innovative ways to make money. Fortunately, Jungle Scout’s research has proven time and again that running an ecommerce business is a viable way to earn an income —and can generate enough profit to replace a full-time job. 

Ecommerce offers entrepreneurs the kind of flexibility a traditional retailer could only dream of. Online sellers set their own hours, pay what they want to launch and grow their businesses, and can work from anywhere in the world. They succeed at all ages and education levels , many with no prior business experience. 

Selling products online isn’t just accessible—it’s meeting an enormous surge in demand for online shopping. As more consumers shift to shopping on their phones, tablets, and even smart speakers, opportunities to launch ecommerce businesses will only grow. In fact, 57% of consumers shop online at least once a week. 

If you’ve been thinking about starting a business online, now is the perfect time to get the ball rolling. We’ll go over how to launch an ecommerce business in five detailed steps, plus how to plan for future growth—even if you have zero startup funds. 

The first step to launching your online business is often the biggest bottleneck: finding a profitable product to sell . 

Notice that step one of starting a business isn’t fundraising. You can start a business at virtually zero up-front cost—stay tuned to find out how. 

If you don’t have any product ideas yet, don’t worry! Thinking about how you want to sell online will inspire you. 

Choose a business model

There are all kinds of ways to sell products online, but here are seven tried-and-tested, profitable options:

• Private label : You rebrand or rename a product already in production under your own label. If you’ve bought a drugstore’s “generic” equivalent of a brand-name product, you’ve seen an example of a private-label business. It’s the most popular and profitable business model among Amazon sellers. 
• Wholesale : You purchase brand-name products in bulk from a manufacturer, supplier, or distributor and resell them online as individual units to the end customer. It’s the second most popular model for Amazon sellers, and among the easiest to launch.
• Retail arbitrage : You’ll purchase inexpensive or discounted products from a brick-and-mortar retail store, then resell them online. This is a relatively low-cost method—you just pay for the products the gas you burned driving to the store. 
• Online arbitrage : Similar to retail arbitrage, except you purchase products from other online marketplaces and resell them online. 
• Dropshipping : You’ll take online orders for a product on behalf of a manufacturer, supplier, or distributor. When a customer makes a purchase, you notify the supplier, who then fulfills and ships the order. Next to used items, dropshipping is the best business model if you want to start selling for free. 
• Handmade products: You’ll sell your hand-crafted wares on handmade-friendly platforms like Etsy and Amazon Handmade. 
• Used items : You’ll list still-functional items like furniture, video games, art, books, collectibles, and even cars for resale online. This model calls for virtually zero startup investment—the products are already sitting in your closet, garage, or bookshelves. You can also source hidden gems from yard sales, consignment shops, and estate sales for cheap.  

Your business model will help determine where you source your products, your marketing plan, and how much you stand to profit. Check out our guide to Amazon business models to learn more about each method’s popularity and profitability. 

Note that you can sell online in more than one way—for instance, you could start selling used items to earn enough money to develop your own private-label product. 

Validate your product idea with data

Here’s a gut check: Your product decision can’t hinge on a hunch. 

That’s right—you can’t just take the revolutionary idea you conjured in the shower and run with it. You have to validate its profitability through product research, even if your family, your friends, and your dog all think it’s a million-dollar idea.

Product research answers many of the necessary questions any ecommerce business owner should ask before launching their operations, such as the following: 

• Is my product idea original? If similar products exist, is there an opportunity to improve on those products?
• Will my product idea sell year-round, seasonally, or not at all? 
• Where should I source my product, and how much will that cost? 
• What fees will I have to pay to list and fulfill my orders? 

Product research estimates your dream product’s profitability before you seriously invest in selling it—a necessary, if time-consuming first step. Skip it, and you may end up building a business around inventory that will ultimately sit unsold in a warehouse (or your garage). 

Jungle Scout’s data-driven tools and free educational resources are here to handle the heavy lifting and guide you in your product research. While our software tools use data specific to Amazon, the product opportunities they reveal are transferable to virtually every ecommerce platform, whether it’s Walmart , eBay , Etsy , or Facebook Marketplace . 

With the Opportunity Finder , Chrome Extension , and Product Database , Jungle Scout users can examine competition and demand for specific product niches, forecast potential sales using real Amazon sales data, and ultimately uncover profitable product ideas they wouldn’t otherwise find. 

If you’re not a Jungle Scout user yet, you can still follow our free, in-depth guides to selling on Amazon, read about our data-driven ecommerce product ideas , and learn about how to discover niche opportunities . More guides will be linked throughout this article.  

We keep a finger on the pulse of the ecommerce industry through regularly-published data reports on consumer spending and seller behavior. You can view insights into what consumers are buying online in our quarterly-updated Consumer Trends Report . 

Data on how ecommerce sellers conduct their business can be found in our annual State of the Amazon Seller Report . Our seller guides draw from industry trends to give readers new opportunities to launch and grow their businesses. 

Find a supplier

Your supplier can be many things—a private-label product manufacturer , a wholesale distributor, or the local hardware store where you buy furniture-making supplies. Whatever your sourcing needs, the cost of procuring your product is a crucial aspect of product research. 

Reliability is important—you’ll want to develop a rapport with your supplier if possible, choose materials you can easily reorder, and stay within your inventory budget instead of banking on runaway sales to cover the cost of goods.  

• Private-label sellers can easily find high-quality suppliers using Jungle Scout’s Supplier Database and on Alibaba . 
• Arbitrage sellers looking for sourcing ideas can check out our guides to retail arbitrage , online arbitrage, and profitable seasonal products to sell. 
• Wholesalers can check out this article for tips on finding a distributor. 
• Our startup guides on eBay and Facebook Marketplace offer tons of ideas on where to find used items. 

Choose an ecommerce platform and fulfillment method

Thanks to ecommerce’s growing popularity, you can list your product on many different online marketplaces, where it can be viewed by thousands—if not millions—of potential customers.  

While online marketplaces tend to have some similarities, you’ll find that each one offers advantages depending on what kinds of products you’re selling. For instance, used items tend to do well on eBay and Facebook Marketplace, whereas private-label products sell well on Amazon and Walmart Marketplace .

Selling on Facebook Marketplace, or Instagram can also be lucrative; 54% of U.S. consumers have purchased products they first learned about on social media, and that figure is likely to grow.  

Each platform offers different fulfillment methods. “Fulfillment” includes all the actions that occur after a customer clicks “purchase”: picking and packing the order, labeling the package, and shipping it to the customer. Done right, and it feels like a magic trick to the end customer—it’s a key determinant of customer ratings and reviews. 

The best fulfillment method for your business will depend on your finances and time. You can self-fulfill by storing inventory in your home or a rented space, and pack and ship orders yourself. You may prefer to outsource these tasks to a third-party logistics provider or use Fulfillment by Amazon (FBA). 

Whatever you choose to do, make sure you can reliably fulfill orders on time and at a reasonable cost to the customer, using packaging that ensures the product arrives intact.  

To that end, it can be helpful to have some inventory on hand in case there’s a sudden disruption with third-party fulfillment services. When COVID-19 interrupted FBA shipping speed, many Amazon sellers temporarily pivoted to FBM (Fulfillment by Merchant), packing and shipping orders from their homes to avoid losing their rank and ratings on Amazon. 

Choose a memorable brand name 

Think hard about your brand name—it’s an important piece of marketing. Use it to evoke what you want your customers to feel about your brand. 

It should be distinctive, memorable, and original. Be sure to check whether your intended brand name is already taken before you use it.

Not sure what to call your brand? Try riffing on branding trends and archetypes , or tell a personal story with a family name. If you’re stumped, play around with an online brand name generator— this one even suggests fonts and logos to match. 

Once you’ve validated your product idea, it’s time to get real about the numbers game—namely, how much it’ll cost you to launch and maintain your business, and when you can expect to start earning profits. 

It is possible to start an online business for free . But if you want to make a significant investment in inventory, legally register your business right away, or develop your own private-label product, you’ll incur some up-front costs. 

Having a budget for your business is important. Try not to get overwhelmed by all the line items that can accrue—making adjustments here and there to stay within your spending limit is part of the process. An up-front investment can feel like a huge risk, but with a well-researched product and optimized operations, it’ll pay off.   

Let’s go over what items you should consider in your financial plan. Loosely, they include: 

• Cost of goods/sourcing costs
• Seller fees and/or fulfillment fees (varies by marketplace)
• Cost to form an LLC
• Business insurance
• Taxes 
• Your estimated time-to-profit
• Financing options

Seller fees, legal fees, insurance costs, and taxes

Depending on where you list your products, you may be subject to seller fees and insurance requirements . You’ll also want to think about legally registering your business as an LLC , as it comes with some tax advantages. 

Seller fees

On Amazon, sellers must pay “referral” fees—kind of like a commission—back to Amazon for each order. Typically, these fees come out to 15% of the product’s sale price. Amazon sellers also pay additional per-item fees or subscription fees (depending on their seller account type) and refund administration fees. And if they use FBA, there are fees for that, too. 

Not every ecommerce platform will charge as many fees. You can use a fee calculator to estimate your net profit—we recommend Salecalc . 

Here’s a rough breakdown of online seller fees outside of Amazon: 

• Walmart: referral fee for each product sold, typically 15% of sale price; no monthly subscription fees
• eBay: 13.25% of product sale price to list and sell most items; $0 monthly for a free seller account, $7.95+ per month for eBay Store subscribers 
• Facebook Marketplace: no subscription fees; no referral fee for local sales; referral fee of 5% of the sale price if the product is shipped  
• Instagram Checkout: selling fee of 5% per shipment
• Shopify : monthly seller subscriptions start at $29.99
• Etsy: listing fee of $0.20 for each item, plus a 6.5% of sale price transaction fee. Etsy Plus subscribers pay $10 per month
• Craigslist: listings are free , except for a handful of regional fees for vehicles, housing, and furniture

Keep in mind that platforms often offer advertising programs to their sellers, which come with their own fees. We’ll discuss marketing in Step 4, but for now, keep in mind that advertising costs need to factor into your overall budget. 

If you’re in the U.S., it’s a good idea to register your business as an LLC (a Limited Liability Company). While you don’t technically need a business license to sell products in most ecommerce marketplaces, LLCs offer business owners protection, flexibility, and a simpler tax reporting process—not to mention the credibility of a licensed brand name. While it costs money to create and maintain an LLC, we recommend it. 

You can form an LLC all on your own, or you can hire a lawyer to help you. The price of forming an LLC varies by state , but typically falls between $50-200. Naturally, you can expect to pay more for the help of an attorney. 

Once you have your LLC set up, you’ll want to protect it from unexpected costs like accidents and lawsuits. On certain ecommerce platforms like Amazon , you may be required to maintain some form of business insurance. 

The type of insurance you’ll need depends on where and how you run your business—there are policies to protect you from lawsuits, property damage, and defective products. You should shop around to compare rates and benefits. 

All U.S. businesses must file taxes, typically on a yearly or quarterly basis. Our seller calendar can help you stay on track with quarterly business tax deadlines. 

If you’re operating as an LLC, you’re eligible to write off a significant amount of business expenses through deductibles. We recommend that you hire a professional accountant to handle your taxes, as they can be tricky to decipher.   

Startup costs and time to profit

So, after all of these fees and taxes, what should you expect to spend at startup, and how quickly can you make a return on your investment? Once again, it depends. 

You can start selling online for virtually no money—dropshippers, Amazon Merch sellers, and used item resellers (if they’re selling their own stuff) don’t have to spend a dime on inventory. 

Our data on Amazon sellers indicates that sellers using the wholesale or arbitrage models will pay up-front costs in the neighborhood of $500-$2,000. Private-label sellers tend to spend more, because it costs more to develop your own product. 59% of private-label FBA sellers invest at least $2,500 at startup on inventory, Amazon fees and storage, and advertising costs.

On the whole, over half of all Amazon sellers spend below $5,000 at launch, and nearly one quarter spend no more than $1,000.  

Ecommerce isn’t a get-rich-quick tactic—it takes time to generate profits. While the majority of Amazon arbitrage, wholesale, and dropshipping sellers turn a profit within three months of launching their businesses, private label sellers usually take longer. 

But the outlook is generally positive: 63% of all third-party Amazon sellers achieve profitability within the first year of launching their business.

That said, if you’ve invested heavily at launch, make sure you’re ready to spend several months to a year before making that money back. While most Amazon sellers are profitable ( 89%, to be exact ), they didn’t get that way overnight. 

How to finance your online business 

There are many different ways you can fundraise the money you need to start an ecommerce business. 

Over three quarters of Amazon sellers funded their businesses using personal savings, a testament to ecommerce’s affordability for aspiring entrepreneurs. 

A third took out family or business loans, which can range from $500 microloans to tens of thousands of dollars paid back over several years. 

It can be difficult for new ecommerce sellers to qualify for loans from a bank or the government, because they tend to require tax and credit histories that new sellers don’t have. 

Fortunately, Amazon and fintech companies like AccrueMe are developing investment solutions for online sellers that offer more flexibility. You can read more about how to fund your ecommerce business in our guide to financing options . 

Customers can learn about a product many different ways—by viewing ads, seeing a suggestion on Google or Amazon, reading a review from a satisfied customer, scrolling through social media, and even via word-of-mouth.  

Ultimately, brand awareness starts with your product listing —it’s the single best piece of marketing in your arsenal. Use your listing to tell customers why they need your product, communicate your brand identity, and build credibility with your audience.  

Use keywords to boost visibility 

Your product listing should capture the relevant keywords and feature the data that customers use to find the products they want to buy. That way, it’ll actually show up in search results, instead of getting lost in a sea of competitors. 

Here’s how that works: when deciding what to display in search results, search engines like Google and Amazon check potential results for relevance—either by “crawling” text on a web page, as is the case for Google, or by scanning keywords and data associated with different products, as Amazon does with ASINs. 

One big difference between traditional search engines and ecommerce platform search functions is that the latter are product-focused. In other words, while Google seeks to answer questions with information (i.e. articles on the “best dog beds” or “top 10 dog beds”), Amazon wants to answer search queries with relevant products (i.e. the products most related to the customer’s search terms, like “dog bed”).

Because users come to Amazon to buy things, the search results need to facilitate a purchase, which means presenting the products most likely to satisfy the customer’s needs.   

In any event, this is true for both Google and Amazon: the more relevant your listing is to a customer’s search, the more likely it is to appear in search results.

A keyword-rich product listing boosts your product’s visibility to the millions of customers across the globe who shop online. A great keyword strategy can elevate your brand above your competitors, reach new audiences, and ultimately generate more sales for your business. 

You can do keyword research for free on ecommerce platforms and search engines. Here’s a great method to start: try searching Amazon for broad terms that describe your product, and see what its search algorithm suggests in the autofill drop-down box. For instance, if you’re envisioning selling a dog bed, type “dog bed” into the Amazon search bar, but don’t press “enter” just yet.  

Amazon will suggest popular keywords associated with “dog bed,” so you can see exactly what real customers have searched for, design your product to suit that demand, and include those keywords in your product listing. 

If you already have ideas about your product’s design or features, you can search for more specific keywords, too. Say you want to sell a pink, fluffy dog bed that heats up.  Make your search more descriptive (“pink dog bed” or “heated dog bed”), and take note of the suggested keywords for those specific niches. You’ll want to include at least some of them in your listing. 

Then, start browsing your competitors’ listings. Take note of how other sellers describe their dog beds: do they mention benefits for your dog, machine-washability, or other special features? Informative descriptions help convert customers, so be sure to include relevant details about functionality, advantages, and design features in your listing. 

You run a similar autofill search on Google. Be sure to also take a look at the “People also ask” feature to generate more keywords. This section pops up in Google search results and can offer details about how and why people are searching for a given product. You can translate those queries into keywords that indicate your product’s functionality or purpose.

For example, people who Google “dog bed” want to know about proper firmness, best use, and accessories, so you should include keywords in your listing like “soft” “for crate” or “with blanket” if they apply to your product. 

The best way to do keyword research is to use a paid tool like Jungle Scout’s Keyword Scout. This tool does the work for you—it pulls advertising data directly from Amazon and suggests thousands of high-converting, top-ranked keywords to include in your listing.

To learn more, check out our top keyword strategies .  

Take great product images

Different marketplaces will have different image requirements for listings and ads. One thing is true wherever you sell: having high-quality images of your product will boost sales. 

You should also consider including video content of your product. Amazon allows sellers to upload quick, informative videos for ads and product listings.   

So, you’ve built an informative, keyword-rich product listing with compelling copy and stunning visuals. Now it’s time to let the world know about it! 

You want to drive as much traffic as possible to your listing so you have more chances at conversion—that is, you want to get as many people as you can to click on, view, and purchase your product. 

The broader your online presence, the more likely you are to attract online shoppers. So make sure to establish a digital foothold in at least three areas: on your own ecommerce storefront or landing page, on social media , and in online ad space. Once you start making sales, keeping your review count and ratings high will boost your brand’s legitimacy. 

Build an ecommerce storefront

Your storefront is where customers can learn about your brand, and where you’ll convince customers that your brand is legitimate, with products worthy of their hard-earned cash. 

Essentially, you want to recreate the experience of visiting a physical store, but streamlined. Think about what a customer would want to know about your product or brand and what questions they’d have for the store clerk, and communicate that information somewhere within your storefront.

Typically, that means providing plenty of photos and videos of your products in action , links to product listings, and information about your return policy. You can include your brand story, customer testimonials, and even helpful tutorials on how to use your product. The goal is to gain the customer’s trust in your product—and ultimately, a purchase.

You can build a standalone website through hosting platforms like Shopify or Wix, or you can create a storefront on Amazon or eBay using their templates.   

Leverage social media

54% of consumers have purchased products they first learned about on social media, making a social presence a no-brainer for entrepreneurs looking to build brand awareness. 

Growing a following for your brand on Instagram, Twitter, Facebook, and TikTok exposes your products to millions of potential customers. 

You can link your storefront or individual product listings within your social media profiles so customers can easily navigate to your listings You can even sell products directly on Facebook and Instagram . 

Social apps also allow you to interact with viewers in ways that can feel more organic than with traditional advertising. For example, you can run polls on Instagram or Twitter to get feedback on your products, notify customers about sales and discount codes, or post engagement prompts to encourage comments. 

You can also use social media to notify customers about sales and other notable events. 

Even if you don’t yet have a social media strategy to promote your brand, it’s important to claim the social media handles you’ll want to use (like “@junglescout”) before someone else scoops them up. 

Create ad campaigns 

Ads generate clicks, which in turn lead to sales. And in today’s competitive ecommerce industry, you have to maintain a solid advertising strategy to get noticed.  

Fortunately, ecommerce sellers have a ton of options when it comes to advertising their products. Amazon offers a wealth of pay-per-click (PPC) ad options to its sellers, as well as other marketing programs to boost visibility. You can even track inbound traffic to your listing from your off-Amazon ad campaigns. 

Here are some helpful guides to advertising your products on and off Amazon:

• Amazon PPC Strategies – The Ultimate Guide for 202 4
• 2024 Amazon Advertising Guide for Sellers
• How to Use Facebook Ads for Amazon FBA (And Sell More Products)

Get reviews 

Product reviews matter more to your business’s long-term success than you might expect. 71% of U.S. consumers are influenced by products with the best ratings and reviews when shopping online, and 68% find reviews with photos or videos more compelling. On Amazon, getting a high volume of great reviews boosts your product’s ranking, which in turn affects sales. 

Getting great reviews starts with having a high-quality product. Ensuring timely fulfillment and returns processing, courteous communication, and beautiful brand help, too. 

We know getting reviews is hard, so we’ve published a few different articles about why reviews are important and strategies for boosting your review count.

Launching a business is a huge accomplishment that takes time, money, and patience. Congratulations on becoming an entrepreneur! 

Once you’ve gotten your business up and running, it’s important to regularly check in on its performance. You may need to make some changes in order to set yourself up for long-term success .  

Plan to check in on your business sometime in the first three months. But remember that while the majority of Amazon sellers get their businesses up and running relatively quickly, 23% take at least three months to launch their businesses, and over half wait six months or longer before turning a profit. 

Measure your business’s performance

Pull up your financial plan and start comparing it to how your business actually performed. Here are some questions to consider: 

• Are you meeting sales estimates, exceeding them, or falling short?
• Have you turned a profit? 
• Is your current fulfillment method working for you and your customers, or do you need to find an alternative? 
• Are you able to stay on top of your inventory, or do you regularly run out of stock? 
• Is your profit margin above 20-30%? If not, how can you raise it? 
• Are you getting plenty of positive reviews? Have you checked your reviews for helpful feedback or improvement opportunities? 

You’ll want to keep a close eye on performance metrics like sales volume, revenue, and ad spend, so you can spot trends and quickly identify hidden fees. Software tools like Jungle Scout’s Sales Analytics keep track of this for you, so you can focus on strategy instead of bookkeeping.   

If your product isn’t living up to your expectations, don’t panic. Investigate any changes you could make to improve its functionality, or try to get customer feedback on how it could be upgraded. If you’re selling multiple products, consider nixing one that isn’t selling well.  

Lower your fees and costs

If running your business is costing more than you expected, there are probably ways you can cut back. 

It’s easy for first-time ecommerce sellers to know they’re being overcharged for things like shipping fees, so we wrote a guide to help you get reimbursed . 

Here’s another way to cut back on overhead costs: try negotiating for better inventory costs with your supplier. 

Expand to other channels

Just because you start your business on one ecommerce platform doesn’t mean you have to stay there forever. You’ll be more competitive and attract a wider audience if you list your product on multiple ecommerce channels.

Hire freelancers or employees

Like any job, selling online comes with tasks you perhaps would rather not have to do. Thanks to freelancer hubs like Fiverr and Upwork, it’s easy to find high-rated, trained consultants to cover every imaginable aspect of running an ecommerce business. 

Start your online business today

Ecommerce is a rapidly growing industry with plenty of opportunities for newcomers with great product ideas. With a bit of product research and planning, you can join the ranks of profitable ecommerce sellers. In time, you may be able to replace your full-time job, like the 47% of Amazon sellers who are self-employed or earn income exclusively from ecommerce. 

If you’re ready to get started on your new business, check out our in-depth beginner’s guides to selling on different marketplaces: 

• How to Sell on Amazon FBA , Amazon Handmade , and Amazon Merch
• How to Sell on Walmart
• How to Sell on eBay
• How to Sell on Facebook Marketplace

If you need a product idea, get started here: 

• Top 20 Ecommerce Business Ideas
• Low Competition Niche Products to Sell on Amazon FBA

Do you have any questions about launching a business online that we didn’t cover in this post? Let us know in the comments!

Start your online business with Jungle Scout

Get everything you need to launch a profitable business on Amazon, including product research, competitive analysis, and more!

Ecommerce Expert & Writer at Jungle Scout

Brian Connolly is an Amazon seller, ecommerce expert, and writer for Jungle Scout. He lives in the New Jersey Shore area with his wife and cat. When he isn’t writing advice online for aspiring and experienced Amazon sellers for Jungle Scout, he spends his free time boating, fishing, and selling boating-themed items on his Amazon business.

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Table of Contents

1. Define your e-commerce business idea

2. set up your business, 3. source or develop your products, 4. set up your e-commerce website, 5. figure out order fulfillment, 6. market your e-commerce business, how much does it cost to start an e-commerce business, tips for starting an e-commerce business .

An e-commerce business sells goods, services and funds over the internet. Starting an e-commerce business is a lot like starting any company: You’ll need to create a business plan, get licenses and permits and set up dedicated finances. You’ll also need to choose an e-commerce website builder , source your products and market to online customers.

Follow these six steps to get your e-commerce business up and running.

The first step in starting any business is to hone your idea. Online business ideas can include selling physical or digital products as well as professional services. Whatever you choose, you’ll want to define your e-commerce business model and write a business plan that outlines your niche.

During this process, you’ll start to ask a lot of questions: How will you get your products or services to your customers? What sort of licenses or permits do you need? How much will it cost to get your business up and running — and how will you foot that bill? Your business plan should answer these questions and provide a road map for the coming months.

More resources to help shape your idea:

What is e-commerce? Understanding how it works  

Our picks for the best business plan software

Can your business idea actually make money?

Once you've solidified your e-commerce business idea, the next step is to set your company up for success.

This includes back-office steps like:

Choosing a business structure . There are benefits and drawbacks to each of these entity types, so talking to an attorney may be helpful as you choose the one that’s right for you.

Naming your business. Consult your local secretary of state's website as well as the U.S. Patent and Trademark Office to ensure that you're not choosing a name that belongs to another company. Check to see if your potential business domain name is available as well.

Applying for an employer identification number (EIN) . You can get an EIN from the IRS for free online or by mail, fax or phone. Not all businesses need an EIN, but having one can help you separate your personal and business finances.

Opening a business checking account . NerdWallet recommends all business owners have a dedicated bank account for their business.

Getting licenses and permits your city or state requires. This probably includes a business license, and if you perform services, you may also need an occupational license. Check your state or local government website for requirements for your area.

Answers as you set up your business:

Do you need a business license to sell online?

What’s the difference between an LLC and a sole proprietorship?

Our picks for the best free business checking accounts

Shopify Ecommerce

Next, you'll need to source the products you're going to sell. If you’re selling physical products, you may need to make them yourself or work with a manufacturer.

A key decision at this point: Are you going to order products in bulk and keep inventory in stock? If so, you’ll need to think about storage space and raising capital to order goods upfront. However, you’ll have the power to ship items yourself.

Other businesses choose to rely on dropshipping , in which products are manufactured or sourced at the time the order is placed. In general, dropshipping may keep your overhead costs lower, but it can be more difficult to manage since inventory levels and shipping will be out of your hands.

Other options for sourcing e-commerce products include:

White-labeling, or ordering items in bulk from a manufacturer and then branding them with your company’s identity.

Print-on-demand, or paying a third party to print your company’s designs on merchandise like T-shirts, mugs and posters. Print-on-demand normally functions like dropshipping, in that a customer places their order, then the manufacturer creates the product and ships it directly to the customer.

Retail arbitrage, or buying discounted items from retail sellers and listing them in your own store at a markup. 

If you're selling professional services, you might just have to describe and list what you offer on your business website. Still, you’ll need to figure out how much to charge and decide how many clients you can see each day or week.

More to help you develop products:

16 e-commerce business ideas

How to find products to sell on Amazon

How to make money on Shopify

Your e-commerce website will be your storefront. It’s where your customers will learn about you and your business, browse your products and make purchases.

The easiest way to set up a website is to use an online store builder . These platforms can walk you through the process of launching your website, from buying a domain name to managing your inventory to taking credit card payments.

Popular e-commerce website builders include Shopify , Squarespace , Square Online and BigCommerce .

If you’re a very small business or just experimenting with online sales, a free e-commerce website builder may be a good place to start. But to list unlimited products and access more robust suites of tools — which can help with things like shipping label printing, order management and sales analytics — you’ll typically need to spring for a subscription.

In general, many online store builders should be simple enough for someone without web development experience to navigate. But most offer the option to pay a professional designer or developer if you don’t want to build the website on your own.

The best e-commerce platform for you fits into your budget and is appropriate for your skill level.

Choosing the right website builder:

Our picks for the best e-commerce website builders

Wix vs. Squarespace: Head-to-head comparison

Shopify vs. Square Online: Head-to-head comparison

Order fulfillment is the process of getting customers’ purchases in their hands.

Most e-commerce website builders offer shipping label printing, which is the first step in the fulfillment process. Some also offer the ability to add shipping costs onto customers’ orders at checkout.

If you choose to handle order fulfillment yourself, research shipping rates so you have a sense of how much it’ll cost. Look for an online store builder that can help make the shipping process easier or research shipping software providers like Shippo .

Note, too, that e-commerce may connect you to customers across the world. If there are places you’re not willing to ship to, make that clear on your website.

If you don’t want to manage order fulfillment, you can outsource it to an e-commerce fulfillment center or use a service like Fulfillment by Amazon. Fees for fulfillment services vary depending on the size of your products, how far they’re traveling and how much you’re shipping.

More to help you manage orders and inventory:

Our picks for the best inventory management software

What is just-in-time inventory?

Shipping services that integrate with WooCommerce

Now that you've started your online store , you're ready to start serving customers — as long as they can find your products.

Your small-business marketing strategy might include:

Omnichannel commerce , in which you list your products on third-party marketplaces like Amazon and Instagram. Some e-commerce website builders can help facilitate this.

Influencer marketing, in which you pay popular social media creators to plug your products. 

Social media content or paid social media ads.

Optimizing your business website for search engines.

Sending email campaigns to past and future customers.

Many e-commerce website builders include some marketing features, which can help you do things like create social media ads or send emails to customers when they’ve abandoned their carts.

But if you want to develop more sophisticated campaigns, consider investing in marketing software . These tools can help you create email templates and campaigns, text customers, keep track of how individual customers are responding to your emails and more.

More help with marketing:

20 free marketing ideas for small businesses

Online marketing strategies and tips

Content marketing for small businesses

The cost of starting an e-commerce business can vary widely depending on what you’re planning to sell and in what volume. Your expenses may include:

Your e-commerce website. Subscription plans for online store builders generally start around $25 to $30 per month when billed annually. You may also need to spring for a domain name if your e-commerce website builder doesn’t include one — and make note of annual fees to keep your URL registered. 

Payment processing fees. In general, the company that provides your payment processing will take a cut of around 3% from each online sale. 

Stocking up. If you plan to order inventory in bulk, be prepared for significant upfront costs — even before you’ve started generating revenue. Inventory financing may be able to help you bridge the gap.

Order fulfillment. In general, you’ll pay a third-party service to fulfill each order, with rates varying depending on item size and weight. The more customers buy at once, the less you’ll have to pay per item. Order fulfillment services may also include warehousing, for which you’ll pay a per-item storage cost. 

Warehousing. If you’re buying more inventory than you can keep in your home or garage but not using an order fulfillment service that provides storage, you may need to spring for warehouse space of your own.

General costs of running a business. These could include monthly or annual fees for accounting software , business insurance , any employees or contractors you plan to hire and more. You may also need to set aside money for small-business taxes .

» MORE: NerdWallet's list of the best accounting software for Amazon sellers

As with launching any business, starting an e-commerce business can feel overwhelming. Here are some tips for managing the transition.

1. Start simple

If you’re not certain e-commerce is the right path for you, set up an online store with low overhead first. This may mean starting with the free version of an e-commerce website builder, ordering a small amount of inventory or selling only one or two types of products. 

Starting small can limit how much startup funding you need and make it easier to pivot if your first idea doesn’t land. As your business starts to get traction, you can trade up to a more robust e-commerce platform and expand your product line.

2. Cultivate a loyal customer base

Your e-commerce business needs customers who appreciate your products enough to buy them more than once and, ideally, customers who will promote them to their networks.

Establishing a strong brand presence on social media can help you build a following. But the more information you can gather from your customers, the more you can market directly to them, whether that means creating an email marketing campaign, sending discount codes through text message or letting them know where your booth will be at an event in their region.

3. Invest in multichannel selling

Loyal customers may be willing to visit your website frequently. But to reach new ones, you might have to meet them where they are — which might be on Amazon, Instagram, TikTok or elsewhere. Start with the platforms where your customers are most likely to be, launch those integrations and then see how they perform. You can add platforms later if they fit into your business strategy. 

Keep in mind that selling in person is a channel, too. Craft fairs, local shops and industry or trade events may help you connect with new customers while generating some revenue.

A version of this article originally appeared on JustBusiness, a subsidiary of NerdWallet.

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How to Start an Online Business

Last Updated: September 1, 2024 Approved

This article was co-authored by Ksenia Derouin . Ksenia Derouin is a Business Strategy Specialist, OBM, and Artist based in Grand Rapids, Michigan. With over ten years of professional experience, Ksenia works with wellness and social impact sector solopreneurs and organizations to support their business strategy, operations, marketing, and program development. Her mission is to support business owners in building thriving businesses and creating impact so that they can achieve a sense of purpose, career fulfillment, and financial independence. There are 9 references cited in this article, which can be found at the bottom of the page. wikiHow marks an article as reader-approved once it receives enough positive feedback. This article received 56 testimonials and 87% of readers who voted found it helpful, earning it our reader-approved status. This article has been viewed 1,611,461 times.

If you're ready to be in charge of your own destiny, but don’t have the capital to buy a franchise or open up a storefront, consider starting an online business. When your store is online, you can reach millions of customers instead of whoever happens to wander in - plus, you don't have to pay for retail space. However, like with any business, you'll need an excellent product and a solid marketing plan. See Step 1 to learn what it takes to start your business online.

Setting Up Your Business

• Let’s say you make jewellery—but so do a few million other people. What makes yours different? If one-of-a-kind jewellery (or another product) is your gig, make sure it's truly original.
• Remember that people are visual and usually don't really pay as much attention to descriptions as they do to pretty pictures.
• Offer expertise in an area. Even if the product itself isn't very unique, your expertise might be a strong selling point. If you're selling a line of skincare products, for example, it helps if you have a degree in a field related to skin health.
• Check into the competition. Figure out what isn't already being offered, and find a way to fill the hole with your product.

• Before you register your business, it can help to have a business plan laid out. Consider your production costs, shipping costs, taxes, and web hosting fees. It might be a good idea to hire an accountant and a lawyer before starting your business so you can keep it going with no issues.
• Know the business regulations in your state, and be sure to comply when you get things up and running.
• It's possible to find business plan templates online according to your specific industry to help you get going.

• Some hosting services are highly structured, allowing you to choose from among different templates to create a website quite easily. Others allow you to do your own programming, giving you greater flexibility.
• Some of the best free hosting services are InfinityFree, ByetHost, HyperPHP, Google Cloud Hosting, AwardSpace, and FreeHosting.

Creating Your Online Store

• Make sure your site design matches your product. For example, if you make traditionally styled diamond jewelry, having a website that looks like shredded cardboard with edgy fonts and images taped to the cardboard would tend to drive away your potential customers.
• Consider setting up an online portfolio. Whether you are a programmer who specializes in Javascript, a graphic designer who works on commissions, a plumber who is on call 24/7, or a copywriter who will write about anything at all, having an exemplary website where potential clients can evaluate your work is crucial to your online business success.
• You don’t have to design the website yourself—there are professional designers who are more than up to the task, plus ecommerce websites will offer dozens of appropriate templates for you. If you know in advance what you want, you’ll make selecting a designer or a template that much easier.
• When designing your site you need to remember to focus on what is important. Your ultimate goal is to make your site simple and easy to use.
• Your customers should have to make no more than 2 clicks in order to land on the page where they can make a purchase.
• The top of every page should have a link to your shopping cart if its an ecommerce store
• Buttons should be large and clear to read and input boxes should be large and easy to enter your information
• Less is more. Don’t be wordy when you don’t need to on payment pages
• Make sure your logo at the top of the page always links to the homepage
• If you have dark backgrounds use light text and vice versa.

• You can also use an all-inclusive ecommerce web service. Sites such as Shopify and Volusion offer competitive packages, with free templates, custom packages, credit card processing, and more. Ecommerce web services makes it easy to sell your products on the web, without a lot of overhead. There are no custom interfaces or templates to work with; you simply create an online store within the framework of the service.

Selling Your Services

• Don't use jargon. If you are offering technical expertise, include descriptions that appeal to your client base, not your peers. For example, if you are showing that you can code with PHP and AJAX, don't say "in this case, if the input field is empty (str.length==0), the function clears the content of the txtHint placeholder and exits the function." The person who needs you to work on their site will just scratch their head and say "huh?" Say, instead, "Start entering text into this field, and it will auto-complete."

• For example, if you are an affiliate marketer for Musician's Friend, an online musical instrument retailer, you can advertise their products on your site. If a person visits your site, and clicks on the link that takes them to the Musician's Friend website, and they purchase an instrument within a certain amount of time (24 hours or more, typically), you get a commission on the sale.

Expert Q&A

• After 2014 Google's algorithms changed to give priority to rich content, consider writing creative and write content that keeps users intrigued to ultimately sell your product without much effort. [10] X Research source Thanks Helpful 0 Not Helpful 0
• Putting up an online business may be easy or hard, depending upon whether you did your research well and laid down all the groundwork before you began. You can make money out of an online business if you execute the necessary steps and do not miss out on some of the essentials that are needed for an online business to succeed. Thanks Helpful 20 Not Helpful 7
• A thing that needs to be ironed out for your online business is your billing service. While there are businesses that may bill their clients directly after a contract has been agreed upon and signed and these bills are paid for through checks that are deposited into the service provider's bank account, there are some clients who require a certain online billing system for them to pay for the services they have contracted. You may need to register with a billing system like PayPal for your online business to make billing and payment easier and less of a hassle to you and your clients. Thanks Helpful 8 Not Helpful 4

• PayPal is limited as a payment processor because when people use their debit/credit cards through them they lose the ability to get refunds directly. Thanks Helpful 104 Not Helpful 22
• Never give out your money to anyone to show you how to make money. Please be very cautious before spending a penny. Thanks Helpful 128 Not Helpful 35
• Watch out for website hosting and building services that do not handhold you through the process of building an e-commerce website. Thanks Helpful 91 Not Helpful 26
• Keep in mind that it is a business. Learn from your failures but also the success of others. Be a willing and eager student. Thanks Helpful 4 Not Helpful 2
• Always start a little bit smaller and scale up from there. Do not try to come in on a huge scale or go all in on a business that might not really work, or you could just be following a trend that will not really be around for long. Thanks Helpful 0 Not Helpful 0

You Might Also Like

Expert Interview

Thanks for reading our article! If you'd like to learn more about starting a business, check out our in-depth interview with Michiko Takatani .

• ↑ http://www.entrepreneur.com/article/175242
• ↑ https://articles.bplans.com/steps-to-starting-an-online-business/
• ↑ https://www.pcmag.com/article/2287/how-to-register-a-domain-name-for-your-website
• ↑ https://www.techradar.com/how-to/how-to-choose-a-web-hosting-service
• ↑ https://www.entrepreneur.com/article/64838
• ↑ https://digitalmarketinginstitute.com/en-us/blog/why-digital-marketing-is-important-for-small-business
• ↑ https://www.entrepreneur.com/encyclopedia/affiliate-marketing
• ↑ https://www.google.com/adsense/start/how-it-works/
• ↑ https://blog.hubspot.com/marketing/major-google-algorithm-updates-2014

About This Article

To start an online business, start by deciding on a product or service that's original or different from your competition. Next, develop a business plan that lays out projected business costs. Then, register your business with the U.S. Small Business Administration to make it official. You’ll also need to choose a short and catchy domain name that’s easy to remember, then check with a domain registration company to see if it’s available for you to claim. After that, set up a stylish website that’s both professional and easy for people to navigate. For more tips, like how to market your business, read on! Did this summary help you? Yes No

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How to Start an Online Business Profitably From Home In 90 Days

Darren DeMatas

September 4, 2024

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In addition to receiving commissions generated through affiliate marketing, we are able to fund our independent research and reviews at no extra cost to our readers. Learn more.

If you have ever thought about how to start an online business of your own, now is a great time to finally roll up your sleeves. In the wake of COVID-19, the ecommerce world was flooded with new activity from all sectors. Although growth has slowed since then, there’s still plenty of room in the market.

How To Start An Online Business

• Research Business Models
• Decide Your Niche
• Conduct Competitive Analysis
• Define Your Brand And Target Audience
• Set Up Business Logistics
• Build Your Website and Marketing Automation
• Promote Your Business

People can make money online in lots of different ways. They can open an online store, write a blog, or become popular on social media. In this post, we will dive into the different models and guide you step-by-step to launching your own online business.

Why Start An Online Business From Home

Online businesses can be profitable with low startup costs. The ecommerce market is growing, especially due to COVID-19, offering many opportunities.

Some of the richest people in the world got their start with online businesses. With the right business plan and commitment, you can reach customers worldwide .

Types of Online Business Models

Online businesses come in all shapes and sizes. You don’t have to be the next Amazon ecommerce marketplace or Netflix to be successful.

When it comes to online business models there are a few major buckets to consider.

• Physical Products: Selling products like t-shirts through online retail
• Digital Products : Like courses, ebooks, or software
• Media / Publisher: Selling ads, affiliate marketing, or sponsored content
• Services : Exchanging time for money by providing services like logo design or marketing

We have hundreds of online business ideas you can start , but I wanted to highlight a few ones in each of those buckets.

Physical Products

An ecommerce store is likely the first thing you think of when it comes to online businesses. Instead of shopping in person, customers make purchases over the internet.

In essence, your website replaces the store. Customers browse and buy your products or services online, and then you ship the order to them.

Online stores offer advantages over brick-and-mortar. Customers anywhere in the world can shop with you regardless of location. Plus, a virtual storefront means lower overhead.

Dropshipping

A dropshipping business is great for its simplicity . To the customer, they operate just like any other ecommerce store. But in actuality, your internet business is just the middleman. 

When a customer places an order, you send the order to the drop shipper . The drop shipper fulfills and ships the order to your customer.

Digital Products

Selling digital products online is very low overhead, but it’s highly competitive. If you have unique skills or knowledge, create digital products to monetize your expertise.

If you have experience in graphic design or web development, create and sell online courses. Or, maybe you’re a talented writer who could create and sell ebooks, audiobooks, or other digital content.

The possibilities for digital products are almost endless. All it takes is some creativity and hard work to get started.

Launch An App Or SaaS Startup

In today’s digital era, launching an app can be a viable business online.

With an innovative app idea, you could tap into a potentially huge market. If you have the technical skill to create it, or the resources to hire someone to do it for you, it could be lucrative.

To successfully launch an app, identify a problem or need your target audience has. Then, address it with your app. Invest time and resources into promoting your app to get it noticed. In a crowded marketplace, marketing can make or break you.

Remember, developing an app is only the first step – you still have to market it.

Ebooks or Courses

Have a passion for sharing what you know with others? Create and sell ebooks or online courses. It can be a long-term viable business since you can create content on almost any topic. Ideas include cooking and fitness, entrepreneurship, and personal development.

For success, pinpoint your target audience. Create content that speaks to their needs and preferences. Spend time building your brand and promoting your products. Use social media, email marketing, and other channels.

Media Publishing Company

You can start a media company with almost no resources other than yourself. Again, a low barrier to entry means tight competition.

Starting a media publishing company involves creating content for your target audience. You can create written, video, or audio content. Then, you monetize it with advertising or other methods.

This business model is highly scalable. Healthline is a publishing company that generates $100M+ per year.

To compete in this space, focus on consistently producing high-quality engaging content. It will help you build a loyal audience. Learn about online advertising and marketing strategies to maximize revenue potential.

Affiliate Marketing

Affiliate marketing allows you to promote and sell without handling products. Your job is to promote affiliate products and drive traffic to the partner’s website.

You earn a commission when customers use your affiliate link to make a purchase . The company selling the product handles processing and shipping the order. You are responsible for encouraging the sale and directing traffic with referral links.

Blogging is a large and varied category for online businesses. There is a wide range of blogs and many ways to monetize them. For example, some people make blogs as a hobby, while others use them for affiliate programs.

Blogs can make money selling ad space, sponsored posts, or ecommerce. You can even work as a blogger by creating content for other companies’ blogs. Blogging can be great as a part-time job or full-time gig.

Launch A YouTube Channel

What are you passionate about? Create videos about what you love, and build a following of interested viewers. After you build a loyal audience, monetize your channel with:

• Advertising
• Product sales
• Sponsorships

Most full-time YouTubers make $60K per year. But people like Blippi make a ton more. In fact, his net worth is around his total YouTube subscribers.

Become an Instagram Influencer

These days anyone can become an influencer. That’s if you don’t mind being the “face” of your business. I prefer to pass on that. With that said, influencers can make a killing by putting themselves in the spotlight.

Trading hours for money is the basic idea behind selling services. If you have a particular skill set or expertise, you can offer your services online to those who need them. This includes things like:

• Social media management
• Content creation
• Virtual assistance

Use platforms like Fiverr or Upwork to find clients and build your reputation.

Web Design Services

If you have web design skills, leverage them to build websites for others . If you have software development experience, this is a lucrative business opportunity.

Many tools can help non-technical people build websites. But business owners don’t have the time to do it. Beyond websites, you can also create and manage social media accounts.

Marketing Agency

Have a background in marketing? Experience in social media, content marketing, or search engine optimization (SEO)? You can offer your expertise to help other businesses grow. These businesses tend to have a lot of overhead, but you can easily build and sell a marketing agency for seven figures.

Start With a Niche in Mind

Before starting your online business, you have to know what you will be selling . This could be a product, a service, or an idea.

For example, selling a cool t-shirt design differs from selling a website-building service. Once you know what you want to focus on (this can be many things), you can start developing your strategy.

Some questions you will want to ask yourself are:

• What am I selling?
• Do I need or want a website?
• What will my company (and website) name be?
• Will I have stock to manage?
• Do I need to hire anyone?

What you are selling will help answer most of these questions. And you’ll learn things along the way. But first, what are you selling, and how will you make money?

Conduct Competitive Research

Whatever it is you are selling, you will have competition. Before you get started, do some competitive analysis of the market as a whole.

Begin With Basic Keyword Research On Google

Start with basic keyword research on Google. Identify keywords that are relevant to what you’re selling and see who shows up in the search results. Note their website, pricing, products or services, and any unique selling propositions.

Next, delve deeper into their online presence. Visit their website, social media profiles, and any other online platforms they use. Pay attention to:

The design and user experience of their website

How they engage with their audience on social media

Any content they create

This will help you identify what’s trending and the competitive discovery process.

Conducting product research is important. Entering a highly competitive industry with established competitors makes a difficult battle. When it’s hard to carve out your market share, you stifle growth before you even start.

What is the competition doing well? Where could they make improvements? Exploit the areas of improvement for your own benefit.

Your market research could show competitors pricing products too high. It could show poor customer service. Ensuring you do better may determine product viability . If you cannot, it will point you to another business niche.

Define Your Brand and Target Audience

Think about what you want your brand to communities. Beyond the name, consider your color scheme, logo, and mission statement.

You might have an idea or starting point for defining your brand and company image, but you’re not stuck with it. Amazon grew from an online bookseller to a global marketplace. Your brand will likely evolve and settle into its niche.

Define Your Target Audience

What you are selling will also determine who your target audience is . Are you selling to other businesses or customers? Who are they? What social media platforms do they use?

Define and understand your target audience to shape your business and marketing strategy. Your target market will likely change over time. You may notice a difference between your ideal and actual customers, too.

Analytics tools help identify your audience and track what works and what doesn’t. Your customer demographics determine how you run your business (and make money.) It also impacts your social media marketing.

Trademark Your Brand Name

Once you have defined your brand name and image, it is important to protect them legally. Register a trademark for your brand name to ensure no one else can use it or create confusion in the market.

This important step helps establish your business and protects your intellectual property. It’s helpful to consult with an attorney to navigate the process. This ensures you don’t miss anything when securing your trademark,

Create Your Business

Creating your online presence isn’t enough to start your business. You must officially register your company . You can find original and distinctive names for your business with the use of a  business name generator .Generally, it’s okay to start working and make a few sales. But you’ll eventually need to make things official.

Take all Necessary Legal Steps

You will need to address some legal aspects when creating your company . A licensed and registered business provides personal legal protection.

First, make sure you choose the right business structure. Depending on your location, products, and services, you may need a business permit. You may also need a federal business license. In most cases, you will need a federal business license .

Here are the main legal hoops you will need to jump through:

Register Your Business

Don’t let the idea of registering a business scare you. It’s paperwork and paying fees.

You can expect to:

• Register your new business name and optional Doing Business As (DBA)
• Choose your business’s legal structure: limited liability company ( LLC ), partnership, etc.
• A Federal Tax ID (or EIN)
• Other licenses and permits

Opting for a sole proprietorship allows you to skip many steps. That’s why many people getting started take this route. However, this doesn’t legally separate you from your business. If something goes wrong, you put your personal assets at risk.

If you’re confident in your business, save time and register your business at the start. A DBA and Federal Tax ID can also provide other perks.

Get Tax IDs

After getting your federal tax ID and business license, get your state and local tax IDs. You may have more paperwork for taxes and permits.

Get All Necessary Licenses

Certain types of businesses have licensing requirements . Common business licenses you may encounter include:

• Federal business license
• Sales tax license
• Home occupation permit
• Specific industry licensing
• Permits for regulated products

Your needs depend on your business and the products or services you’ll sell. Your local government or the Small Business Administration can help you.

Remember that sole proprietorship can avoid a lot of these requirements.

You must abide by all regulations where you do business. This includes across state lines or international borders.

Open a Business Bank Account

A separate business bank account is crucial. It simplifies your accounting to keep your business revenue separate from personal income. You need a registered business tax ID to open a business checking account.

As a sole proprietor, you can still open a separate bank account to manage personal and company funds.

Choose a Payment Gateway

Whether you sell B2B or B2C, you need a system for handling payments. Popular ecommerce tools integrate with third-party services so you can collect customer payments.

You must connect your payment gateway to your business account to accept payments. Your location and the ecommerce tools you use determine available payment gateway options.

Set up Taxes 

As with any business, you must track your earnings and pay business taxes. Consider hiring an accountant to help you get started if you can afford one. Keep clear and accurate records to ensure you’re ready for tax time.

Build Your Website

Your website serves as your storefront and a direct representation of your company. Building an effective and attractive website is essential for a successful online business. Luckily, there are tools you can use to build a website without technical skill.

Choose the Website Platform

Thanks to many different ecommerce platforms , it’s easy to start an online business. If you’ve got general computer skills, you can build an ecommerce website yourself.

Popular codeless ecommerce platforms include:

There are others, though these make up the vast majority of websites that aren’t coded from scratch. In fact, WordPress powers roughly 40% of all websites on the internet!

The beauty of WordPress is it is free, open-source software . Developers can create custom plugins, so no matter what feature you need, you can find it. This makes it easy to build your website without technical knowledge.

With its popularity, you can find step-by-step guides for anything you may need.

Shopify is an easier website builder for creating a basic ecommerce store, though it will require a monthly fee. It uses simple templates for creating product pages to sell your goods online. This is a popular option among small business owners.    

WordPress may be free, but there are ongoing expenses , including:

• Domain name
• Web hosting plan
• Premium plugins

Find a balance between cost and service when you choose an ecommerce platform.

If you are selling digital products, consider using an online course platform.

If you’re not ready to build a website, use marketplaces like Amazon, eBay, or Etsy to sell your goods. The downside of this business plan is marketplace fees, which can eat into your profits.

Set Up Marketing Automation

Once you have your ecommerce platform set up, it’s time to start thinking about how to market your business. One of the most effective ways to do this is through marketing automation.

Marketing automation refers to software that automates repetitive tasks. This can include email marketing, social media posting, and advertising campaigns. This can save you a lot of time and effort while still achieving great results.

To start using marketing automation, create a customer database. Collect customer information through your website or social media accounts. Use the data to segment customers into different groups. From there, send them targeted messaging.

Email Marketing

Email marketing is one of the most important tools in your marketing arsenal. With it, you can reach customers directly in their inboxes. When done properly, it increases brand awareness and sales.

To start, build an email list. Offer something of value, such as a free book, discount code, or webinar. Subscribers get access to your offering in exchange for their email addresses.

After building your list, use an email marketing platform such as Mailchimp or Constant Contact to create and send emails.

Personalize and offer value to your subscribers with each email you send. Segment your list based on consumer behavior and interests to boost engagement.

Landing Pages

A landing page is a standalone page designed to convert visitors into customers or leads. Effective landing pages have:

• Clear and concise messaging
• A strong call-to-action
• A form for visitors to fill out to become a lead or make a purchase

When creating your landing page, keep in mind your target audience and what will appeal to them. Use eye-catching visuals and persuasive copy to convince visitors to take action. Tools like Unbounce or LeadPages make it easy to create landing pages without coding knowledge.

Funnel Set Up

To maximize your online business success, it’s important to set up a sales funnel. A sales funnel is a step-by-step process that guides potential customers toward buying.

Typically, it starts with the awareness stage. This is where visitors discover your brand. From there, you’ll move them to the interest and consideration stages. Here, they’ll learn more about your products or services. The end goal is to move them to the decision stage, where they make the decision to purchase.

Setting up your sales funnel involves:

• Identifying key steps customers take before they buy
• Creating content and offers to guide them through each stage

For example, you can offer a free trial or consultation.

Market Your Website

Marketing is crucial to help your business grow. To effectively market your online business, understand your target audience. Once you know who your ideal customer is, you can use various strategies to reach them.

Content Marketing and SEO

Using content marketing and SEO can attract potential customers and improve your search rankings. Creating high-quality, relevant content using keywords related to your niche can organic visibility.

Start by identifying topics and keywords relevant to your business. Then, create content around those phrases. You’re not limited to blog posts – you can also create infographics , videos, and more.

Optimize the content with proper headings and meta descriptions to improve ranking potential.

Facebook and Instagram Ads

To build a social media following and increase brand awareness, run ads. Facebook and Instagram make it easy to create targeted ads based on:

• Demographics

To get started, set up a Facebook Business Manager account and connect it to your website. Then, create your ad campaign with an objective that aligns with your business goals. You can choose from options such as brand awareness, website traffic, and conversions.

Create visually appealing graphics and compelling ad copy. Everything should speak directly to your target audience. Use A/B testing to refine your ads over time and achieve a return on ad spend.

Influencer Marketing and PR

Find influencers who have a following in your niche. Reach out about collaborations on content or promotions to tap into their audience.

Use PR tactics such as press releases and media outreach to gain exposure for your business. Focus on relevant journalists and publications because they’re more likely to feature your brand.

Building relationships with influencers and journalists takes time and effort. Don’t expect immediate results. With consistent outreach and quality content, you can establish yourself as an authority.

Retargeting

Retargeting involves showing ads to users who have already interacted with your brand. It reminds them of what they’ve viewed and encourages them to complete the purchase.

To set up retargeting, install a tracking pixel on your website. Then, you’ll create ads targeted at those who have interacted with your site. You can use platforms like Google AdWords or Facebook Ads to create and manage your retargeting campaigns.

Conversion Rate Optimization (CRO)

It’s not enough to drive traffic to your website. For success, that traffic needs to convert to customers. CRO is strategically editing your website design and content to increase conversions.

To leverage CRO, analyze your website data using tools such as Google Analytics. Find pages with high bounce rates or low conversion rates. Make adjustments to improve the user experience. For example, simplify navigation or make your calls-to-action clearer.

Use split testing to identify the changes that are most effective.

Successful Online Businesses You Can Learn From

While every online business is different, we can learn from those who paved the way. Here are some strong ecommerce examples :

We’ve already mentioned Amazon a few times, with good reason.

Why? Because Amazon is the be-all and end-all of ecommerce business . It started as a small operation selling used books out of a garage. It grew to control more than a third of all ecommerce in the United States. You can’t ignore Amazon.

Amazon followed many of the tips we’ve covered in this article. (You could argue that they wrote the book on successful online business).

But Amazon started with a focus on one product category: Books. Its target market was people who wanted to save money and enjoy the convenience of delivery.

They embraced their success and continued to grow the brand around those strengths. They expanded into other product categories and now offer countless products and services.

With them, we learn how to focus on our strengths and look for growth opportunities.

Etsy is another good example of a simple idea that turned into a huge success. Etsy started as a small online business that focused on the sale of homemade goods. This differed from marketplaces like Amazon, which sold mass-produced items.

Etsy stayed true to its concept. It is a popular platform for artists and crafters who don’t want to compete with factory-made goods. Their business model was a success, offering niche products you can’t find anywhere else.

EBay revolutionized ecommerce with its new business plan of online auctions. Rather than selling products, eBay built a business around allowing others to sell.

eBay inspired many other ecommerce websites to follow a similar approach.

Each of these ultra-popular websites started as a small ecommerce business before making it big. We can apply the same strategies to our own online business plans. 

Which business is best for online?

Some business concepts that benefit from being online are:

• Affiliate marketing
• Digital product sales
• Dropshipping (and Fulfillment by Amazon companies)
• Training and digital courses

What do these business models all have in common? You can start them with little to no money and with minimal overhead.

Basic ecommerce companies can be successful. But there is greater risk with physical inventory. You must rent warehouse space, buy the inventory, and pay other business expenses.

With the above examples, all you need to invest is your time, and you can start earning money online!

What is the most profitable item to sell online?

You can sell most things online, but digital goods have unique profitability. Unlike physical goods, you can create digital goods like games or online courses once and sell them forever. The same goes for ebooks, videos, and other digital content.

You must print, bind, sell, and ship a physical book. You can sell and download an ebook with no physical labor involved. This is what makes digital goods so profitable for online businesses.

What online services are in demand?

In-demand online services are those that help others get online. In the wake of the pandemic, companies rushed to build their online presence.

Service-based businesses related to website design and digital marketing are in demand. An example is email marketing software, especially email marketing automation.

What are the most successful small online businesses?

You can sell almost anything online, but fashion and beauty are among the most successful. Fashion was the largest ecommerce segment in 2022 . Countless boutiques , brands, and content creators are getting their slice of the pie.

Start Creating Your Online Business

Now you are ready to start planning your own online business endeavors. Chances are it won’t be quick, and it won’t be easy. With a bit of luck and persistence, you can launch a successful online business.

Before, it took specialized knowledge and big risks to make money online. N ow abundant opportunities for those looking to break into ecommerce . No matter your strengths or skill level, there is a solution for how to start an online business.

With a little bit of elbow grease, you can turn your side hustle into a profitable business.

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A Step-By-Step Guide to Starting an Online Business in 2022

Updated on November 22, 2021

According to eMarketer, the global ecommerce industry is expected to grow more than USD 4 trillion by 2022. You must grab a piece of this pie by starting an online business as soon as possible. If you don’t have an online business up and running in this digital era, you’re missing out on massive profits.

Needless to mention, starting an online business takes a lot of time and effort. Various procedures and decisions come together to generate a fruitful income stream. This step-by-step guide on how to start an online business will answer most of your questions and you’ll leave with a clear set of mind.

Moreover, there are many tips and tricks mentioned throughout the article that will allow you to bag in larger profits, especially during the high-converting online sales seasons. Let’s begin!

How to start an online business?

First things first, starting an online business requires a solid workable plan. You must know exactly what product or service you want to sell. Also, you must understand your buyer personas to sell your product or service to effectively. There are many strategies you can implement before you start selling your products online.

Slow Store = Bad Conversion Rates!

Try Cloudways and maximize your online store’s performance.

To start an online business, you must:

#1 Choose Your Niche

When you’re planning to start an online business, it’s better to remain niche-specific. You cannot expect to sell everything and gain massive profits. Many online businesses offer hundreds of products and dozens of categories with no real focus on being niche-specific. You cannot become the next Amazon or Best Buy overnight unless you have a massive investment at your disposal. Until then, it is the  best option to focus on your niche to run a successful online business.

The first major step is  identifying other successful online businesses that are already having a presence in the industry you wish to be a part of. To start an online business, go for the niche that isn’t overly-crowded. You must also ensure that you have a healthy competition, since the absence of competitors usually indicates that there is no market for your product or service. More importantly, skip anything that is dominated by giant brands.

Confused between Ecommerce or E-commerce? Learn the difference here

#2 Select a Business Model

Now that you’ve decided on which product or service to sell, you must come up with a business model to start an online business. Remember, there is no single business structure that works best for everyone. Therefore,  evaluate everything and select a business model after thorough consideration. It is also important to choose a business structure if you want to get serious about your business and protect it, there are many options for this such as a corporation. One of the best options would be to start an LLC . You can find the details of this process at bestllcservices.co .

For instance, if you desire to earn profits without managing inventory or investing heavily, dropshipping is your answer. It is a smart, cost-effective choice that fits well when it comes to starting an online business.

If you desire to have a warehouse where you can stock inventory, you will be investing more up-front while working on a wholesaling or warehousing business model.

If you’re interested in selling a unique product that only you can offer, you can sell it under your brand’s umbrella. To do so, you will have to become a part of the white labeling or manufacturing business model.

And then there is a  subscription model . This is where you curate a set of products or services to be delivered at regular intervals to your subscribed customers.

#3 Starting an Online Business  

To start an online business, you must consider a few fundamental requirements. Let’s go through them one by one.

Step 1: Selecting A Name

The name of your online business and your website does not have to be identical, but keeping them consistent is highly recommended. Ensure that your brand’s name fits your niche and is simple enough for your online prospects to judge what your brand is selling.

Ensure that your brand’s name fits your niche and is simple enough for your online prospects to judge what your brand is selling or you can choose any business name generator to find out the best names related to your niche or business.

Step 2: Get a Logo

You don’t need to fret over it too much. Do  ensure that it is not similar to the logo of your competitors. As long as you have a simple yet attractive logo, you’re good to start an online business.

Step 3: Register Your Business

Once you have a name and logo for your online business, it is time to get it registered. The registration  with the help of a reliable service like Northwest Registered Agent will allow you to enjoy many legal protections alongside other perks. Don’t skip it!

Step 4: Apply for Licenses and Permits

Running an online business does not exclude you from business licenses or permits. Check your country’s laws to see what kind  of sales tax licenses or business licenses you must have to start an online business.

Step 5: Visualization

Start with identifying your brand’s persona. You must focus on becoming a brand that connects with its  customer personas. Classification of customer personas makes launching an online business much easier.

Choose the colors you want your brand to represent; the types of content you’ll use to promote your products or the fonts you’ll use throughout your website. Hire a professional if your budget allows you to, it will create a stronger impact. If not, feel free to run things manually. However, keep things consistent.

For instance, if your product is for professional businesswomen, you might want to avoid girly colors as you’re catering to a mature audience. Understanding your buyer persona is important. It’s what will lead your brand to achieve greater success.

Step 6: Find the Right Vendors

There is a fierce competition going on when it comes to selling products online. It’s in your best interest to find reliable vendors who can offer quality products at reasonable prices. Also, ensure they won’t compromise on your delivery deadlines. Take your time to search and evaluate different vendors until you find the right ones to start your online business with.

A few things to remember:

• Create attractive landing pages
• Sell high converting products
• Write captivating product descriptions
• Always showcase your products in HD

#4 Choosing the Right Online Business Platform

Many entrepreneurs tend to make a crucial mistake by opting for an ecommerce platform that’s not ideal for their business model. There are various aspects you must evaluate before choosing an ecommerce platform.

The wrong ecommerce platform not only creates trouble in the future, but it also affects the on-going operations significantly. There are many online business platforms you can choose from. However, in my opinion, the top five  ecommerce platforms in 2022 are:

• WooCommerce
• BigCommerce

Gain valuable insights into the market share of these leading ecommerce platforms . In this article, I will show you how to setup an online store on WooCommerce and start your online business with a leading ecommerce platform.

How Much Does an Ecommerce Website Cost in 2022?

#5 How to Setup an Online Store Using  WooCommerce

Setting up a WooCommerce store obviously requires you to install the WooCommerce plugin first. Once you have it, you will see  a welcome message on the Dashboard saying, “Welcome to WooCommerce – You’re almost ready to start selling 🙂”.

Click on “ Run the Setup Wizard ”. This is the easiest method to setting up a WooCommerce store. By any chance, if you accidentally click on “ Skip Setup ”, you can still run the Setup Wizard by navigating to  WooCommerce > Help > Setup Wizard . Let’s take a look at the process of setting up your online store on WooCommerce.

#1 Store Setup

You can set up the location of your online business here. You must also define the currency you’ll be dealing in and the type of product you wish to sell.

#2 Payment Setup

Payment setup is an important step, so tread carefully. Since WooCommerce accepts both offline as well as online payments, you can choose your payment processor here. I recommend adding Stripe and PayPal to get started with. However, you can always add other modes  of payment.

#3 Shipping

If you wish to sell your product(s) globally, you can choose your Shipping Zones and define the Shipping Costs . Also, here’s where you can  set up the parameters for your product’s weight and dimensions.

#4 Recommended

You can avail amazing recommended free apps for your online business. Depending on your requirements, toggle the most appropriate option to enable or disable them.

#5 Activate

At the time of activation, you have a choice to use Jetpack. This WordPress plugin ensures security, performance, and website management with ease. It also offers various significant aspects like automated taxes and discounted shipping labels. Nonetheless, if you prefer to skip it, you can, as it won’t have any direct implication on launching your online store on WooCommerce.

Congratulations! You have successfully launched your WooCommerce online business and you’re now ready to start selling your products. Simply click on “Create a Product” to start adding the products to your online store.

#6 Adding Products to Your Online Store

Before you begin selling your products via your WooCommerce online store, you must evaluate the essentials. It is important to learn the basics of WooCommerce by discovering the product categories, attributes, and types.

Product Category

Product categories help you group your products. For instance, “clothing”, “sportswear” or “sleepwear” are product categories. They allow your online visitors to quickly find the products in the same category. Feel free to create as many product categories as you wish, and change them at any time you want.

Product Labels

Product labels help you to filter your products as per their size, color, or type. You can create custom labels like “fabric” if you’re selling clothes or “taste” if you’re selling food products. Product labels help online customers to choose their desired products with ease. You can also assign product labels independently to each product or set up a generic label for the entire web page.

Product Data

WooCommerce saves you time by offering predefined types of products. For instance:

• Simple: Shipped without any options. For instance, a physical book
• Grouped: A group of similar products. For instance, a dozen pair of glasses
• External/Affiliation: The product is advertised on your website, but is sold elsewhere
• Variable: These products have varying attributes  like size, color, weight, etc. For instance, clothes.
• Virtual: These are products that do not require shipping. For instance, services.
• Downloadable: These are the products you can download from the website. For instance, songs, pictures, videos, ebooks, etc.

Add Products to Your WooCommerce Store

With so many products, it can be confusing to add a new product to your WooCommerce store. Nonetheless. adding products to your WooCommerce store is no rocket science.

To get started, go to Products > Add New

Write the title of your product along with its description. The product description presents  the most important and relevant information about the product.

You can set the price of your product in the General section. You can also set up a promotional price or even schedule sales dates.

The Inventory section helps you organize Stock Management Unit (SKU). You can select whether a particular  product is in stock or out of stock. You can also check out the ‘sell individually’ option that allows you to sell only one item at a time.

The Shipping section deals with delivery and logistics operations .You can provide the dimensions, weight and delivery class of your products.

Linked Products

This section allows you to link and market related products to the customer. You can effectively promote your product by upselling or cross-selling it with other products.

This section allows you to add product attributes. For instance, if you’re selling t-shirts of various colors, you can specify the colors here.

The Advanced section allows you to enable or disable notifications. It also lets you create purchase notes for your customers. You can also specify the order in the menu, and choose custom order positions for your product.

Once you’re done with the aforementioned Product Data, you’re ready to publish your product!

#7 Target The Right Audience

When you start an online business, there’s no guarantee that your potential customers will find you right away. Therefore, you must  market your products effectively. You can do so by optimizing your website as per the latest Search Engine Optimization (SEO) standards. It’s important!

The keyword-stuffing days are long gone, but SEO is still alive and doing well. You must keep keywords or search terms in focus for each landing page of your online store. You must put your keywords in your URLs as well as in your landing pages, blogs and ad campaigns. All you need to make an effort to  drive traffic to your website.

Starting an online business demands a well-thought finance plan. You must invest wisely when it comes to online marketing. You can subscribe to various marketing newsletters, listen to different digital marketing podcasts and keep a bird’s eye view  on the industry. It is essential to learn actionable marketing strategies to make your online store successful in the long run. .

There are a lot of factors you must  consider in order to attract the right audience . You can sponsor content on third-party platforms or use the power of social media which works like a charm. Also, PPC ad campaigns can help you increase your conversions.

You must monitor which marketing campaigns are driving traffic to your website. If marketing your brand seems overwhelming, you can always hire a professional team to do it for you.

#8 Scaling Your Online Business

Starting an online business is not an easy task, however, scaling an online business is rather a big and different task altogether. It becomes a hassle for many online entrepreneurs after they start an online store. Once your brand starts growing, you’ll probably see an increase in sales. Regardless, don’t consider that as a success just yet.

You don’t want to end up with a high demand for your products with little to no way to meet it. To meet your customers’ demands that come with an expanded brand presence, you must be ready to expand your operations.

Don’t stress about it. Start with keeping a bird’s eye view on your Ecommerce Key Performance Indicators (KPIs) . The more in-depth statistics you can measure, the more data you’ll have that will help you make important business decisions.

Monitoring how these KPIs change over time when you tinker with them, it will allow you to develop a winning online marketing strategy . It will help you make better decisions concerning branding and scaling your online business.

Moreover, you can choose from must-have WooCommerce plugins that can help you alter the look or feel of your online store. You can also conveniently automate processes with different  plugins. These extensions and plugins for WooCommerce help you build an efficient online store.

Best Time to Start an Online Business

By now, you understand that starting an online business can be a rough patch if you don’t play your cards right. For instance, entering into the right market at the right time is essential as it creates all the difference. However, what is the right time to enter the ecommerce landscape? The answer is NOW!

Fun Fact: The ecommerce industry will result in a global revenue of more than $4 trillion by the end of 2022 – eMarketer.

Keeping the ecommerce growth statistics in focus, there are two best times to enter the ecommerce space and reap massive profits. They are:

1) The Back to School Season

This is the 2nd largest online sales season in the world. It begins in late July and lasts until mid-September. The back-to-school retailers offer a variety of products that parents buy for their kids. On average, 29 million households from the USA participated in the shopping spree with an average spend of $510 per household in 2018.

The market size of back-to-school sales season is estimated at a whopping $27.6 billion. That’s a huge market to cater to with your online store.

2) The Holiday Sales Season

The holiday sales season is the largest online sales season in the world. It begins in October and culminates with New Year celebrations.

You can offer exclusive deals for Halloween, Thanksgiving, Black Friday, Cyber Monday, Christmas and New Year during the Holiday Sales Season. The sales during this season in 2017 increased by 17.8% whereas it will further grow by almost 15% – 17% in 2018 . According to eMarketer, the retail industry (in-store+online) of the US will grow by 3.8% in 2018 to $691.9 billion .

Undoubtedly, the holiday sales season is the best time for you to enter the online marketplace. You can  reap higher profits with ease as everybody is in search of the best promotional deals they can get their hands on.

Time-Sensitive Promotions Work Like a Charm!

Many online campaigns make sense only during the holiday season. You have one shot to execute them perfectly. To help you in this regard, here’s an ecommerce store checklist Holiday Season Ideas .

There is  no need to take the pressure. It doesn’t matter whether you offer a flash sale or a holiday gift guide promotion, you’ll have a larger ecommerce target audience to interact with during the holiday season. Take advantage of it.

You can also  take this opportunity to define your brand. Work on strategies that will allow you to stand out from the crowd. Any efforts that you make during the holiday season towards refining your brand, you can carry them  into the following year.

Are You Ready Your Start an Online Store?

Whether you choose to enter the market with the back-to-school sales season or the big holiday sales season, you must optimize your website at least 30 days before any shopping season begins.

It will give you enough time to consider effective marketing strategies and identify gaps. For instance, it is a great idea to repackage your website into a theme-based ecommerce store during the sales season. It increases conversions.

If you intend to enter the market with the holiday sales season, feel free to go ahead. Give your best. Unfortunately, if you are unable to extract massive profits, don’t worry. You have a whole year to overcome the struggles you have endured, and make a comeback in the next holiday sales season stronger than ever.

So what are you waiting for? Start an online store today and work your way to garner massive profits by expanding your online presence to the right people.

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

Whether you're looking to turn a dream into profit or capitalize on market trends, starting an online business comes with unique advantages and challenges. Yet, the internet makes it easier for anyone with passion and a plan to succeed. You don't need a ton of money upfront or have to worry about your location to get started.

Use our guide on how to start an online business as your roadmap—from the spark of an initial idea to the exhilarating launch of your online venture. We'll explore the reasons to embrace the online business model, and offer all the tips you need to identify your niche market, attract customers, and grow.

​​ Build your dream business with the help of a high-paying job—browse open jobs on The Muse »

Why starting an online business might be for you

Online businesses have lower startup costs and overhead expenses compared to their physical counterparts. There's no need for a physical storefront or extensive infrastructure, so you can allocate resources more efficiently towards product development and marketing.

Running an online business also gives you more flexibility. You can manage operations remotely and serve customers globally, around the clock. Unlike traditional businesses that rely on local foot traffic, online businesses can attract customers from anywhere in the world.

By leveraging digital marketing strategies like SEO, social media, and targeted advertising, you can precisely target your audience and expand your market niche exponentially.

How to start an online business from home in 10 steps

Once you've decided to follow this route, it's time to master how to open an internet business (and thrive!). Here's our step-by-step guide:

1. Find your niche

Begin by exploring your passions and skills —what interests you most, and where do you excel? Can you turn what you love into a business? Whether it's photography, exotic vegetarian cuisine, or antique furniture restoration, there's a market for your unique talents. (Here's a thorough list of online business ideas for you .)

Next, research market demand. Use free tools like Google Trends and social media insights to identify trending topics, unmet needs, and gaps in the market. What problems can you solve with your skills and expertise? Observe your surroundings and talk to people to uncover hidden opportunities.

2. Conduct market research

Dive into competitor analysis, a key strategy to uncover opportunities and ways to stand out. This helps identify gaps in the market, understand consumer preferences, and refine your unique selling points.

Connect directly with your target audience through customer surveys and interviews. Engaging with potential customers lets you validate assumptions, discover pain points, and fine-tune your products to meet their needs effectively.

Use market research reports, industry publications, and market trends to gain a deeper understanding of your niche. You may find insights into consumer behavior, emerging trends, and competitive dynamics. This helps anticipate changes, spot growth opportunities, and mitigate potential challenges in your market segment.

3. Write a business plan

A well-crafted business plan gives you clarity, direction, and a strategic framework to open your own business online. It guides every aspect of your venture, from initial launch to long-term growth and sustainability. (Want to learn more? Here's how to write a business plan from scratch.)

Your business plan for an online business should emphasize digital strategies and online channels. This includes leveraging e-commerce platforms, digital marketing tactics like Search Engine Optimization (SEO) and social media, and analytics tools to track performance and optimize operations.

4. Pick the right products or services

Explore different sourcing strategies like dropshipping, partnering with wholesale suppliers, or developing your own products. Each approach has its perks in terms of cost, control, and scalability, so you can make your choices based on your business goals and market demands.

Here's what you should consider:

Cost analysis : Conduct thorough market research and cost analysis to identify consumer demand trends, competitive pricing, and profit margins to ensure your offerings can generate sustainable revenue and profitability over time.

High-quality : Maintain high standards of product quality to build customer trust and satisfaction.

Fulfillment logistics : Implement effective fulfillment logistics to streamline order processing, shipping, and customer service, ensuring a seamless shopping experience that encourages repeat business and positive reviews.

Scalability : Evaluate the potential of your products or services for long-term growth and adaptability to market changes. By selecting scalable offerings, you position your online business for expansion and diversification, laying the foundation for sustained success in the competitive online marketplace.

5. Define your brand identity and image

Your online business needs more than great products; it needs a personality. That's where your brand identity comes in—it's the essence of who you are and what you stand for.

Develop a compelling brand story and a unique selling proposition that sets you apart. What makes your business special? What problem do you solve better than anyone else? Communicate this unique value clearly and consistently.

A standout logo and cohesive color scheme are vital components of your brand’s visual identity. They should be distinctive and reflect your business essence. Choose brand colors that evoke the right emotions and align with your message.

Developing a consistent brand voice that matches your brand’s personality is also key—whether it’s professional, friendly, or innovative. This voice should be evident across all communication channels, from your website to social media and customer interactions.

6. Set up your online presence

Select a memorable domain name that reflects your brand and is easy to remember. This is your online address, so make it count. Next, choose a reliable web hosting service that ensures your website is always accessible and performs well. Look for hosting providers with excellent uptime, security features, and 24/7 customer support.

Your website is the online storefront for your business, and it needs to offer a smooth user experience. Whether you use a DIY website builder or hire a professional web designer, prioritize a clean design with clear navigation, high-quality images, and engaging content. Optimize your content for search engines (Google) to improve visibility in search results and drive organic traffic.

For e-commerce platforms, integrating secure payment gateways is essential. Implement robust security measures to protect customer data and build trust. Additionally, use analytics tools to track visitor behavior, measure performance, and gain insights to optimize your site.

7. Implement marketing strategies

Marketing is the lifeblood of any online business, driving traffic, engagement, and sales. The tricky part is there's no one-size-fits-all approach. You have to choose the marketing strategies that best resonate with your target audience and budget.

Consider leveraging SEO to rank higher in search results, and explore the power of social media marketing (even with influencer partnerships) to connect with your audience on a more personal level. Email marketing allows for targeted communication and promotions, while pay-per-click (PPC) advertising can drive immediate traffic to your website.

Define clear marketing goals, whether it’s increasing website traffic, boosting sales, or enhancing brand awareness . Allocate your budget across different channels based on their effectiveness and your business goals. A well-rounded marketing strategy ensures you’re reaching your audience through multiple touchpoints, increasing your impact and return on investment.

8. Manage your finances effectively

Familiarize yourself with the different types of business expenses. Fixed costs, such as rent and salaries, remain constant regardless of sales volume, while variable costs, like shipping fees and raw materials, fluctuate based on your business activity. Overhead costs, including utilities and insurance, are necessary for daily operations.

Setting the right price is also important. You want your products or services to be profitable while remaining attractive to your target audience. Use pricing strategies like cost-plus pricing, which adds a markup to the production cost, or value-based pricing, which sets prices based on the value perceived by customers. Adjust your pricing as needed to remain competitive and profitable.

Maintaining accurate financial records is essential for monitoring your business's health. Use accounting software or tools to track income, expenses, and profits, identify trends, manage cash flow, and make informed financial decisions. If necessary, don’t hesitate to seek guidance from financial advisors or accountants.

9. Ensure compliance with legal and regulatory requirements

It's crucial to understand the licenses and permits required for your online business and get familiar with your tax obligations. Ensuring compliance with these requirements helps you avoid legal issues and penalties.

Selecting the right business structure is a key decision that affects your legal and financial responsibilities. Common structures include sole proprietorships, limited liability companies (LLCs), and corporations—the first being simpler, and the last being more complex.

Online businesses must comply with various laws related to e-commerce. This includes understanding data privacy regulations, such as the General Data Protection Regulation (GDPR) in Europe and the California Consumer Privacy Act (CCPA). Ensure you have a clear privacy policy that informs customers about how their data is collected, used, and protected.

10. Keep focusing on ongoing growth and development

Launching your online business is just the beginning. To sustain success and drive ongoing growth, focus on these key areas:

• Customer service excellence: Respond to inquiries promptly, address concerns effectively, and go above and beyond to meet customer needs.
• Adapting to evolving trends: Keep an eye on emerging technologies, shifts in customer preferences, and new marketing strategies.
• Continuous learning and development: Invest in your professional development by taking courses, attending workshops, and reading industry publications.
• Celebrating milestones and successes: Whether it’s reaching a sales target, launching a new product, or hitting a business anniversary, celebrating milestones keeps you motivated and fuels continued growth.

Now that you have the ultimate step-by-step guide on how to open a business online, it's time to put your plans into action. With dedication, creativity, and the right strategies, you can build a successful online business.

Need more encouragement? Read this next: 6 Signs You Have What It Takes to Start Your Own Business

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How To Start an Online Store in 11 Easy Steps (2024)

How to start an online store: 2024 edition.

Setting up an online store might seem overwhelming at first, but with the right steps, it can be both exciting and profitable. Whether you’re new to starting an online store or have some business experience, an ecommerce store can help you connect with more customers and grow your brand.

In this guide, we’ll tell you how to get started—from selecting an ecommerce platform to designing your site and launching your first product. Follow these steps, and you’ll be well on your way to building a successful online store.

How to start an online store (step-by-step instructions) 

• Find a business idea
• Determine your target audience
• Choose an ecommerce platform
• Decide on your business structure
• Create your brand
• Build your ecommerce website
• Customize your new store
• Set up a payment gateway
• Prepare your store for launch
• Launch your store
• Promote your ecommerce business 

1. Find a business idea

One of the biggest challenges you’ll face as an ecommerce entrepreneur is finding profitable products to sell. While understanding your audience can spark some product ideas, there’s still a lot more effort that goes into identifying truly profitable items. Fortunately, there are plenty of ways to find winning products to sell, whether you’re dropshipping, manufacturing, or reselling.

To find profitable items to sell:

• Follow your personal interests
• Jump on trends early
• Cater to passionate hobbyists
• Explore what’s popular in online marketplaces

Note: This post is focused on helping you start an online store. If you’re looking to learn more about branding, writing a business plan, choosing products, or finding a manufacturer, check out our complete guide to starting a business .

2. Determine your target audience

Your target audience is the group your marketing zeroes in on. When starting an online store, knowing who your ideal customers are is essential. It makes finding new customers smoother and draws in buyers who are ready to shop, boosting conversion rates and driving more sales.

You can define your audience by size or specific traits, depending on what you’re offering. But as a new ecommerce entrepreneur, focus on these three categories for a start:

• Demographics. Covers aspects like age, gender, job, education level, and income.
• Interests. Focuses on psychographics, including your audience’s values, personality traits, opinions, and lifestyle.
• Location. Segments the audience by geographical area, allowing you to focus on a particular region.

Think about who’s buying your product. What’s their deal? How old are they? Put all that together into a buyer persona and add it to your business plan. It’ll be handy when you’re writing website copy or planning marketing campaigns.

Even if you don’t have a product yet, you can still identify a target market and create something just for them.

3. Choose an ecommerce platform 

During your journey to start an online store, one of the key choices you’ll make is deciding which platform to use. An ecommerce platform is your gateway to creating and launching your store, processing sales, and managing orders.

As you think about building a website to sell products , envision your ecommerce platform as the hub of your business. It manages everything from inventory to marketing, equipping you with all the tools needed to sell online and support your customers.

When choosing an ecommerce platform for your online store website, consider these key features:

• Web hosting. Your online store needs hosting to be accessible. Some platforms offer built-in hosting, while others might require a third-party service.
• Usability. Pick software that’s user-friendly. Look for something with a drag-and-drop builder to set up your online store without hassle.
• Smooth checkout. A seamless checkout process is vital for closing sales. Opt for a platform that simplifies buying.
• Accessible customer support. You’ll want help along the way, so choose a platform with reliable support.

You’ll also want to consider your current and future needs when choosing your ecommerce software. Some platforms might be perfect for your initial setup, but others like Shopify can offer more advanced features to support your business as it grows.

4. Decide on your business structure

You’ve gone through all the fun stages of building an online store: choosing a name, designing your ecommerce site, selecting products, and writing descriptions. But before you go live, there’s one more step—making your business legal.

It might not be the most thrilling task, but setting up a legal entity is essential. It safeguards your personal assets if something goes wrong. Plus, it can help you:

• Secure business funding more easily
• Potentially lower your tax bill
• Set up retirement plans
• Keep your business credit separate from your personal score

Popular business structures for new entrepreneurs include:

• Sole proprietorship. A simple setup where the business and the owner are legally the same. It’s the easiest entity to start and manage. Partnership. A business owned by two or more people. Partners invest through money, property, or skills and share both responsibilities and profits.
• Limited liability corporation (LLC). A business structure that combines the flexibility of a partnership with the liability protection of a corporation. It helps protect personal assets from business debts.

Read more: Top 10 Most Popular Types of Businesses for New Entrepreneurs

5. Create your brand

A common trait among successful online stores is a brand that connects with customers. Good branding makes your store memorable and keeps people coming back. Before you start designing, focus on building a strong brand identity and creating assets for your marketing.

Here are some key branding elements to consider:

Mission and core values

Start by defining what your brand stands for. What’s your purpose? What makes you unique? And, what promise are you making to your customers? These decisions will influence everything else, from colors to logos.

Business name

Choose a name that truly represents your brand. It could be anything—from your own name to a fun, made-up word, or something that clearly describes what you offer. If you’re struggling to come up with ideas, tools like Shopify’s AI name generator can help you brainstorm unique options.

Your logo is a key element that will represent your brand across various platforms. Whether you design it yourself or hire a designer , ensure it aligns with your brand’s mission, values, and tone to create a cohesive image.

Product photography

Clean, sharp photos are essential for making a great first impression. Contrary to popular belief, you don’t need expensive gear to take high-quality images. With just a smartphone and some creativity, you can produce stunning visuals for your website..

6. Build your ecommerce website

Now it’s time to start building your ecommerce site. Take the following steps to ensure you’ve checked off every item on your ecommerce checklist before you launch.

Add your items

In Shopify, go to the “Add a product” section. This is where you’ll enter all the content, images, and details about your product.

Writing product titles and descriptions Your product title should clearly state what the item is. It’s the first thing customers see while browsing, helping them quickly identify what they’re looking for. Keep it brief. Use the product description or options like size and color to share more details.

Product descriptions are meant to both explain and sell. Here are some tips:

• Know your audience. Consider what your customer needs to feel confident about purchasing. Make sure your description communicates that clearly.
• Highlight what matters. Focus on features, benefits, and offers that actually count. Many stores combine text and icons to quickly emphasize these points on product pages.
• Make your text easy to skim. Break up descriptions with short paragraphs, bullet points, subheadings, and bold text. You can also use tabs to organize details effectively.
• Address potential concerns. Think about what might stop a customer from buying. Are they worried about the fit? Do they need specific ingredient information?
• Help customers envision your product. Since they can’t touch or try it, provide details like materials and include a size chart to help them visualize the product.

Uploading product photos or other media

Most ecommerce platforms let you add visual content to showcase your products better. This can include photos, GIFs, videos, or even 3D models.

Presentation matters. You want customers to picture themselves owning your product. Show them how it looks in use or on display. Here are a few tips to keep in mind:

• Use high-quality photos. Blurry or poorly lit photos won’t do your products justice.
• Keep the same aspect ratio. It creates a cleaner, more professional look for your online store.
• Use your existing gear. If you’re on a budget, your smartphone can take great product photos. Free editing apps can help polish them up.
• Include necessary info. Add alt text to your photos to make them accessible to everyone, including those using screen readers.

Managing your inventory

Depending on your business model, you might need to keep track of, store, and manage inventory. This doesn’t apply to dropshipping or print-on-demand stores, though. When setting up your online store, you can use tools from your ecommerce platform or third-party apps to make it easier.

Here are some terms you’ll see in your store’s admin:

• SKU. A stock keeping unit (SKU) is a unique code used to track your products. Create a clear system with numbers or letters so you can identify items easily.
• Bar code. Bar codes (like UPC or GTIN) come in handy if you’re reselling items or want to add scannable codes for simpler inventory management.
• Quantity. This tells you how much stock you have on hand. If you manage inventory across multiple locations, your platform will show the numbers for each location.

Adding product options

Adding product options When your product comes in various versions, like different sizes or colors, you don’t need to create a separate listing for each one. Instead, group them as variants under a single product. Each variant can have its own image, price, inventory tracking, and specific settings.

You can even get more detailed with your options. For instance, you might offer multiple colors that also come in various sizes.

Tagging and organizing your items

Your ecommerce platform provides various fields on the product page builder to help keep your catalog in order. For instance, on Shopify, you’ll find:

• Product availability. Mark your product as “available” and easily toggle sales channels on or off later. 
• Product type. This helps you categorize products, like labeling a t-shirt or a pair of jeans.
• Tags. Add relevant keywords to help customers find your product through the search bar in your online store.
• Vendor. Identify the manufacturer, supplier, or third-party source. Filtering by vendor can make reordering inventory faster.
• Collections. These are key for organizing and curating products for targeted audiences or specific promotions.

Grouping your products into collections

Creating collections lets you curate products based on specific audiences, themes, or categories. Organizing your items this way makes it easier to feature them by season or event, like showcasing winter coats before the cold hits. You can also apply changes to an entire collection, such as putting all your summer wear on sale.

Collections are key for navigation, often appearing in the main menu or top navigation of an online store. For example, a clothing store might organize collections by bestsellers, clothing type (like jackets), or specific customer groups (like kids).

Entering shipping details

In your online store’s shipping section, you’ll input information that will enable automatic calculation of shipping rates and generate the correct labels for each order. Deciding on the specific shipping costs and the options you’ll provide to customers will be covered later in this tutorial.

Pricing your products

When selling online, several factors can impact how you set your prices. Consider things like shipping fees, material costs, overhead expenses, and the value of your time. But most importantly, think about how customers perceive your products’ quality.

You can always adjust your pricing as you gather insights after launching. You might find customers are willing to pay more, or discover new ways to cut expenses and boost each order’s value.

Don’t forget, most businesses that sell products or services need to collect taxes on every sale. Make sure you’ve configured your tax settings correctly.

Optimizing your product pages for search engines

To make your products easier to find on search engines like Google, it’s important to use SEO best practices when writing your page title, description, and URL.

If you know what keywords your ideal customers are typing in to find products like yours, you can weave those into these fields to boost your chances of showing up in search results.

Setting up essential pages for your online store

Besides product pages, there are a few other must-have pages that every online store needs. These pages help establish trust, share your brand’s story, answer common questions, and guide customers on how to reach you. Key pages include:

An About page lets you introduce your brand and build trust with new customers. This is where you can share your story—maybe with a video, some images of your process, or links to any press coverage or awards. Let people know who you are and what makes your business unique.

Contact page

The Contact page is where customers go when they need help or have questions. Include a physical address, phone number, email, contact form, and customer support hours. You might also consider adding live chat options to make getting in touch even easier.

Policy pages

Policy pages are essential for any online business. They give customers a clear understanding of how you operate and what they can expect from you. These pages also protect your business if disputes arise. Important policy pages include:

• Return policy: Outline your return and exchange process. A customer-friendly return policy can make buyers feel more comfortable purchasing.
• Privacy policy: This page explains how you collect and use customer information.
• Terms of service: Your terms of service lay out the agreement between your business and your customers, detailing how you operate and what rights you reserve.
• Shipping policy: Set clear expectations for shipping costs, processing times, and delivery options for the areas you serve.

Tip: Just as you did for your product pages, customize the SEO details for these pages. Think about the URL, the title, and how you want each page to show up in search results.

7. Customize your new store

With your products and content ready, it’s time to focus on your store’s design. You’ll want to tailor the look and feel to match your brand perfectly.

Selecting an ecommerce theme 

Start by picking a theme—a design template that acts as the foundation for your online store. Most ecommerce platforms offer a variety of themes. For example, Shopify’s Theme Store features both free and premium options, each with different styles and capabilities.

When choosing a theme , keep these tips in mind:

• Filter themes by factors like your business size, the number of products you sell, your order volume, and your industry. Some themes work better for clothing shops, while others are made for businesses with large inventories.
• Look for themes that include features you need, like an auto-complete search bar or a section to showcase customer reviews.
• Don’t worry too much about the colors or fonts in the theme—they’re easy to change later.

Designing your homepage

When planning your homepage design, think about the specific goals you want to achieve and how they fit your business:

• Make sure new visitors quickly understand who you are and what you sell.
• Make it easy for returning customers to find what they need right away.
• Build interest in your products and establish trust with each scroll.
• Guide your visitors with clear, direct routes to make a purchase. Keep the design clean and free of distractions.
• Remember, many visitors will be using mobile devices, so design with that in mind.

Allbirds is a great example of effective design. Its uncluttered homepage emphasizes large lifestyle photos and effectively directs visitors to the brand’s main product.

Customizing your navigation menus

Your online store will have three main types of navigation:

• Search bar. Place it in the header to help visitors find specific products quickly.
• Main navigation. The top menu should highlight the key pages you want customers to explore.
• Footer navigation. Use this area for less critical links, like your policies or contact information.

Don’t overwhelm visitors with too many choices. Instead, prioritize the most important actions you want them to take, keeping the focus on shopping.

Setting brand colors, typography, and other design elements

Colors and fonts are essential to your brand’s look and feel, and they should be carefully considered when building your online store.

Even if you’re not a designer, you can still create a cohesive and appealing design with these tips:

• Most themes allow you to customize fonts and colors. Stick to those that align with your brand’s style.
• Think about how different colors influence emotions and use contrast to highlight key areas like buttons.
• Limit yourself to two or three fonts, with a focus on readability (sans serif fonts like Helvetica or Arial work well).
• Add your logo in key places, such as the site’s header and favicon.

For example, a homepage might use calming colors, easy-to-read fonts, and a logo that’s subtly integrated into the design, creating a cohesive and welcoming online space.

Tailoring your checkout

Customizing your online store’s checkout involves tweaking settings, messages, and other details that shape the customer experience and enable you to accept payments online. Most ecommerce platforms offer options such as:

• Customer contact: Decide if customers can choose how they prefer to be contacted after making a purchase (via email or SMS).
• Form options: Choose whether additional details like first names or company names are required, optional, or hidden during checkout.
• Order processing: Streamline the process or add extra confirmation steps, depending on your needs.
• Abandoned checkouts: Set up automated reminder emails for customers who don’t complete their purchase after reaching checkout.
• Customer accounts: Let customers create an account at checkout, which is especially useful for wholesale or members-only stores.

For example,  Ban.do ’s website offers guests the option to check out as a guest, sign in, or create an account before finalizing their purchase:

Set your shipping options

Shipping is often one of the more complicated aspects of running an online store. You need to consider packaging costs, carrier rates, shipping destinations, product weights, and your potential profit margins.

Depending on your business needs, choose a shipping strategy or combine a few options, such as:

• Free shipping: Offer it as an incentive, applying it to certain products, order minimums, or specific regions.
• Real-time carrier rates: Many platforms integrate with carriers like Canada Post or USPS to show live pricing options.
• Flat-rate shipping: Best for businesses with products of similar weights and sizes, making it easier to predict costs.
• Local pickup/delivery: Offer local customers the option to pick up orders at your location with customizable notifications and pickup instructions.

Within your platform’s shipping settings, set up shipping zones (where you ship and available delivery methods) and conditional rates (e.g., bundling goods or handling oversized items).

For example, Momofuku’s site encourages customers to spend a bit more to hit the free shipping threshold:

Configure your tax settings

If you’re selling goods or services, you’ll likely need to collect taxes for the government whenever someone orders from your store. There are exceptions, such as digital goods in some regions or small businesses under specific revenue thresholds.

If taxes apply to you, adjust your online store’s admin settings accordingly. Set taxes by region if necessary, depending on where you do business. If you’re unsure about taxes, consult an accountant or tax professional.

8. Set up a payment gateway

Now it’s time to figure out how your store will handle payments and how you’ll receive your earnings. With countless payment gateways available, including ones built into platforms like Shopify, you can save on transaction fees and keep more of your profits.

Once you’ve picked a gateway, here’s what comes next:

• Decide on payment methods: Choose what options you’ll offer customers, like credit cards, one-click payments such as Shop Pay , or services like PayPal.
• Enable multicurrency sales: If you’re selling globally, add a currency converter so prices adjust automatically to the buyer’s local currency.
• Add extra fraud protection: Implement steps like CVV or ZIP code verification for added security.
• Set your payout frequency: Decide if you want to receive payments daily, weekly, or monthly based on what suits your cash flow needs.
• Customize your bank statement name: Make sure your store’s name is recognizable on customer statements to avoid confusion.

9. Prepare your store for launch

There are a few more steps to ensure your store looks polished and is ready to welcome customers. These include:

Securing a custom domain

Buying a domain is like claiming your space on the web. That’s why it’s called a “web address.”

A custom domain gives you a personalized URL, replacing the default one generated when you named your store. Go to your store’s settings to link the domain you purchased earlier, or grab one directly from your ecommerce platform.

Setting up sales channels

Besides your main online store, you can tap into other sales channels to expand your reach. Not every channel will suit your business, but here are a few worth considering:

• Google. As the most popular search engine, Google lets you run Shopping campaigns and list products for free in its Shopping tab .
• Social networks. Sell your products directly on platforms like Facebook and Instagram, or set up shop on TikTok .
• Marketplaces. Some customers start their shopping journey on sites like Amazon , Etsy , or Walmart. You can link these marketplaces with your online store for smooth integration.
• Point of sale (POS). Many platforms offer in-person payment solutions that sync seamlessly with your online store and inventory.

Customizing your email sequences (optional)

With automation, you can set up email sequences that guide customers through their journey—from signing up to making a purchase and tracking their orders. This boosts efficiency and cuts down on customer support tasks.

10. Launch your store

You’re finally set to go live! Most ecommerce platforms will have you flip a switch or remove password protection so everyone can access your site.

Is it flawless? Maybe not, but you’ve handled the essential steps to get your store ready for business. Launching now allows you to gather feedback in real-time and adjust your design, settings, and messaging as needed.

Here’s what to focus on next to grow your ecommerce business:

• Bring customers to your online store
• Increase traffic and make your first sales
• Analyze what your traffic is telling you
• Fine-tune your store’s performance

Treat this like a “soft launch” for your business. Use real transactions and beta testers (like friends or family) to check your checkout process and navigation. Once everything’s running smoothly, it’s time to share your launch with the world.

11. Promote your ecommerce business

Marketing varies for every business, but it’s essential to lay a solid foundation to maximize your efforts as you drive traffic to your store. Let’s explore some key marketing elements for online businesses.

Social media marketing

Social media marketing combines sharing content to build an audience and running paid ads on social platforms. Here’s how to make the most of social media for your online business:

• Focus on key platforms. You don’t need to be everywhere—start where your audience spends their time. For instance, if you’re targeting Gen Z, TikTok is vital.
• Provide value, don’t just sell. Your ads and posts should blend in with the organic content people see in their feeds. Share content that’s timely, relevant, and adds value to your audience.
• Maintain consistency. Ensure that your brand’s presence on social media matches your online store, using the same colors, imagery, and tone.
• Use social selling features. Enable shopping tools on each platform to make buying seamless, and use your bio link to direct followers to products, offers, or landing pages.

Search engine optimization (SEO)

Many potential customers turn to Google or other search engines when they’re shopping online. Whether they’re searching for something they heard about or comparing products, SEO helps your store appear in their search results.

Effective SEO can bring organic traffic to your online business. Here are some SEO tips:

• Utilize free tools like Keyword Surfer to find high-traffic keywords that are directly relevant to your products.
• Create content that addresses common questions about your products to rank in search results.

For example, if you sell crafts, write blog posts or create videos on related topics to capture search traffic.

Monitoring your store’s traffic and sales across all your marketing channels is essential. Analytics help you understand what’s working and what’s not, allowing you to focus your efforts on the strategies that offer the best return on investment for your online business.

Build your own online store today

Now that you’ve got the basics down, it’s time to take action! Whether you’re selling handmade crafts , custom merch , or digital downloads , your online shop can offer it all. Your ecommerce journey is just beginning, and it will evolve as you grow. To build a successful store, focus on connecting with your target audience and offering the products and messaging they’re eager to find.

How to start an online store FAQ

How do i start my own online shop.

To get your online shop going, start with a brand and something to sell. Next, create your store on an ecommerce platform. Add custom designs, products, and important pages to your site. Once everything is set, launch your shop and begin marketing to bring in customers.

How can I create an online store without inventory?

You can run an online store without holding inventory by picking the right business model. Options like dropshipping or print on demand mean a third party takes care of the shipping. You just focus on sales, marketing, and handling customer service.

Can I start an online store with no money?

Yes, you can start an online store with no money by signing up for a free trial with most ecommerce platforms. However, keep in mind that you might need to spend a little on basic plans after the trial ends.

How much does it cost to start an online store?

The cost of starting an online store depends on several factors. At a minimum, you’ll need around $20 for basic web hosting and an ecommerce plan. You’ll also have to consider transaction fees that can add up with each sale. Beyond that, there are marketing expenses like paid ads, as well as overhead costs like internet, utilities, and rent if you need storage or office space.

What is needed to run an online store?

Running a profitable online store requires a few essentials. You’ll need a device like a laptop or smartphone, internet access, an ecommerce platform, and some startup cash to cover web services and fees. As your store grows, you might also need to stock inventory, buy packaging materials, find storage space, handle order fulfillment, and budget for services like ads or professional help.

Want to learn more?  

• How to Get Free Media Coverage for Your Business
• What You Need to Know About Pricing Before You Launch
• Ecommerce Shipping Solutions: Guide to Ecommerce Delivery
• 10 Tips on How to Handle Customer Complaints
• 9 Ways to Earn Customer Trust When You Have Zero Sales

How to Start an Online Business in 8 Steps

Starting an online business requires the same diligence as starting a brick-and-mortar business, plus some unique steps.

Ready to start your business? Plans start at $0 + filing fees.

by   Miles Almadrones

Miles is a legal writer and content marketing specialist with a background in operations management and logistics. He...

Read more...

Legally reviewed by   Allison DeSantis, J.D.

Allison is the Director of Product Counsel at LegalZoom, advising and providing leadership to internal teams on the d...

Updated on: September 11, 2024 · 13 min read

1. Assess the viability of your new business idea

2. develop a business plan, 3. choose a business name, 4. decide on your business structure, 5. take care of all the legal tasks, 6. build your website and choose your sourcing and fulfillment methods, 7. develop and implement your prelaunch marketing strategies, 8. test and launch your new business, why start an online business, useful tools for starting an online business.

In many ways, the internet has leveled the playing field for small business owners everywhere. Online businesses are relatively easy to start, without the kind of up-front costs a brick and mortar business demands. However, this relative ease doesn't mean that you can simply jump in and hang out your shingle.

As with any business, you need to establish a strong footing for your online business. While the steps outlined below don't necessarily have to be completed in order, their objective is to provide you with a foundation that's solid enough to bear the weight of your future business growth and success.

Just because it's easier to start an online business doesn't mean no costs are involved. As with a physically based business, the first step to take with your online business is to assess your idea's feasibility .

The most brilliant online business ideas can be unsuccessful if your product or service has no market. Even if you've hit on the solution to a problem that plagues many people, you're just throwing money away if the problem turns out to be one that most people don't care enough about to spend time or money solving.

With this in mind, you need to evaluate your online business idea. The following are just a few of the questions you need to ask yourself:

• Does your product or service solve a problem that enough potential customers have?
• Does your product or service provide a cost-effective solution to that problem?
• Are people willing to spend money to solve the problem?
• How costly will it be to reach the people in need of the solution your product or service offers?

How to perform market research

In order to evaluate your online business idea and answer these questions, you’ll first want to conduct market research. From a broad perspective, you want to identify your target audience, understand the problem they have, and determine whether or not your business can be the solution. 

Here are several research methods to try: 

• Keyword research. Start with basic Google searches related to your business idea, including similar products, services, and key phrases. Pay attention to the search suggestions and related queries, as these often reveal customer concerns and what they prefer to engage with. For a deeper dive, you can also use tools like Google Trends to track interest in your niche over time. 
• Competitor analysis. Study successful online businesses in your target market, including their product offerings, pricing strategies, and marketing tactics. Look for gaps in their services that your business could potentially fill, and consider whether competing with them is realistic.
• Monitor social media . Nowadays, it’s crucial for businesses to track trends and conversations across Facebook, Instagram, TikTok, and other popular platforms. Pay attention to frequently asked questions, pain points, and the general sentiment towards existing solutions and brands. 
• Surveys and interviews. With some planning, you can create short, focused surveys using free tools like SurveyMonkey or Google Forms. Ideally, you can share them in relevant online communities (such as a Facebook group) or with your network. Likewise, you should also conduct informal interviews with potential customers to better understand their needs and preferences. 

Ultimately, you want to confirm your business idea addresses a genuine market need and at least has the potential to stand out among the competition. 

Once you know your idea is feasible, it's time to put together a comprehensive business plan. Even if you don't plan on obtaining funding for your business, at least not initially, having a business plan is valuable because it lets you spot any potential bumps down the road and plan for future growth and profitability.

The work you did in step one gives you a good base from which to develop your own business plan , and multiple resources are available online to help you put together the core elements of a solid plan, including the following: 

• The vision. Your business’ purpose and long-term goals (usually known as an executive summary)
• Market insights. Your target audience, competition, and industry trends 
• Growth strategy. Your approach to marketing, sales, and customer retention 
• Financial roadmap. Your projected revenue, expenses, and potential funding needs 

An effective plan will help you to identify your market further, clarify your objectives, provide a marketing roadmap, and assist you in making the kinds of decisions that may mean the difference between success and failure.

Choosing your business' name is an important step in the startup process. Because your business will primarily function online, your chosen name must be available for registration as a business name in your state and within the digital space.

This means you will need to check whether the name you want is available as a:

• Business name in your state
• Domain name
• Username on each of the social media platforms you plan to use

If your chosen name isn't available as a domain name or social media username, consider different permutations of the name, and remember that many domain name extensions beyond the original ".com" are available. Additionally, it's important to check that your name and domain name aren't impinging on any registered trademarks.

The business type you choose will dictate the legal and tax requirements you need to meet. Most small business owners choose from the following structures:

• Sole proprietorship. This is the simplest form of business structure, but its lack of limited liability offsets its simplicity.
• Partnership. While this form of business structure might appeal to you if you are embarking on your venture with a partner, your liability is unlimited, like a sole proprietorship.
• Limited liability company (LLC). An LLC offers limited liability without the additional complexity of incorporation, making it one of the most popular small business structures.
• Corporation. Like an LLC, a corporation provides limited liability, and while it's more complicated to both setup and maintain, it may be a good choice depending on your circumstances.

It's always a good idea to consult an attorney to determine the appropriate business type for your new business. Because each structure has different tax requirements, you may also want to consult a tax professional. 

Like a brick-and-mortar business, you will need to file all the appropriate business-formation documents and other paperwork to ensure your new business has a solid legal foundation. This includes:

• Registering your business with the appropriate government authorities
• Obtaining all the required permits and licenses
• Meeting all federal and state tax requirements, such as applying for state and federal tax ID numbers

Since these requirements vary on a state-by-state basis and the nature of your business, it's important to do your research so you meet any applicable requirements. Again, it's often helpful to consult with an attorney with experience in business startups in your particular industry to make certain you're on the right track.

An online business's website is as important as the physical location of a brick-and-mortar company, and you should put as much care into this part of the startup process as you would if you were location and lease shopping. Here’s how. 

Decide how to build your website

You have several options to create your website , including the following: 

• Website builders. Platforms like Shopify, Wix, and Squarespace offer user-friendly interfaces and templates to build a website and set up hosting. 
• Content management (CMS). CMS platforms like WordPress offer more flexibility and plugin options to customize your own website, though they’re not quite as user-friendly. 
• Custom-built sites. For many online businesses, hiring a website developer to help build your site makes sound business sense, as they can build it exactly to your preferences and give your brand a premium look.

When looking at how you will build your website, consider available payment processors (such as through Square, Apple Pay, or PayPal), their fees, and whether they meet your customers’ preferences. 

Choose your domain name and hosting platform

Next, you can register your domain name with the website builder you use or another service like GoDaddy or Google Domains. The web host you choose is an important consideration as well, provided you build a custom site. You can have a top-notch website, but it will do you no good if your host has too much downtime or if the speed of browsing your site is too slow.

In addition to checking out reviews online, consider asking your personal and business network contacts. Other online business owners, in particular, can provide invaluable information about a web host's reliability. 

Plan your sourcing and fulfillment strategy

Depending on the products or services you'll be offering, you will also need to evaluate and choose your sources of supply and inventory, as well as how you will deliver your product or service to your customer. Again, a number of options are available. 

Given the importance of having inventory on hand—or a good on-demand provider—and a reliable method of fulfillment, spending adequate research time on this aspect can mean the difference between success and failure.

It's important to market your online business while you're working on each of the previous steps. Your business plan will provide you with the information you need to develop effective marketing strategies for your potential market. Then, you’ll need to choose the right channels to reach your customers, such as: 

• Content marketing. Create and share relevant content on your website to attract and engage your target audience, whether through blog posts, videos, or podcasts. 
• Social media marketing. Build brand awareness on social media platforms to drive traffic to your website. Be sure to tailor your content to each platform’s unique audience, features, and algorithm.
• Email marketing . Use personalized and targeted email campaigns to keep your audience informed about your launch, promotions, and new offerings when they come out. 
• Paid advertising. Invest in targeted ads on platforms like Google Ads or social media to reach a wider audience quickly. 

No matter what strategies you go with, it's important not to skimp on implementation. By building up your target market's anticipation of your launch through social media and various advertising methods, you will be paving the way for a successful launch.

Before launching, you should test every element and feature of your online business to confirm the customer experience is where you want it to be. 

Start by testing your website on various devices (desktop, tablet, and mobile) and browsers to verify compatibility. You should also confirm everything functions, including the navigation and menu items, product pages, payment processor, and other relevant features. Once you’re confident everything works as intended, you’re ready to launch. 

While you won't actually be "cutting the ribbon" the way you might with a physical business, you'll be doing so metaphorically when you make your website live and announce to the world that you're open for business.

This announcement can be made in a variety of ways, including:

• Social media accounts
• Your email list
• Traditional ads

During the launch phase, you will reap the benefits of the work you did during your prelaunch marketing.

Of course, your work will have only just begun, but by going through these eight steps, you will have built a solid foundation for your online business.

Laying the groundwork in this manner means you can devote your time to running and marketing your new business rather than dealing with the various fires that might arise if you've neglected any of these important steps along the way.

There’s arguably never been a better time to start an online business. E-commerce sales are projected to account for over 20% of all retail sales in the U.S. by 2027, compared to less than 15% in 2022. Besides the expected growth, starting an online business comes with numerous benefits, including the following: 

Flexibility

Unlike traditional businesses with fixed hours and locations, an online business allows you to set your own schedule and work anywhere as long as you have an internet connection. This flexibility also extends to your work environment—you can operate from a home office, a coffee shop, or even while traveling. 

Low startup costs

Starting an online business is usually less expensive than opening a physical location, as you don’t necessarily need to pay for rent, renovations, or repairs. With lower overhead costs, you also have more flexibility to allocate resources where they’re needed most, whether that’s building your business website, purchasing software, or padding savings in your business bank account. 

Global reach

With an online presence, you’re not restricted to local customers or traditional business hours. Your website is “open” 24/7, allowing customers from different time zones to visit at their convenience. This also means you can tap into niche markets that you otherwise couldn’t reach locally and expand your customer base. 

Scalability

As your business grows, it’s generally easier to accommodate the increased demand without proportional increases in physical infrastructure or staff. Likewise, if you need to downscale during seasonal fluctuations, you won’t have as many associated expenses or long-term assets to maintain. 

Automation and tools

You can find numerous tools and programs that can handle everyday tasks associated with running your online business, including inventory management, order fulfillment, and customer service, among others. As you become more familiar with the operations and implement these tools, you can improve efficiency while freeing your time for more important matters. 

Depending on your business model and needs, you might consider using some of these tools to help start your online business: 

• All-in-one e-commerce platforms. Platforms like Shopify or Squarespace allow you to build a website, launch an online store, and set up various features all in the same program. 
• Marketing tools. It’s helpful to set up accounts with tools like Google Analytics, Ahrefs, or Mailchimp to track analytics and manage marketing campaigns. 
• Task management tools. The early stages of launching a business can feel overwhelming, so you might use productivity software like Asana or ClickUp to keep your projects on schedule. 

Before investing in any tools for your business, you first need to launch it—and why not handle this step online as well? From filing necessary paperwork in your state to securing a federal tax ID (EIN), we’re here to help you get your business online in just a few clicks. 

How do I build an effective website for my online business?

To build an effective website, focus on user-friendly design, clear navigation, and mobile responsiveness. You can either use a website builder or hire a professional developer for more complex designs. It’s also a good idea to reference successful online business websites you’d like to model after. 

Can you start an online business with no money?

Yes, it’s possible to start an online business with no money , including graphic design, writing, and other freelance services. You can usually find free or low cost online courses to build your skills in these areas. However, expect to invest time and effort to grow your business. 

Can you sell online without a business?

You may be able to sell online without a formal business through marketplaces like Amazon. However, most online businesses must have licenses to operate, so you should check with your county, state, or the Small Business Administration to confirm what you’ll need. 

What challenges of starting an online business should I prepare for?

You should prepare for challenges related to earning customer trust and establishing a name for your business . You may also face technical issues or struggle with scaling operations as you grow. Still, the exact challenges ultimately depend on your business type, strengths, and weaknesses. 

Belle Wong, J.D., contributed to this article.

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How to start an online business

Find out what it takes to start and run an online business. With insights from experts and owners who’ve done it before.

Download guide

What goes into starting an online business?

Starting an online business is different to starting a traditional brick-and-mortar business. Yes, you need an idea, a plan, and a budget. But even those fundamental elements are done differently online.

We surveyed 171 experts who work with online businesses to find out what makes them tick. They told us the idea can be weirder, the plan can be shorter (whoop!), and the budget can be smaller (hooray, again!).

This guide combines their insights with quotes from online business owners and ecommerce consultants so you can see how to start an online business.

• Pros and cons of online business
• Online business ideas
• Writing an ecommerce business plan
• Creating a budget for a digital business
• Finance options for an online business
• Digital marketing 101
• How to set up an online shop, office or app

1. Pros and cons of online business

Xero surveyed small business advisors to see how ecommerce stacks up against traditional brick-and-mortar businesses.

Key findings

The accountants and bookkeepers who completed this survey prepare financial statements for 1,500 US small businesses. We asked them to compare the performance of online businesses vs brick-and-mortar operations. Here’s what they had to say.

• Profitability – 70% say online businesses have a higher net profit margin.
• Resilience – 69% say they’re less likely to fail (and 68% say owners lose less if they do fail).
• Innovation – 69% say they’re more likely to be based on a novel idea.
• Lifestyle – Online business owners are 2.5X more likely to hold down a day job as well.
• Stress – Just 4% say online owners are more stressed (49% say brick-and-mortar owners are).
• Costs – Most say it costs less to start and run (see full report for retail/service breakdown).
• Break even – Most say they break even sooner (see full report for retail/service breakdown).

That makes online look pretty good. So what’s the catch? Well, the experts say there are a few.

Common pitfalls

• Digital marketing – 41% say digital marketing is tricky to figure out.
• Time online – 37% say the quantity of hours spent on social and reviews can be tough.
• Transaction fees – 35% say online transaction fees catch out beginners.
• Website – 33% say businesses struggle to create a genuinely good website.
• Technology – 33% say owners can have a hard time understanding the tech.

The online and brick-and-mortar businesses in this study had comparable revenue so these differences were not likely due to scale. 51 US accountants and bookkeepers participated in the study, with an average of 30 clients each (equating to a collective clientele of 1,500 businesses).

Back to How to start an online business

2. Online business ideas

Online business ideas fall into four broad categories – retail (including those who make their own products), service providers, apps, and content producers. Catch our article on online business ideas for tips on what could work for you.

Making your idea the best it can be

While online businesses generally cost less to start up, our study found they chew through just as much energy and effort as a physical business. You don’t want to waste all that sweat on an idea that could’ve been better. A little research can help you tweak your product or service in just the right way.

Experts’ number one tip for better ideas

We asked business experts for their top tips for online startups. The most common reply was to “define your target market”. In other words – work out which people (or businesses) will end up buying from you. They might be local parents, fitness fanatics, thrill-seekers, restaurants, schools, hairdressers, or something else entirely. Figure this out before starting your online business.

Whoever your target customers are, make everything about them. Make the product or service perfect for that specific user. And pitch your marketing at them, too. One way to get inside their collective heads is to have a chat with a few of them. Ask if they like your idea, your packaging, your price point. While you’re at it, ask who they buy from now and use the opportunity to learn about your competitors’ strengths and weaknesses.

Related articles

• How to come up with online business ideas
• How to do market research
• How to do competitor analysis

3. Writing an ecommerce business plan

Writing a business plan for an ecommerce startup can feel strange to anyone who’s run a brick-and-mortar operation before. You may not need to put in as much detail. In fact, you may not be able to.

Why you don’t need a 20-page plan

Those big, buttoned-down business plans are great if you’re naturally a planner. But most people do them so they have a strong pitch to take to investors and lenders. Online startups don’t cost so much to run, which means you’re less likely to need outside cash. Besides which, institutional investors and lenders don’t generally back ecommerce startups anyway.

That frees you to write a business plan that works for you. It might still be 20 pages long but it doesn’t have to be.

Why you may only need a 1-page plan

When planning how to start your online business, you’ll probably find you don’t have all the information you’d like. Almost 60% of new online business owners struggle to forecast revenue for their first few months (Global eCommerce report, Xero 2019) after starting an online business.

That’s because so much depends on the success of your digital marketing, which is a massive rolling experiment in the early days. You’ll probably try lots of tactics on several digital platforms before you crack it. Only then will you have enough information to forecast sales and revenue.

Because online startups have to launch in the dark and learn on the fly, they tend to go with shorter, more fluid plans. Something that is easier to update as more information comes in.

Shorter plans doesn’t mean no plans

While the planning is dialed back a bit for online startups, it doesn’t go away and nor should it. Working through the steps of a business plan will help you think about your startup from lots of different angles. That process will help you build on your idea and make it better.

Related articles and templates

• Business plan template
• How to write a business plan

4. Creating a budget for a digital business

While it’s hard to estimate income when starting an online business, it’s still a good idea to have a rough budget. You need to know what the venture is going to cost you, and when it might start to pay you back. Accountants and bookkeepers generally agree that online businesses cost less to run, but they also say beginners often overlook some big costs.

3 common ecommerce budgeting mistakes

• 37% of experts say people starting an online business underestimate the cost of a good website: Off-the-shelf templates have made websites so much more affordable but creating a great user experience may require the help of freelancers who know what they’re doing.
• 27% say startups get caught out by digital marketing: Most digital advertising is sold on a cost-per-click basis. You pay for each site visitor. Only about 1 in 50 will buy anything (based on 2% conversion), so things add up quickly.
• 35% say online businesses don’t budget correctly for online transaction fees: When you take an online payment, up to 5% goes to the merchant service provider who processes the transaction. You need to factor that into your pricing.

How to do a budget

List all of your business costs and plot them on a calendar so you know roughly when they’ll hit. Then place some modest sales projections on the same calendar. You will be in the red a lot at the beginning, but that’s how starting a business goes. Just make sure you have a plan for paying bills in the meantime.

Online business consultant, Shahemen Farid of Boobooks Accountants says it will take a while for your long-term budget to become clear. “We suggest clients who are starting an online business go in with three months of working capital and base their forecasts on that first quarter.”

Experts’ pricing tip for online businesses

While online businesses are cheaper to run, they’re not expected to pass those savings onto customers. They can maintain prices similar to brick-and-mortar competitors, which leaves them with more margin between buy and sell prices.

Some of that extra margin will end up paying for things like shipping, which most customers expect to be free . But some will go into the business owner’s pocket, with our study confirming that ecommerce businesses have higher net profit margins.

• How to create a small business budget
• Create a cash flow forecast with this free template
• How to set prices

5. Finance options for an online business

Banks are unlikely to finance an online startup, unless you already have a strong business track record. Fortunately, plenty of people have figured out how to start an online business without that external support.

Lots of online service businesses grow out of small freelancing teams, who don’t have terribly high operating expenses. They can get started with a laptop and a few software subscriptions, which they’re able to pay for out of their own pocket.

Retailers have to fork out more, but they can manage the risks easier than a physical store. They can try a soft launch, with limited inventory, and ramp up only when they find that demand is solid. “You can start an online retail business for 20K now,” says Shaheman Farid of Boobooks Accountants. “So people are increasingly able to self-finance.”

Sources of extra cash

If you still find you need extra money to start your online business, there are still options like:

• credit cards – just be aware that interest rates will be high
• personal loans – you will have to offer something you own as security
• friends and family – they might lend cash or buy in as investors
• angel investors – maybe, just maybe, a friendly industry contact will buy in
• crowdfunding – your idea would need viral potential to excite the crowd
• grants – some cause-driven businesses are eligible for free money
• Guide to finance
• Learn about friends and family loans
• How crowdfunding works

6. Digital marketing 101

In the online world, people don’t walk by your business by chance. You need to earn each and every visit to your website, and only about 2% of those visitors will purchase anything.

If you’re buying all your traffic through pay-per-click ads, costs can spiral out of control. Online business expert, Shaheman Farid says he’s seen failed campaigns chew through thousands of dollars without getting a single sale.

It’s not a unique problem. 41% of accountants and bookkeepers in our study say digital marketing is a big challenge for anyone learning how to start an online business. So how do you avoid catastrophes and give yourself a shot at online success?

The unsatisfying secret to digital marketing

The truth is that there’s no digital marketing playbook that works for every business. You could be doing search marketing through Google, creating articles on LinkedIn, posting videos on YouTube, or telling stories on Insta. Most things won’t work the way you need them to.

There will be heaps of trial and error. You can take some smart guesses, for sure. But you need to try several options at the beginning because results can be wildly unpredictable.

“There’s no telling what will work and what won’t,” says Ben Charlton of Air8 Digital , an agency that helps small businesses navigate the complex world of digital marketing. “You have to experiment. But you can do that without spending a fortune.” Ben’s low-cost tips are in our guide to digital marketing .

How much to budget for digital marketing

Ecommerce consultant Marc McKeown of FortBrave , encourages clients who are starting an online business to keep 40% of their startup budget for marketing. “We’d spend that in the first three months to see what things work and make a plan from there.”

That may sound like a big chunk of money, but remember that digital marketing may be your only source of sales or leads. And that investment is offset by the money you don’t have to spend fitting out a shop or office.

• How to do digital marketing
• How to manage your online reputation
• Simple CRM for small business

7. How to set up an online shop, office, or app

Geography becomes irrelevant when you start an online business. You can sell to customers in other parts of the country or the world. Even people with super niche ideas can scrounge up enough customers from across the internet to make a living from it.

That may explain why 68% of accountants and bookkeepers say digital businesses are more likely to be based on a novel idea. But how do you actually interact and transact over the internet?

Creating an online shop

Retailers can use existing marketplaces like Amazon, Alibaba, Facebook, or dozens of others. It’s a fast and easy way to start because you just drag and drop pictures of your products into the shop and the marketplace processes payments for you. On the downside, you don’t have much control over how your shop looks and you pay a cut from each sale to the marketplace involved.

You can also create your own online shop using off-the-shelf templates from providers like Shopify, Square and BigCommerce. These usually cost you a monthly subscription fee and you will pay a cut on each sale in transaction fees, but you have more flexibility. However, that extra flexibility comes with the potential to make mistakes. Build your shop with care.

Setting up an online office

If you work in professional services, you probably already know how to work remotely. There’s tons of great software for creating, sharing and collaborating on projects. Online businesses have higher net profit margins than their brick-and-mortar equivalents which goes to show those remote working tools are perfectly productive.

Even complex group tasks like brainstorming are thriving online. Michael Yared’s app development agency, Echobind , has been using remote collaboration tools for years and says they’re better than in-person whiteboard sessions. “Digital brainstorming boards allow you to capture ideas from everyone – not just the loudest or highest-paid people in the room. Plus remote working encourages better documentation of your methods because so much information is exchanged in writing.”

Creating an online studio

Olivia Park Coaching delivers online physical and wellbeing training to clients across Asia. Olivia Park attracts customers by sharing free content on social platforms, then signs paying customers to self-serve courses. She also offers one-to-one calls and says the digital approach allows her to help twice as many clients. “It’s enabled me to create more products with different tiers of service.”

Building an app

Got an idea for an app? Of course you do. Now you just need to turn that inspiration into a piece of working software. There are some pitfalls to avoid along the way. We spoke to an app development company to get the lowdown on how apps are made and what they cost.

Find out what they had to say in our article: How to make money from an app

• Two quick ways to sell online (infographic)
• When and how to offer free shipping
• Tips for setting up a remote office
• An intro to online invoicing
• How to bill subscription customers

Go start your online business

Our expert survey found that online businesses are less expensive to run and reach break even faster. They’re also less likely to fail and, in cases where they do fail, their owners lose less of their own money. It’s not risk-free – no business ever is – but it may be lower risk.

So write down your plan. Test your idea and build on it. Then give it a go. You can get free tips and tools for your business journey from Xero’s small business resources .

Get help from an ecommerce pro

You know who knows how to start an online business? Accountants and bookkeepers do. They do this stuff for a living. Find someone to help in our advisor directory.

Find an advisor

Why Xero knows about starting an online business

Millions of small businesses use Xero’s software to run their finances and accounting. About 100,000 accountants and bookkeepers use us too. We asked some of those owners and experts how to start a business, then put their insights into this guide.

Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided.

Download the guides to starting a business

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BUSINESS STRATEGIES

How to start a business in 14 steps: a guide for 2024

• Amanda Bellucco Chatham
• 34 min read

Get started by: Creating a website →  | Getting a domain →

In the words of Steve Jobs, “The only way to do great work is to love what you do.” Starting your own business is one step towards doing work that you love. But from forming an idea to creating a business website , there are several essential steps and questions to consider before you dive in: What problem are you solving? Who is your target audience? What differentiates your product or service from existing offerings? And, most importantly, where exactly do you begin?

This comprehensive guide will walk you through every step of the journey: brainstorming ideas, perfecting your branding, registering your business and more. Use it as your trusted roadmap on how to start a business, empowering you to navigate the exciting world of entrepreneurship with confidence.

Ready to create a business website? Start building yours today .

How to start a business

Brainstorm and refine your business idea

Conduct market and competitor research

Pick a business name

Write up a business plan

Choose a legal structure for your business

Secure business capital and funding

Register your business and make it official

Apply for tax IDs, licenses and permits

Apply for business insurance

Organize your finances

Brand your business

Create a professional business website

Market and promote your business

Build a team

01. Brainstorm and refine your business idea

You might already have a great business idea that you can’t wait to start, or maybe you’re still in the early brainstorming stages of finding your niche. If the latter applies to you, think about what you’re passionate about and what skills you possess. The best business ideas often emerge from your interests and expertise, making it easier to stay motivated and dedicated throughout the journey.

Keep in mind that there are some very real, very unavoidable small business challenges to consider. Most business ideas require money, innovation and time to yield results—some may even come with financial risks. This is true for both brick-and-mortar businesses and online business ideas . That’s why as a first step, you’ll need to refine and test your idea to make sure it’s a viable option. Here are some effective ways to kickstart your brainstorming process:

Be realistic: While it’s important to choose a business idea that’s in line with your passions, it’s also crucial that there’s market demand for your product or service. Ask yourself, is your business idea scalable? Who’s your target market ? Do you have the necessary skills and expertise?

Test your idea in the real world: This can involve anything from a focus group to a small-scale pilot test. Another strategy is to build a landing page , which can help you generate and gauge interest. If you find that your idea doesn’t pique interest, it’s time to reassess. Consider how you can refresh your idea to bring something new to the table, or how you can adapt it to more directly address consumer needs.

Define your business model: As you think about ways to make money from your idea, think about the exact business model that will help you to grow your business in a manageable way. Think: How do you want your business to look a year from now? Two years from now? Five? Is it sustainable?

Popular business ideas to get you started

Dropshipping : Dropshipping is a great low-cost business idea that lets you sell products without needing to manage your own inventory. You simply need an eCommerce website , or a specific dropshipping website and a strong marketing strategy to get started.

Print on demand (POD): Another popular way to make money online , POD involves working with suppliers that print your designs on blank items, such as t-shirts and mugs, and ship the orders on your behalf. This is an effective way to put your own spin on a retail venture and start your own online store .

Freelancing: Freelance artists , writers and creatives can jumpstart their business by creating a portfolio website and monetizing their skills. Take Berlin-based illustrator and animator Rafael Varona for inspiration—his modern, visually engaging Wix website features artwork he’s done for leading companies including Disney, Google and Porsche.

Starting a service business : Service business ideas center around selling your expertise, skills or assistance—such as tutoring, dog walking, personal training or event planning. For inspiration, take a look at Whitehead Weddings + Events . Founder Anna Katherine Whitehead has built an elegant service website that showcases work samples, package offerings and more.

Selling handmade items: If you’ve got a knack for creating homemade jewelry, artwork, décor or clothing, you have a business idea just waiting to launch. Follow the lead of businesses like Tach Clothing , whose online Wix storefront features handmade crocheted clothing inspired by vintage fashion.

Boring businesses : Don't be fooled by the way these business sound, boring means anything but. These ventures are typically businesses that offer products or services that are essential but may not have flashy or attention-grabbing qualities. Think accounting firms, insurance companies, waste management services or industrial manufacturers.

How a successful business owner turned selling handmade items into a $2M business

Six and a half years ago, Amanda Buhse was working a 9-to-5 job as a graphic designer. Her day job was exhausting so Buhse and her best friend, a nurse, decided to meet a few times a week to decompress over a glass of wine and make candles together. The hobby stuck. Buhse eventually turned those evenings melting wax and cutting wicks into a bustling business.

Now she’s the owner and chief creative officer of Coal and Canary , a Canada-based online luxury candle company. Her candles are sold all over North America and have even made it into the glamorous gift bags handed out to VIPs at the Oscar and Grammy Awards.

What started as a passionate side hustle is now a $2M business. You can read more about Amanda’s business story here .

Other business ideas to consider:

Business ideas for teens

Small town business ideas

Part-time business ideas

Scalable business ideas

Family business ideas

Craft business ideas

B2B business ideas

Rental business ideas

Beauty business ideas

Is starting a business worth it?

Many business owners would say, yes. Business ownership can mean profit as well as some degree of financial stability. Moreover, for small business owners it offers the opportunity to escape the confines of a 9-to-5 job that may not bring you happiness or fulfillment.

That said, starting a business isn't without it's share of challenges - from launching a profitable idea, to securing funding, to managing a business, it all takes time, resources and a lot of hard work. Not all businesses succeed. Before launching your business make sure to be very clear about your goals and timeline for achieving them.

More popular business ideas to consider

How to start an online business

How to start a consulting business

How to start a fitness business

How to start a fitness clothing line

How to start a makeup line

How to start a candle business

How to start a clothing business

How to start an online boutique

How to start a t-shirt business

How to start a jewelry business

How to start a subscription box business

How to start a beauty business

How to start a photography business

How to start a food business

How to start an interior design business

How to start a rental property business

How to start a painting business

How to start a gym business

How to start a babysitting business

How to start a plumbing business

How to start a coaching business

How to start a finance business

02. Conduct market and competitor research

When your business is still in its earliest stages, doing market research is critical. This step helps you understand your target audience’s needs and preferences, allowing you to tailor your products or services accordingly. It also enables you to evaluate the competitive landscape, identify market gaps and make informed decisions. All of this increases your chances of success and mitigates risk.

When it comes to consumer behavior, there are two sets of research: primary and secondary.

Primary research: This is the direct study of your target market by researching them firsthand, such as by conducting user interviews or holding focus groups. You’ll want to define who your customers are and further segment your market by age, location, language, spending power or even stage of life (for example, college students, newlyweds or retirees).

Secondary research: This consists of gathering information from external sources. Conduct an online search or reference public agencies like the U.S. Bureau of Labor Statistics as a good starting point. Down the line, you might also find internal data just as useful. You can turn to your own sales reports and see what trends took off right under your nose.

This combination of primary and secondary research can help you create a thorough SWOT analysis , which is an insightful way to measure and evaluate your overall business outlook against your competitors. To do this, create a table with four quadrants, where you'll rank your business’ strengths, weaknesses, opportunities and threats.

Strengths: Identify the areas where your business stands out. Then, turn to your competitors and ask yourself, “How can I do what they do, but better?” Look at the products and services they offer to help you understand what attracts their customers, and use this as inspiration to improve your own business strategy and competitive advantage .

Weaknesses: Be honest with yourself here. Answer this question as directly as you can: What do customers complain about or dislike? This will let you narrow in on one topic at a time, as opposed to tackling something abstract like, “What is wrong within my company?”

Opportunities: Think about your business in terms of growth. Consider different ways to expand and tap into new spaces, like running seasonal events, taking on a green initiative or testing out trends.

Threats: Be cautious of any external factors that can affect your business in a negative way. It can range from market fluctuations to consumers who no longer express interest in your offerings.

Remember to play to your understanding of what a specific audience needs. Identifying a gap in the market, or having an idea to make an existing product is an important part of market research for starting a business.

How one entrepreneur translated her understanding of her target audience into business success

Raquel “Rocky” Harris knows a thing or two about kicking ass. She’s a five-time Muay Thai champion, Team USA gold medalist, Fight Camp trainer (that’s basically the Peloton of boxing) and, most recently, a thriving entrepreneur (see our guide on how to become an entrepreneur ). Harris now uses Wix eCommerce to sell a collection of wellness products to athletes like herself as the founder of Warm Up .

“I was making my own hand sanitizer and thought ‘Why don’t they have sanitizers that kill fungus?’” she says. “There are always breakouts in boxing gyms due to common skin infections like ringworms. Tea tree soap is anti-fungal, so I started adding it to my hand sanitizers, which eventually evolved into my sweat butters.”

She launched her first product line while training clients and creating Wix sites for her colleagues, all while moving across the country to shoot workouts for Fight Camp. You can read more about her business story here .

Is it easy to start a business?

Creating a business doesn't have to be difficult or intimidating. It can start with a simple but strong idea, like Raquel Harris' realization that hand sanitizers would be all the more useful if they killed fungus, especially in boxing rings.

Starting a business does require dedication, hard work and careful planning—there's no way around that. While it may not be easy, per se, with the right mindset, research, resources and tools like Wix, anyone can embark on the entrepreneurial journey. The rewards of building a successful business can truly be fulfilling and worthwhile.

03. Pick a business name

Feeling satisfied with your business idea? The next step is to come up with a business name that will leave a strong first impression on potential clients.

You’ll want a name that’s catchy, memorable and scalable (i.e., is still relevant even if your business expands to new locations, niches or product offerings). If you need a little nudge, Wix’s free business name generator can help you brainstorm some ideas, or you can check out these best company names for further inspiration.

You’ll also want to make sure no one else has trademarked or registered your desired business name, which you can check via the U.S. Trademark Electronic Search System or with the Office of the Secretary of State for the state in which your business is located. And, remember you’ll eventually want to build a website for your business. Because your domain name will most likely be the same as your business name, make sure your desired name is available by doing a domain name search .

Learn more:

Small business name ideas

Tech business name ideas

Craft business name ideas

Clothing brand name ideas

Consulting business names

Marketing business names

eCommerce business names

Beauty business name ideas

Fitness business name ideas

04. Write up a business plan

Another essential step when starting a business is to come up with an organized plan. At its core, a business plan is a document that serves as a roadmap for how to structure, operate and manage your new venture. It serves multiple purposes, like helping to attract investors, earning the trust of banks and outlining the cost of starting your business . You can use a business plan template to get your thoughts on paper.

No matter how you get started, your business plan should include these components:

Executive summary : Give a high-level view of your business proposal or concept. If you were to make a professional elevator pitch (explaining your business in about a minute), you’d be reciting this bit aloud.

Company description: Include your company’s name, the names of your founders, your locations and your mission statement . Your mission statement should include core values, goals and your guarantee to provide clients with quality service or products. Take a look at these powerful mission statement examples to gather inspiration for your own.

Industry analysis: Provide research about your industry, such as small business trends and growth. When writing this section, think about how large your industry is and how it’s expected to evolve. You should also consider who your competitors are, and make note of their strengths and weaknesses.

Customer analysis: Describe your target audience and how you plan to reach them. Clearly state the needs of your customers and specify how your product or service will meet them.

Organization and management: Provide an overview of your business' organization and leadership, encompassing any founders, executives, board members, employees or important stakeholders. Creating a visual representation—like an organizational chart—can assist in presenting your company's structure effectively.

Service or product offerings: Create a list of your existing and upcoming products and services. If you're still developing your business idea, write a concept statement to outline your vision. Additionally, incorporate a proof of concept (POC) to showcase the viability of your idea.

Marketing and sales: Outline how your business concept actually translates into sales. Explain your marketing strategies and tactics, including plans for advertising, promotions, pricing, distribution channels and digital marketing efforts, along with planned consumer touchpoints (website, mobile app, retail store, etc.).

Financial projections: Estimate how much money will be coming in—or share any data around early sales. Investors want to see hard numbers to justify their risk. Include a sales forecast (based on industry and market trends), expenses , sunk costs , overhead costs , anticipated break-even point, expected accounts receivable, an estimated cash flow (derived from your sales forecast and expenses) and expected profits or losses.

Operational plan: Wrap up with an action plan. If you have a team, write down how each member will contribute to achieving your company’s SMART goals and objectives. Answer questions like “Is there a timeline?” and “What are the milestones you wish to accomplish?” For both, think in terms of years and quarters.

How choosing the right business model and establishing a clear business plan helped this online business succeed

Based in Oldbury, right in the heart of England, Andrew Darby, Faye Darby, Craig Pritchard and Terri Pritchard sold their first piece of jewelry in January 2019. Their story began with Wix eCommerce and a little inspiration from their spouses: “Our wives love jewelry, so we thought, ‘Let's do something mid-range and affordable. Nice pieces that last well.’"

For these new entrepreneurs, the key to starting their business off on the right foot was, in their own words, also their biggest challenge, “The biggest challenge was having a business model so to speak—or a blueprint and sticking to that blueprint. Eventually when we found our blueprint, we got ourselves out of trying to sell here, there, and everywhere.”

And for this business, it's worked. As of April 2022, Darby Pritchards had an annual returning customer rate of over 20%. Read more about how they started their business here .

Looking for a business plan for a specific business idea:

How to create a clothing line business plan

How to create a consultant business plan

How to create a photographer business plan

How to create a bookkeeping business plan

How to create a virtual assistant business plan

How to create a real estate business plan

How to create a restaurant business plan

How to create a plumbing business plan

05. Choose a legal structure for your business

While there are different flavors of legal structures, choosing which one will best serve your needs is based on multiple factors, such as how much personal liability you want to have, taxes and business registration requirements. For example, a sole proprietorship is the easiest to file, but has the most personal liability. LLCs relieve you of many personal liabilities, but can come with hefty tax payments.

A great place to start is by reviewing your options via the U.S. Small Business Administration’s business structure breakdown .

The most common types of businesses or business entities in the U.S. include:

Sole proprietorship : This refers to a business owned by one individual who assumes all of its legal responsibility. Profits and losses from the business are reported on the owner's personal income tax return, and the owner is personally liable for any debts or legal issues that may arise, which could potentially put personal assets at risk.

Partnership : In this arrangement, two or more individuals or entities share ownership, responsibilities and profits. The partnership itself does not pay income tax; instead, the profits and losses "pass through" to the partners, who report them on their individual tax returns. Each partner is personally responsible for the debts and obligations of the partnership, which could potentially expose personal assets to business-related risks.

Corporations : This is a legal entity separate from its owners (shareholders) that can conduct business and incur liabilities in its own name. Corporations are subject to corporate income tax on profits, and its shareholders are generally not personally liable for the company's debts and legal obligations. If a corporation distributes dividends to its shareholders, they must pay personal income tax on these amounts. There are different types of corporations with varying legal implications, most notably C-corps and S-corps.

Limited Liability Company (LLC) : LLCs provide the limited liability protection of a corporation while allowing for the flexibility of a partnership. In terms of taxes, an LLC can choose to be taxed as a pass-through entity, where the profits and losses "pass through" to the owners' individual tax returns, or it can elect to be taxed as a corporation.

How do you know which one is right for you? We consulted with Shylene D’Addario, VP, associate general counsel with LegalZoom. Shylene offered the following insight:

"Sole proprietorships, partnerships, corporations and LLCs are the most popular kinds of business structures, according to the IRS. But what type is best for you and why?

A sole proprietorship is best suited to a business owned by an individual or couple that doesn’t have employees or significant contracts with landlords, suppliers or subcontractors.

A business with two or more owners that hasn’t established an entity is treated as a general partnership. General partners typically share the management of the business and its profits and losses but don’t have any protection against liability for their partners’ negligence, misconduct or internal disputes.

Limited Liability Companies (LLCs) provide their owners with protection against liability for company obligations. If your LLC can’t pay its debts or is unable to meet its obligations, only the business assets—and not personal assets—are at risk in a lawsuit. This flexibility and limited liability make LLCs a popular choice for small businesses of all types.

Corporations offer their owners (called 'shareholders') the same liability protection as LLCs. Corporations tend to have somewhat more complex recordkeeping and reporting requirements than LLCs, depending on the state in which you incorporate.

If you have additional questions about what kind of entity may be right for your needs, you can learn more on our website or LegalZoom can connect you with a business lawyer who can help advise you in this process."

Start an LLC with LegalZoom.

Do your research, and compare and contrast the advantages and disadvantages of the different business structures to find the right fit for you. A business lawyer can help advise you in this process, and the IRS’ guide to business structures can assist in evaluating tax implications.

What are the differences between starting a small business and an enterprise?

Starting an enterprise and starting a small business share some similarities but they differ greatly in scale, scope and goals.

Small businesses are typically, as the name suggests, small in scale. They often serve a local or niche market and have a limited number of employees. Enterprises are generally larger in scale, often with a broader geographic reach. They may have multiple locations and serve a larger customer base. Think a small, independent toy shop in a town versus a huge brand like Toys R us.

Small businesses are often owner-operated, where the owner is actively involved in day-to-day operations. Enterprises usually have a more complex ownership structure. They generally have multiple owners, shareholders and a board of directors. The owner's involvement in day-to-day operations can be limited, especially in larger enterprises.

Small businesses tend to offer a narrow range of products or services tailored to a specific customer base. They might focus on providing personalized, local solutions. Enterprises typically have a broader scope, offering a wide range of products or services. They often aim to capture a larger share of the market or diversify their offerings.

While small businesses can grow over time, they might not have aspirations for rapid or significant expansion. The primary goal may be to maintain a steady income or lifestyle. The primary goal of an enterprise is often rapid growth and scaling. They aim to expand their operations, market presence, and profitability.

06. Secure business capital and funding

The most common cause of startup failure is lack of financing (47%), according to a recent survey. Second to that is running out of cash (44%). Clearly, it’s never too early to start thinking about finances. You’ll need both sufficient capital and reliable cash flow to get your business off the ground.

Business funding can take many forms. From applying for grants and loans to reaching out to an angel investor or setting up a fundraising campaign, there are many different strategies here. Here are a few good ways to obtain capital:

Bootstrapping : This involves dipping into your own personal finances to fund your business. In some cases, the benefits of investing your own money may outweigh the challenges of having to depend on outsiders. This allows you to retain greater control over all aspects of your company, though you may face slower growth and potential personal risk.

Crowdfunding: This is a fast and easy way to share your ideas on a wide scale, get feedback and raise money at the same time. When choosing from one of the many crowdfunding sites available, consider the fees, terms and conditions of each, as well as the kind of audience they typically draw.

Small business grants: The biggest benefit of using grant money is that you won’t have to pay it back. A good place to begin looking for grants and eligibility is on the grants for community organizations page of the U.S. Small Business Administration website. Alternatively, you can check out private institutions that offer small business grants, including FedEx and the Second Service Foundation .

Credit cards: When used responsibly, credit cards can be a viable option for funding a new business. It’s advisable to open a business credit card just for this purpose; ideally one with a 0% introductory APR period and a rewards structure so you can earn cash back, credit statements or miles. This can also be a good way to build your business credit score, as long as you make on-time payments and keep a credit utilization of under 30% . You will need strong credit to obtain other types of financing.

Startup business loan : Small businesses can apply for loans from banks and other financial institutions through their offering of business banking services. First, you should know how much you need, and you should be able to demonstrate good reasons for it. Use the financial projections of your business plan to estimate an amount and determine the type of loan you need.

Business line of credit (LOC): This is a flexible loan that behaves similar to a credit card, letting you borrow and repay funds as needed. Business LOCs often have an annual income and time-in-business requirement, but new business owners may be able apply if they’re willing to put up collateral and have a good personal credit score ( over 670 ).

Angel investors: Often, angel investors are found through mutual contacts or even family members. That said, there are hundreds of other active high-net worth individuals who seed startups with their personal money, particularly in the early stages. You can check out Golden Seeds LLC (New York City) or Tech Coast Angels (Los Angeles) as just a few examples of angel investing firms who are involved in venture capital financing.

07. Register your business and make it official

Before you take your business out into the world, you’ll need to complete all the legal and formal paperwork. If you’re establishing a business in the U.S., your location and business structure will determine the steps you’ll need to take to register a business name .

Keep in mind that, according to the SBA , the benefits of registering your business include personal liability protection, legal and trademark protection, and tax benefits—all of which are crucial to the prosperity and expansion of any entrepreneurial operation .

Meanwhile, for those who are seeking to set up a business in the UK or EU , it's essential to familiarize yourself with the different requirements and rules for registering a business , relevant certifications and VAT.

How to start a business by state

How to start a business in Utah

How to start a business in Massachusetts

How to start a business in Oregon

How to start a business in Alabama

How to start a business in Missouri

How to start a business in Illinois

How to start a business in Maryland

How to start a business in Michigan

How to start a business in Connecticut

How to start a business in South Carolina

How to start a business in Tennessee

How to start a business in Minnesota

How to start a business in New York

How to start a business in Pennsylvania

How to start a business in Virginia

How to start a business in Indiana

How to start a business in Washington state

How these co-founders managed to register their business one step at a time

For Andrea Shubert, Co-founder of Strathcona Spirits when it came to registering their new business they found the following crucial:

"Don’t start with a 'no.' We didn’t think the distillery was going to happen because of all the red tape involved, but we kept applying for permits to do this or that. When they said yes, we thought: great, let’s move on to the next thing. The idea that everything is permitted is the best place to start from and just go from there.

And when you get a 'no,' which we definitely have a few times over the last five years, we typically dust ourselves off and continue on until we find our 'yes.'"

08. Apply for tax IDs, licenses and permits

As a registered U.S. business, you’re going to need to obtain your federal and state tax ID numbers , known as your employer identification number (EIN). This is how your business is recognized by the government when it comes to paying taxes on both the state and federal levels. Furthermore, you’ll need a tax ID number to hire employees, open a bank account and apply for relevant business licenses and permits.

Check your local government site to see what types of licenses and permits you might need to apply for. If your company’s activities are regulated by a federal agency, you’ll need a license (selling alcoholic beverages or broadcasting on public radio are two examples). You can review the SBA’s list of business requirements for federal licenses and permits for more information.

Applying for an EIN is free and you can do so online with the IRS’ EIN Assistant tool . That said, tax requirements vary by state. Visit your state’s website to check whether you need to get a state tax ID number to remain compliant. You'll also need to understand which IRS forms are relevant for your business, income statement , tax return process, income tax audit process and corporate tax payments, if any.

Taxes are a major responsibility for business owners, and that responsibility can vary significantly from business to business. According to Sabrina Papini, marketing director of eCommerce and marketplaces at Avalara , "A small business owner might be subjected to various types of taxes depending on their location, industry and business activities." Papini notes that in particular, business owners may be required to pay the following:

Sales tax: If your business sells goods or services to customers within a particular jurisdiction, you might need to collect and remit sales tax. The rate and regulations can vary based on the location and type of product or service sold.

State and local taxes: Depending on your business' location, there could be additional state and local taxes beyond sales tax. These could include business privilege taxes, property taxes, local business license fees and city-specific taxes.

Excise tax: Certain industries that deal with specific goods like alcohol, tobacco, fuel or other regulated products might be subject to excise taxes. These taxes are usually included in the product's price and are paid by the manufacturer, importer or distributor.

International taxes: The company could encounter various international taxes and fees if the business engages in international commerce. These may include value-added tax (VAT), goods and services tax (GST), customs duties or tariffs. If you're a U.S. business operating overseas, or a foreign business operating from the U.S., you should also check for any double taxation liabilities.

Tax considerations should be part of your operational plan from the beginning, Papini emphasizes. "[Using] automated tools, staying informed about tax changes and seeking professional guidance when necessary are critical strategies for managing tax and staying compliant with regulations . These steps will not only help protect your business from legal issues but also contribute to its growth and success."

09. Apply for business insurance

As a new small business owner, obtaining insurance is crucial to protect your venture from unforeseen risks and potential financial liabilities. Business insurance provides a safety net that can shield your assets and help your business stay afloat in case of accidents, lawsuits or other unexpected events.

When applying for insurance, you’ll want to first assess the nature of your business and identify the specific risks it may face. This includes any potential hazards, liabilities related to your products or services, and any potential lawsuits that might arise. Next, consider the coverage types that align with your business needs, such as general liability, professional liability, casualty or property insurance, etc.

A knowledgeable insurance broker can help you navigate the complexities of insurance policies and find the best rates and coverage options that fit your unique circumstances. Some types of insurance you might need to consider include:

Workers' compensation insurance: Mandatory in most states if you have employees, this insurance covers medical expenses and lost wages for employees who suffer work-related injuries or illnesses.

General liability insurance: This provides coverage for third-party bodily injury, property damage and related legal expenses resulting from accidents on your business premises or due to your products or services.

Professional liability insurance: Also known as “errors and omissions insurance,” this policy protects against claims of professional negligence, errors or omissions that may arise from providing professional services or advice.

Property insurance: This policy covers physical assets of the business, such as buildings, equipment, inventory and furniture against damage or loss from events like fire, theft or natural disasters.

Product liability insurance: This type of policy offers coverage for claims arising from injuries or property damage caused by a defective product sold by your business.

Business interruption insurance: If your business operations are interrupted due to a covered event, such as a fire or natural disaster, this will provide compensation for lost income and ongoing expenses.

Employment practices liability insurance (EPLI): An EPLI policy provides coverage for claims related to employment practices issues, such as wrongful termination, discrimination or harassment.

10. Organize your finances

Keeping a business running smoothly demands organized, detailed financials. As you put these systems in place, you’ll want to open a business bank account and consider how you’ll handle your business accounting.

Set up a business bank account

New small businesses should set up a business bank account for several reasons. First and foremost, separating your business finances from your personal finances is crucial for maintaining accurate and organized records. A dedicated business bank account enables you to track income, expenses and profits effectively, simplifying tax preparation and financial reporting.

Additionally, having a business bank account is usually required if you want a business loan or line of credit. It builds credibility with customers, peers and potential investors, as it demonstrates a professional approach to how you operate.

To open a business bank account, you’ll typically need to provide certain documents, including your business registration paperwork, employer identification number (EIN) or Social Security number (SSN). When setting up a business bank account, you’ll want to ask questions to make sure the bank can adequately handle your business needs. Make sure you ask about account fees, transaction limits, access to credit options and integration with financial accounting software to start.

Set up an accounting system

Having a meticulous bookkeeping system in place will help set your business up for success, especially when it comes to tracking expenses, paying taxes, managing invoices or handling payroll. There are a myriad of accounting apps and software options that can help you stay organized in this area, or you can hire a certified public accountant (CPA) to manage this for you.

With Wix, you can keep your books right from within the platform, eliminating the need for additional software and streamlining your workflow. You can manage customer invoices or product inventory directly from your website dashboard, or you can employ a number of accounting and payroll app integrations, such as QuickBooks and EasyTeam .

To fine tune your process, turn to this guide on small business accounting , which covers everything from creating financial statements to planning cash flow statements to managing balance sheets and more.

11. Brand your business

Building a brand is a vital part of understanding how to start a small business and shape a corporate identity . In a nutshell, branding is about creating a consistent voice, set of values and visual identity for your company. This can include everything from logo and brand colors to your company ethos, story and personality.

Brand visuals

When building your brand visuals, there are several key elements and assets you need to create to establish a cohesive visual identity:

Logo: A well-designed logo is the cornerstone of your brand visuals. It should be versatile, memorable and easily recognizable. You can get a professional design in minutes with Wix’s free logo maker .

Color palette: Choose a set of primary and secondary colors that reflect your brand's personality and evoke the desired emotions.

Typography: Select fonts that align with your brand's tone and are easy to read across different mediums.

Imagery: Decide on the type of images or illustrations that best represent your brand. This could include photography, illustrations or graphics.

Iconography: Create a set of custom icons or symbols that can be used consistently throughout your branding materials.

Website design: Ensure that your brand visuals and colors are integrated into your site design, including buttons, banners and overall layout.

Print materials: Consider how your brand visuals will translate to print materials like business cards, brochures and packaging. Not sure how to design a business card ? The Wix Business Card Maker can help you create a professional design in just six steps.

Email: Creating a business email takes just a handful of steps, and you can get a custom business email with Wix . Develop branded templates to maintain consistency in your online communications.

Brand story

According to Sitecore’s 2022 Brand Authenticity report, 70% of consumers want brands to connect with them on a more personal level. This is where your brand story comes into play.

Building a brand story is all about creating a compelling and authentic narrative that resonates with your target audience. Yaya Aaronsohn, head of brand maker at Wix, explains further. "At its core, branding hinges on trust—think of it as a relationship between two individuals: the customer and the brand, which represents the business. Within this relationship, authenticity plays a critical role. It builds trust and creates emotional bonds. It fosters consistency, engagement and reduces reputation risks."

A well-defined brand story can help you forge an emotional connection with customers, and should touch on your:

Origin story: Share the backstory of how and why your brand was created, including the challenges and inspirations that led to its inception.

Founder's journey: If applicable, humanize the brand by sharing the founder's personal journey and connection to the business.

Brand purpose: Clearly articulate the reason your brand exists, its core mission and the problem it aims to solve for its customers.

Brand values: Identify the guiding principles and values that drive your brand's decision-making and actions.

Evolution: Address how your brand has evolved over time and demonstrate your commitment to continuous improvement.

Brand voice

Brand voice establishes a consistent tone that reflects your personality and communication style. It further helps customers relate to the face behind the brand, which can translate directly to sales.

Your brand voice should remain consistent across all channels to reinforce your identity. Some key elements to include are:

Persona: Identify how you want to be perceived by your target audience and craft a tone that supports that identity.

Language: Use language that aligns with your chosen persona, such as authoritative, knowledgeable, down to earth or humorous.

Communication strategy: Set clear communication standards for how you’ll respond to customer comments, reviews, emails or phone calls.

12. Create a professional business website

Building a strong website and setting goals for your website is an absolute must when starting a business. For most prospective customers, investors and partners, your website will be their introduction to your business. It's a vital opportunity for you to create a positive first impression of your brand.

Expert advice from Amanda Buhse, Owner and Chief Creative Officer of Coal and Canary

"Something that I always heard growing up was that you could be the smallest fish in the sea, but if you have a professional website and branding, people will take you seriously. When I sent my website to potential retailers early on, we were making seven candles at a time out of my small kitchen. I think it goes to show that when you have a professional brand, the goals and dreams that you have are limitless."

(Coal and Canary now produces more than 1,0000 hand-poured candles, a day from their 10,000 square foot warehouse.)

Learning how to make a business website is simple and doable for people of all skill levels. Follow the steps outlined below to get your online presence off the ground.

Ready to launch? Build a beautiful business website or eCommerce website today.

Find a business website template

Website builders make it easy to create a professional, well-designed website with a few clicks of the mouse. Wix offers more than 800 business templates , including more than 500 online store templates , encompassing everything from finance and fashion to crafts and consulting (and beyond).

To begin, simply choose a template and customize it to meet your needs. Alternatively, you can utilize Wix’s AI website builder tool, which translates information about your design and layout preferences into a professional website tailor-made to your needs—all in a matter of minutes.

If you need more inspiration, check out the best business websites of the past year.

Customize your tools and features

With the foundation of your website up and running, it’s time to fine-tune which tools and integrations you’ll use to help run your business.

Wix offers business owners a full assortment of native software solutions and built-in features that transform your site dashboard into a one-stop-shop for day-to-day operations. You can collect payments online with Wix Payments or Wix Point of Sale (POS) ; manage incoming payments with Wix Invoices ; schedule classes, workshops and appointments with Wix Bookings ; and even sell tickets with Wix Events & Tickets .

The Wix App Market offers hundreds of other third-party integrations that can help you manage payroll, expense tracking and more.

Choose a web host and domain name

After you’ve customized your template, you’re ready to move on to the next step: flipping the switch so that your site is visible to the public. This is a two-fold process.

First, you’ll need to pick a web hosting provider. Basically, this is just a tool that stores your website’s files so that they’re viewable online. Wix is the leading web hosting platform for small businesses , and it offers free website hosting that’s protected and reliable—complete with 24/7 security monitoring and integrated SSL certificates to keep your users safe.

Once you’ve selected a web host, you’ll need to connect your registered domain name to a hosting server. It will take a matter of minutes, but rest assured that when you purchase your website domain with Wix, you’ll also gain access to domain security and full customer support.

Optimize your business website for SEO

When it comes to starting a business online, it’s essential to have some basic knowledge of search engine optimization (SEO). SEO is the process of optimizing web content to improve your site’s ranking for searches of specific keywords. Rebecca Tomasis, SEO expert for Wix Blogs, explains further. "The higher you rank in search, and the more keywords you rank for—the greater your visibility, traffic and potential for conversions or sales."

For example, if you sell organic baby items, you want to integrate exact phrases, like “eco baby products” and “natural baby toys,” into your site content. This improves your chances of showing up in search results when people type those phrases into the search bar.

You can use keyword research tools such as Google Keyword Planner, Ahrefs or Semrush (which has native integration with Wix ) to find terms to incorporate into your web content. You can also use the Wix SEO Hub as a resource for all things related to learning SEO.

Your overall SEO strategy should include the following:

Technical SEO: "Technical [SEO] involves elements such as your site speed, core web vitals, the site hierarchy and structure and navigation," Tomasis details. In other words, your website should, on a technical level, be responsive, quick to load (including on mobile) and easy for search engines to crawl. You should avoid things like dead links, duplicate content and large, slow-loading media files that can impact the user experience.

On-page optimization: Optimize your website's individual pages for the targeted keywords you’ve identified. Place the primary keyword in the page title, meta description, headings and content naturally.

High-quality content: Create high-quality, informative and engaging content that addresses the needs of your target audience. If you have a blog, well-written articles attract visitors and encourage them to spend more time on your site, signaling search engines about its relevance. "Make sure your content is helpful and answers the intent behind the search term as directly and as clearly as possible," says Tomasis. "Everything about the article—its structure, its data, its headings—should be optimized to meet the intent of the user searching."

Mobile-friendly design: Ensure your website is responsive and mobile-friendly. With the increasing number of mobile users, mobile optimization is crucial for SEO and user experience.

Local SEO: If your business serves a local audience, optimize for local SEO. Claim and optimize your Google My Business listing, ensure consistent NAP (name, address, phone) information across the web and encourage customer reviews.

13. Market and promote your business

Once you’ve launched your business and published your website, you can start building a small business marketing strategy that fuels business growth . A solid marketing strategy is essential for bringing in customers and taking your business to the next level. As Erin Shea, Senior Director of North America Marketing for VistaPrint shares, "Customers are the backbone of any successful small business and effective marketing is one of the best ways to build and sustain your community". According to Erin,

“Whether you’re engaging customers online or offline—remember that consistency is worth its weight in gold. A cohesive look to your marketing inspires confidence in your professionalism, builds credibility and strengthens customer rapport.”

Check out more of VistaPrint's 2024 marketing trends to help with your new business efforts.

Here are some of the most common marketing strategies to consider:

Paid advertising: By leveraging targeted advertisements, small businesses can reach a vast audience of potential customers who are actively searching for products or services related to their industry. Google Ads are particularly popular, letting businesses bid on relevant keywords, ensuring their ads appear prominently in search engine results. Wix users can manage Google Ad campaigns from their site dashboard, leaving one less external platform to worry about.

Social media marketing: Marketing on social media brings you massive exposure from diverse groups of people. Pick a platform that your target audience uses and maintain an active presence there. You can also implement paid social media marketing; for example, Wix users can boost sales with fully integrated Facebook and Instagram ads directly from their website builder.

Email marketing: A highly effective tactic, email marketing can promote your brand and build engagement . Using this method, you can reach customers directly, build a loyalty program and customize messages based on their individual interests. Wix users have access to a free email marketing tool with customizable templates, simple editing interface and advanced analytics.

Content marketing: This involves crafting and sharing valuable and relevant content in order to draw in your target audience. It can be done in a variety of ways, including publishing a blog, creating a podcast or making a YouTube channel. Use any of these outlets to share business updates, distribute relevant industry related news and build connections with potential customers.

Word of mouth: Positive word of mouth can give your brand's reputation and credibility a boost, increasing customer loyalty and customer acquisition. It’s a cost-effective strategy that can create a ripple effect, reaching a broader audience and generating organic growth for businesses.

Bear in mind that finding the right marketing strategy may take some time, experimentation and patience. But, Erin notes, consistency is key: "Whether you’re engaging customers online or offline, remember that consistency is worth its weight in gold. Even if you’re just starting out, try experimenting with different marketing tactics to see what works. As your sales grow, direct a greater portion of your revenue for your marketing budget and keep building.”

14. Build a team

As your business grows, it may be difficult for you to play multiple roles—which is where hiring employees and delegating tasks comes in. Even if you decide not to hire in-house staff, you may find yourself needing extra assistance from freelancers or independent contractors.

Read also: Human resources guide

When you begin the hiring process, factor in your budget, your needs and the company culture you want to portray. Creating a well-defined vision statement will help you find the right people to satisfy all of these requirements.

There are many effective ways to source talent for your team. A few ideas to get you started:

Online job platforms: Websites like Indeed, LinkedIn and Glassdoor offer job posting services where you can find potential team members.

Local job boards: Many communities have local job boards or websites where businesses can post job openings to attract candidates from the area.

College career centers: Contact career centers at local colleges and universities to connect with talented students or recent graduates seeking employment opportunities.

Networking events: Attend industry-specific business networking events or job fairs to meet potential candidates face-to-face and discuss job opportunities.

Social media: Utilize social media channels like Facebook, X (formerly Twitter) and Instagram to reach out to a broader audience and attract job seekers.

Freelance platforms: Websites like Upwork, Freelancer and Fiverr offer access to freelancers who can work on specific projects or provide specialized skills.

Industry-specific forums or groups: Join online forums or social media groups dedicated to a particular industry to discover talented professionals interested in relevant job opportunities.

How to start a business FAQ

How do you start a business as a beginner.

To start a business as a beginner, follow these essential 14 steps:

How much money do you usually need to start a business?

How do you get money to start a business, do you need a business degree to start a business, what do you need to start a business, can you start a business with no money, how to start a business online, how to start a business as a teenager, how to start a business as a student.

LegalZoom is a partner of Wix.

Related Posts

How to register a business name in 3 ways

How to name a business: 10 tips for getting it right

How to write a business plan in 7 easy to follow steps

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9 Business Plan Examples to Inspire Your Own (2024)

Need support creating your business plan? Check out these business plan examples for inspiration and guidance.

Any aspiring entrepreneur researching how to start a business will likely be advised to write a business plan. But few resources provide business plan examples to really guide you through writing one of your own.

Here are some real-world and illustrative business plan examples to help you craft your business plan .

Business plan format: 9 examples

The business plan examples in this article follow this template:

• Executive summary
• Company description
• Market analysis
• Products and services
• Marketing plan
• Logistics and operations plan
• Financial plan
• Customer segmentation

1. Executive summary

Your executive summary is a page that gives a high-level overview of the rest of your business plan. While it appears at the beginning, it’s easiest to write this section last, as there are details further in the report you’ll need to include here.

In this free business plan template , the executive summary is four paragraphs and takes a little over half a page. It clearly and efficiently communicates what the business does and what it plans to do, including its business model and target customers.

2. Company description

You might repurpose your company description elsewhere, like on your About page , social media profile pages, or other properties that require a boilerplate description of your small business.

Soap brand ORRIS has a blurb on its About page that could easily be repurposed for the company description section of its business plan.

You can also go more in-depth with your company overview and include the following sections, like in this business plan example for Paw Print Post:

Business structure

This section outlines how you registered your business —as an LLC , sole proprietorship, corporation, or other business type : “Paw Print Post will operate as a sole proprietorship run by the owner, Jane Matthews.”

Nature of the business

“Paw Print Post sells unique, one-of-a-kind digitally printed cards that are customized with a pet’s unique paw prints.”

“Paw Print Post operates primarily in the pet industry and sells goods that could also be categorized as part of the greeting card industry.”

Background information

“Jane Matthews, the founder of Paw Print Post, has a long history in the pet industry and working with animals, and was recently trained as a graphic designer. She’s combining those two loves to capture a niche in the market: unique greeting cards customized with a pet’s paw prints, without needing to resort to the traditional (and messy) options of casting your pet’s prints in plaster or using pet-safe ink to have them stamp their ’signature.’”

Business objectives

“Jane will have Paw Print Post ready to launch at the Big Important Pet Expo in Toronto to get the word out among industry players and consumers alike. After two years in business, Jane aims to drive $150,000 in annual revenue from the sale of Paw Print Post’s signature greeting cards and to have expanded into two new product categories.”

“Jane Matthews is the sole full-time employee of Paw Print Post but hires contractors as needed to support her workflow and fill gaps in her skill set. Notably, Paw Print Post has a standing contract for five hours a week of virtual assistant support with Virtual Assistants Pro.”

Your mission statement may also make an appearance here. Passionfruit shares its mission statement on its company website, and it would also work well in its example business plan.

3. Market analysis

The market analysis consists of research about supply and demand , your target demographics, industry trends, and the competitive landscape. You might run a SWOT analysis and include that in your business plan. 

Here’s an example SWOT analysis for an online tailored-shirt business:

You’ll also want to do a competitive analysis as part of the market research component of your business plan. This will tell you which businesses you’re up against and give you ideas on how to differentiate your brand. A broad competitive analysis might include:

• Target customers
• Unique value proposition , or what sets the products apart
• Sales pitch
• Price points for products
• Shipping policy

4. Products and services

This section of your business plan describes your offerings—which products and services do you sell to your customers? Here’s an example for Paw Print Post that explains its line of custom greeting cards, along with details on what makes its products unique.

5. Marketing plan

It’s always a good idea to develop a marketing plan before you launch your business. Your marketing plan shows how you’ll get the word out about your business, and it’s an essential component of your business plan as well.

The Paw Print Post focuses on four Ps: price, product, promotion, and place. However, you can take a different approach with your marketing plan. Maybe you can pull from your existing marketing strategy , or maybe you break it down by the different marketing channels. Whatever approach you take, your marketing plan should describe how you intend to promote your business and offerings to potential customers.

6. Logistics and operations plan

The Paw Print Post example considered suppliers, production, facilities, equipment, shipping and fulfillment, and inventory. This includes any raw materials needed to produce the products.

7. Financial plan

The financial plan provides a breakdown of sales, revenue, profit, expenses, and other relevant financial metrics related to funding and profiting from your business.

Ecommerce brand Nature’s Candy’s financial plan breaks down predicted revenue, expenses, and net profit in graphs.

It then dives deeper into the financials to include:

• Funding needs
• Projected profit-and-loss statement
• Projected balance sheet
• Projected cash-flow statement

You can use a financial plan spreadsheet to build your own financial statements, including income statement, balance sheet, and cash-flow statement.

8. Customer segmentation

Customer segmentation means dividing your target market into groups based on specific characteristics. These characteristics can be demographics, psychographics, behavior, or geography. Your business plan will provide detailed information on each segment, like its size and growth potential, so you can show why they are valuable to your business. 

Airsign , an eco-friendly vacuum cleaner company, faced the challenge of building a sustainable business model in the competitive home appliance market. They identified three key customer personas to target:

• Design-oriented urban dwellers
• Millennials moving to suburbs
• Older consumers seeking high-quality appliances

The company utilized Shopify’s customer segmentation tools to gain insights and take action to target them. Airsign created targeted segments for specific marketing initiatives.

Put your customer data to work with Shopify’s customer segmentation

Shopify’s built-in segmentation tools help you discover insights about your customers, build segments as targeted as your marketing plans with filters based on your customers’ demographic and behavioral data, and drive sales with timely and personalized emails.

9. Appendix

The appendix provides in-depth data, research, or documentation that supports the claims and projections made in the main business plan. It includes things like market research, finance, résumés, product specs, and legal documents. 

Readers can access detailed info in the appendix, but the main plan stays focused and easy to read. Here’s an example from a fictional clothing brand called Bloom:

Appendix: Bloom Business Plan

Types of business plans, and what to include for each

This lean business plan is meant to be high level and easy to understand at a glance. You’ll want to include all of the same sections in one-page business plan, but make sure they’re truncated and summarized:

• Executive summary: truncated
• Market analysis: summarized
• Products and services: summarized
• Marketing plan: summarized
• Logistics and operations plan: summarized
• Financials: summarized

A startup business plan is for a new business. Typically, these plans are developed and shared to secure funding . As such, there’s a bigger focus on the financials, as well as on other sections that determine viability of your business idea—market research, for example:

• Market analysis: in-depth
• Financials: in-depth

Your internal business plan is meant to keep your team on the same page and aligned toward the same goal:

A strategic, or growth, business plan is a big-picture, long-term look at your business. As such, the forecasts tend to look further into the future, and growth and revenue goals may be higher. Essentially, you want to use all the sections you would in a normal business plan and build upon each:

• Market analysis: comprehensive outlook
• Products and services: for launch and expansion
• Marketing plan: comprehensive outlook
• Logistics and operations plan: comprehensive outlook
• Financials: comprehensive outlook

Feasibility

Your feasibility business plan is sort of a pre-business plan—many refer to it as simply a feasibility study. This plan essentially lays the groundwork and validates that it’s worth the effort to make a full business plan for your idea. As such, it’s mostly centered around research:

Nonprofit business plans are used to attract donors, grants, and partnerships. They focus on what their mission is, how they measure success, and how they get funded. You’ll want to include the following sections in addition to a traditional business plan:

• Organization description
• Need statement
• Programs and services
• Fundraising plan
• Partnerships and collaborations
• Impact measurement

Set yourself up for success as a business owner

Building a good business plan serves as a roadmap you can use for your ecommerce business at launch and as you reach each of your business goals. Business plans create accountability for entrepreneurs and synergy among teams, regardless of your business model .

Kickstart your ecommerce business and set yourself up for success with an intentional business planning process—and with the sample business plans above to guide your own path.

Business plan examples FAQ

How do i write a simple business plan.

To write a simple business plan, begin with an executive summary that outlines your business and your plans. Follow this with sections detailing your company description, market analysis, organization and management structure, product or service, marketing and sales strategy, and financial projections. Each section should be concise and clearly illustrate your strategies and goals.

What is the best format to write a business plan?

The best business plan format presents your plan in a clear, organized manner, making it easier for potential investors to understand your business model and goals. Always begin with the executive summary and end with financial information or appendices for any additional data.

What are the 4 key elements of a business plan?

• Executive summary: A concise overview of the company’s mission, goals, target audience, and financial objectives.
• Business description: A description of the company’s purpose, operations, products and services, target markets, and competitive landscape.
• Market analysis: An analysis of the industry, market trends, potential customers, and competitors.
• Financial plan: A detailed description of the company’s financial forecasts and strategies.

What are the 3 main points of a business plan?

• Concept: Your concept should explain the purpose of your business and provide an overall summary of what you intend to accomplish.
• Contents: Your content should include details about the products and services you provide, your target market, and your competition.
• Cash flow: Your cash flow section should include information about your expected cash inflows and outflows, such as capital investments, operating costs, and revenue projections.

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How to start an online business

Our experts

Written and reviewed by:.

Startups.co.uk is reader supported – we may earn a commission from our recommendations, at no extra cost to you and without impacting our editorial impartiality.

It seems like everyone is starting an online business these days. Websites are cheap and can be run from home. Ecommerce sales are overtaking in-person. Plus, with business rates rising, the advantage of having an online-only business over a bricks and mortar site is clear.

That said, there are still unique challenges that an online company faces in 2024. As the internet continues to evolve, fraud is on the up. Standing out in a sea of global competitors is also a challenge – especially given how high today’s customer expectations are for instant service and gratification.

From conducting market research to launching social channels and dealing with pesky regulations, we’ll take you through every step of your online business journey and help you get started with ease. Keen to get your venture going? Read on to find out how to start an online business.

How to start an online business in seven steps:

1. conduct market research, 2. choose your online business model, 3. build your website, 4. fill your site with optimised copy, 5. comply with online business legal regulations, 6. launch social media channels, 7. attract traffic to your online business.

If you’re looking to set up an ecommerce business on a budget, we’d recommend our top pick of free ecommerce website builder Square Online . Its £0/month plan allows you to sell unlimited products completely free of charge – which should help you reduce your set-up and running costs considerably!

Come up with an online business idea

If you’re reading this, it’s likely that you’ve already come up with an idea for your online business. However, if you’re still in need of inspiration, your first step should be to try looking for a need.

Ask family, friends, peers, and forums whether there are any services, products or content that they’d love to be able to access on the internet, but haven’t been able to find.

Similarly, you should think about your own experiences. Has there ever been a time where you’d searched for something online, but hadn’t come across a good enough result?

Research and test the market

Before committing to investing time and money into your idea, you’ll want to know that it’s got the potential to be successful.

To help refine your idea and understand its potential to do well, carry out the following market research techniques:

1. Carry out a competitor analysis

Research all the businesses that could be considered competitors. Make note of how they work, what they’re doing, how well they’re doing, and who their customers are.

This will give you an idea of who your target customers could be – and will get you thinking about how you might do things better than your competitors.

2. Define your target audience

Understanding which internet users you should be targeting will help you to make important decisions about the way your website works, looks and feels. Do they have a particular age, income bracket, gender, profession, interest or hobby?

Our dedicated guide to calculating the size of your target market will take you through all the ins and outs of this process.

3. Seek feedback on your idea

Ask members of your target audience what they think of your idea, whether they’d visit your site, and how you might improve it.

You can ask people you know (though they must be people who’ll be absolutely honest in their feedback), or run focus groups and/or online questionnaires.

Expert Insight – Gina Farran, Glaize

Gina Farran , the founder of disruptive nailcare startup Glaize, notes that, while it’s easy to get carried away with the romance of an idea, make sure you actually consider what the realities of running your day-to-day business will be:

“We all see the noise on social media about the glamorous life of a founder and what being a “girl boss” means.

“However, while I love what I do, I can honestly say that there is truly nothing glamorous about my life at the moment

“In fact, on most days, I’m covered in sticky nail gels while wearing a hoodie and thermal socks in an archway in Camberwell.

So make sure you don’t start a business for the wrong reasons – especially if you’re a female founder.”

Traffic:  The users visiting a particular website. The more traffic, the better!

Sessions:  Individual visits that have been paid to a particular web page. Traffic tends to be measured in sessions, with a higher number of sessions indicating more traffic.

Having established what your online business is going to be all about, you’re now able to think about how you’re going to make money from it.

If you’re starting an online shop or otherwise selling products, downloads or services on your site, you’ll operate on an  ecommerce business model , making revenue from sales.

• If you’re starting your own ecommerce website, take a look at our step-by-step guide to starting an ecommerce business
• If you’re interested in going down the dropshipping route, the above will still be helpful, but make sure you also pick one of the best UK dropshipping suppliers to integrate with whichever ecommece platform you want to use

However, if your website is to have a different purpose – for example, to provide on-site entertainment or informational resources to visitors – there are three main ways to go about monetising it:

• Advertising. Businesses pay you to advertise on your site (usually via visual ads or sponsored content). The more traffic you attract, the more you can charge clients. The content on such websites tends to be free for customers to access.
• Subscription . These sites tend to be ad-free, and instead make money by having the customer pay a one-off charge or a regular subscription fee in order to access the online service or website’s content.
• Fremium . This business model involves giving the customer access to a basic version of your online service for free, but asking that they pay for additional premium features and privileges.

The model that works best for you will depend on what your online business is doing, and what you aim to achieve with it – though you can, of course, base your site around a combination of these.

At Startups.co.uk, we’re here to help small UK businesses to get started, grow and succeed. We have helpful resources for helping new businesses get off the ground – you can use the tool below to get started today.

What Does Your Business Need Help With?

While you might imagine this to be a massive technological undertaking, building a website can actually be pretty simple.

Plus, it’s unlikely to break the bank – domain names tend to cost less than £10 per year, while many website builders can be paid for with manageable monthly subscriptions.

There are three main ways to go about getting a website up and running:

• Build it yourself

Of course, this is hard work, and you’ll need all the right coding knowledge – but it’ll save you money and ensure you keep full control of your website. If you go down this route, you’ll need a domain name and hosting provider.

We’d highly recommend Bluehost; a highly affordable hosting option for almost all kinds of websites. Or if you want to compare more hosting services, check out our rundown of the best small business hosting providers.

• Use a website builder.

Simple to use, many of these tools will take you through the entire website building process, from registering a domain name to designing your site’s layout using templates or drag-and-drop tools.

• Hire a developer

This is a good option if you’d like the guidance of an expert, although it may mean you’ll have to rely on them for fixes whenever something goes wrong or needs to be changed. Costs vary – top developers will be expensive, but you might find a student or graduate who’s willing to charge a low rate in exchange for the experience.

That said, finding accurate pricing information online can be tricky – but that’s where Startups can help. Use our web design price comparison tool to receive accurate quotes and pricing from top UK agencies that are tailored to your needs.

• Still unsure which option is best for building your site? Take our quiz!

Find your ideal web building solution in 2 minutes – our expert Grow Online team has developed this free website quiz that tells you which route best fits your circumstances (i.e. based on your budget, time, coding skills, etc.)

For much more detail on setting up a website, including the steps to take and the costs involved, take a look at our comprehensive guide on how to create a website  with either a web builder, web design service, or yourself with a hosting provider!

Visit this page for a full guide to the best website builders  available for small business users.

Expert Insight – Rachel Watkyn, Aire

When it comes to online businesses, Rachel Watkyn has truly been there, done that, and got the T-shirt. After triumphing on Dragon’s Den, she grew her SME specialist packaging Tiny Box Company to £12m turnover and now, she’s at it again, launching sustainable activewear brand Aire. She told Startups that, once you’ve launched your website, the real work begins:

“ The biggest mistake start-ups make is they build a website, and then just assume that the traffic will follow .

“When you first build your website, you have to assume that the site is positioned in the backend of some industrial estate with no passing footfall, because that is the reality until you become known.

“It takes constant effort and work to let people know where your fantastic site is, and years of hard graft to become positioned on the equivalent of Oxford Street.”

Whether the purpose of your website is to provide users with entertaining or informational content, share information about your offline business, sell products, or do something else, the written copy on your site will need to:

• Be well-written, without unprofessional errors
• Clearly explain, and inspire interest in, what you’re doing or selling
• Answer what the user has come to your website/this particular page to find out
• Be fully primed for SEO

This should apply to any of the written content you might have, from ‘about us’ pages to product information to full-blown articles.

Jargon buster

SEO:  Search Engine Optimisation – employing techniques that make your copy rank higher on Google search results pages. The ultimate aim is to have your page appear at the top of the list when a particularly valuable and relevant phrase is searched.

Key SEO techniques include:

• Smoothly incorporating (not cramming) relevant high-volume search terms into your website copy. Free keyword research tools can help you with this.
• Gaining backlinks – having quality publications write about and link back to your website. A PR or outreach professional can help here – see  section seven  for more on this.
• Ensuring the user experience on your site is fast, smooth and clean. This is something you should always keep in mind while building your website.

Remember, Google rewards relevance, so keep your content readable and useful first and foremost.

Consider including a blog

If your business is doing something that’s not naturally heavy on written copy – if it’s an online shop, for example – it could be worth including a blog in which you (or guest writers) write and share articles about your business, or related subjects.

For example, if your online business sells pet collars, you might choose to run a blog about caring for animals alongside it.

A blog section could benefit your website in a number of ways:

• Quality blog posts show that you know your stuff, enhancing your reputation in the sector
• Blog posts provide more content to be picked up and listed by search engines
• Blogs can keep customers on your website for longer
• Blogs provide an opportunity to talk about your products or services in a less salesy way

Expert Insight – James Badgett, Angel Investment Network

James Badgett is the co-founder of the Angel Investment Network, a website that connects entrepreneurs with angel investors, and knows firsthand just how important SEO is for online businesses:

“Organic discovery is critical early on before you have an established customer base and don’t want to invest in paid ads.

“In a world where Google’s algorithm reigns supreme, SEO needs to be one of your foundational building blocks .

“Take the time to ensure your site is optimised for key terms your audience are interested in. At our company, we have really prioritised key search terms for startups looking for investment across multiple territories – and have built this into the infrastructure of our site to ensure we rank highly.

“This also needs to be flexible and dynamic so you can adapt to changing trends in search behaviour.”

As an online business, there are several legal regulations you’ll need to comply with – that is, if you want to avoid being prosecuted…

General Data Protection Regulation (GDPR)

Having come into effect in May 2018, GDPR gives consumers more control over their personal data, and says businesses must be entirely honest and consensual in their use of data.

Under GDPR, online businesses must ask for explicit consent before processing customers’ data. They must also be transparent about how they will use it, give customers the right to access the data a business holds about them, and comply with requests to have it removed.

And this is a regulation with real teeth – as the VinciWorks guide to GDPR  points out, the likes of Amazon, WhatsApp and Grindr have all received big GDPR  fines in the last few years.

It also remains to be seen exactly how the UK leaving the European Union will affect data protection regulations. A government consultation on overhauling GDPR was concluded at the end of last year, and the UK is keen to develop a new regulation that balances privacy and business innovation.

Even if this does happen, you may have to still follow GDPR if you collect data from non-UK custoners.

Read more about the current regulations, and how they might benefit your business, in our GDPR guide .

Privacy and Electronic Communications (EC Directive) Regulations 2003

These regulations concern electronic marketing and also address the use of cookies (data files which enable website owners to track what users are doing), and prevent them from being used for illegitimate .

If your site uses cookies, you must:

• Inform website visitors that you’re using cookies
• Tell users how to turn your website’s cookies off
• Ensure your privacy policy explains how cookies are being used

Odds are that you’ve visited a website since 2012 – in which case you’ll have encountered a pop-up informing you that cookies are in use.

You can install a ‘Cookie Law’ plugin to make sure this happens on your own website, and some web builders like Wix have this built into their platforms so all you need to do is click to enable the cookie banner that lets users accept or opt out.

The Electronic Commerce (EC Directive) Regulations 2002

This is an absolutely crucial regulation for any online business, and concerns the way in which online companies communicate with their customers.

Under this legislation, if you’re selling something online, you must:

• Display your business’ name and address, contact details, email address, company registration number and VAT number on your website
• Make it easy for users to read your terms and conditions
• Always be clear about prices, taxes and delivery fees, and the terms and conditions of special offers
• Confirm every order by email – you can set up an automated email response to ensure this happens
• Make it clear that all marketing emails and/or unsolicited emails that you send are clearly identified as such
• Make sure the sender of any communication sent by your company is identified

To learn more about exactly what is and isn’t covered by these regulations, check out legislation.gov.uk’s very handy guide to The Electronic Commerce (EC Directive) Regulations 2002 .

You might also want to read our step-by-step guide on how to create a business email .

Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013

These regulations came into force in June 2014 and replaced The Consumer Protection (Distance Selling) Regulations 2000.

They cover B2C (business to consumer, rather than business to business) dealings, and specifically address how the rights of your customers are protected .

The primary tenet of this legislation focuses on returns. It states that online businesses must give customers a 14-day period in which they’re able to cancel or return orders (of course, this excludes downloads and perishable goods). Returns must be met with a refund.

These regulations also demand that you give transparent information about the products or services you’re selling, your VAT, and your postage and packaging costs. Basically, your customers need to know exactly what they’re paying for and how to get in touch if there are any problems.

Although it’s written from a customer rather than business perspective, Which?’s Consumer Contracts Regulations guide is full of useful info on these crucial regulations.

Nowadays, it’s almost unheard of for a business – of any size – to not have any kind of social media presence.

Essentially a free marketing tool, social media has millions of daily users across the globe. This means, there are plenty of opportunities to get your business in front of potential customers on these platforms.

Of course, you don’t have to launch on every platform going. But it’s worth trying them all out to see what works best for you, and then investing more time into the ones which attract the most engagement (such as followers, likes, comments, shares, etc).

You can find advice on using certain social media channels to boost your business in our social media guides:

• How to use Facebook for business
• How to use Twitter for business
• How to use Pinterest for business
• How to use YouTube for business

To get started, think about trying the following on your social media profiles:

• Run competitions or giveaways. This is a great way to get people to actively engage with your brand.
• Pay for ads. Platforms like Facebook, Twitter and Instagram enable businesses to pay for their adverts to appear in target customers’ feeds.
• Regularly share links to your website, products and blog posts.
• Create a hashtag that represents your brand or product, and ask followers to share and contribute to it.
• Post regularly, ensuring your tone and any imagery you share is cohesive with your brand as a whole.
• Respond quickly to any queries or messages from potential customers.
• Ask customers to share reviews and ratings of your business or products on their profiles.
• Put links to your social media profiles on your website.

If you’d like to run your online business on an advertising model, it may be that you decide to forgo starting a website entirely in favour of social media.

In going down this route, you’ll share and advertise other companies’ products and services (having charged them, of course!) on your social media channels. In other words, you’ll be acting as an online influencer.

To find out more about this business model, visit  our guide to making money as a social media influencer .

Expert Insight – Emma Doherty, Empower

After starting her online fitness coaching business Empower with just a handful of clients in 2019, Emma Doherty (pictured above with some of her team) has used the power of social media to grow and now works with clients in over 80 countries and has a growing team. She’s therefore ideally placed to give Startups advice on how to effectively use Instagram, Twitter, Facebook et al:

“In this space, things are changing all the time, and there’s always new trends or patterns in content creation, so you have to constantly keep bang up to date.

“For example, a year ago my account would very much easily grow from just posting a picture with a nice caption, but now it’s all about video content and reels –  things that people can see and take in quickly (which is why TikTok is so huge now).

“There’s also a lot of pressure to always be posting stories and new, interesting content, but it’s crucial for online businesses to stay active to ensure new leads and high levels of engagement.

“And there’s no doubt it can be hard to compete in a space where a lot of people are creating quite similar content. To stay ahead of the game, we have to always be thinking of new ideas for when our concepts are kind of stolen or rehashed in just a slightly different way.

“Ultimately, I always have to remind myself that what works now might not necessarily work in a year, or even three months from now .

“However, while using social media can be hard work, get it right and it can really supercharge your business.”

Besides climbing the Google rankings with excellent  SEO practice  (as covered in  section four ) and running engaging  social media profiles  (as covered in  section six ), there are other things you can do to attract traffic to your website.

Pay-per-click (PPC) marketing

In a PPC campaign, your search engine of choice will ensure that a link to your website appears towards the top of its results page when a user searches for a certain keyword.

In return, you’ll pay the search engine a fee each time a user clicks on your link.

One of the most well-known PPC systems is Google Ads, through which businesses can appear as “Ad” links at the top of a Google results page.

A PPC campaign can be a quick way to get traffic to your site, but it’s up to you to decide whether or not paying for each click is worth the results you’re getting.

Remember, the more successfully targeted your campaign and useful your landing page to users, the better results you’ll get – and the less Google will charge you for each click.

Email marketing

This is the practice of sending regular marketing emails (such as e-newsletters) to your customers and fans in order to keep them engaged with your brand, keeping them abreast of news and special offers.

Gather email addresses for your send list by adding a sign-up form to your website, and sharing it among your social media followers.

When asking for email addresses to build your send list, be sure to comply with GDPR standards.

Affiliate marketing

In an affiliate programme, you place adverts for your business – whether display ads or hyperlinks in articles – on other relevant websites (known as your affiliates) for free.

When a customer clicks that ad, comes through to your site, and then makes a purchase, you pay a fee to the affiliate website the customer has clicked through from.

PR professionals

A good PR or outreach professional will aim to push your business into the public eye by securing media coverage for it – for example, in magazines, newspapers and websites.

If they convince a website to mention or discuss your business, they’ll also try to get that publication to link back to your website. This can be hugely valuable from a high-profile, high-traffic publication.

Of course, with an understanding of the PR process, you could save yourself some money and set about the task yourself – though PR professionals are likely to have more contacts in high places.

As well as sessions and user numbers, you should also monitor metrics such as:

• The amount of time users spend on each page
• The bounce rate (if users are coming to your home page then leaving straight away, it could be that you’re targeting the wrong keywords)
• The conversion rate (the percentage of visitors to your site who actually make a purchase)
• CAC/CPA (cost per conversion/acquisition – what marketing costs have you had to expend to get each paying customer to your site, and might they be too high?)

What’s next?

Now we’ve covered the steps you’ll need to take to start your own online business, it’s time to actually do it. In other words, it’s time to begin building your own website .

You can find the ideal web building solution that matches your requirements, budget, skills, and time allowance in just two minutes using our free web building comparison tool . Try it now, and cross “start building business site” off your to-do list now.

Startups.co.uk is reader-supported. If you make a purchase through the links on our site, we may earn a commission from the retailers of the products we have reviewed. This helps Startups.co.uk to provide free reviews for our readers. It has no additional cost to you, and never affects the editorial independence of our reviews.

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How To Write A Business Plan (2024 Guide)

Updated: Apr 17, 2024, 11:59am

Table of Contents

Brainstorm an executive summary, create a company description, brainstorm your business goals, describe your services or products, conduct market research, create financial plans, bottom line, frequently asked questions.

Every business starts with a vision, which is distilled and communicated through a business plan. In addition to your high-level hopes and dreams, a strong business plan outlines short-term and long-term goals, budget and whatever else you might need to get started. In this guide, we’ll walk you through how to write a business plan that you can stick to and help guide your operations as you get started.

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Drafting the Summary

An executive summary is an extremely important first step in your business. You have to be able to put the basic facts of your business in an elevator pitch-style sentence to grab investors’ attention and keep their interest. This should communicate your business’s name, what the products or services you’re selling are and what marketplace you’re entering.

Ask for Help

When drafting the executive summary, you should have a few different options. Enlist a few thought partners to review your executive summary possibilities to determine which one is best.

After you have the executive summary in place, you can work on the company description, which contains more specific information. In the description, you’ll need to include your business’s registered name , your business address and any key employees involved in the business. 

The business description should also include the structure of your business, such as sole proprietorship , limited liability company (LLC) , partnership or corporation. This is the time to specify how much of an ownership stake everyone has in the company. Finally, include a section that outlines the history of the company and how it has evolved over time.

Wherever you are on the business journey, you return to your goals and assess where you are in meeting your in-progress targets and setting new goals to work toward.

Numbers-based Goals

Goals can cover a variety of sections of your business. Financial and profit goals are a given for when you’re establishing your business, but there are other goals to take into account as well with regard to brand awareness and growth. For example, you might want to hit a certain number of followers across social channels or raise your engagement rates.

Another goal could be to attract new investors or find grants if you’re a nonprofit business. If you’re looking to grow, you’ll want to set revenue targets to make that happen as well.

Intangible Goals

Goals unrelated to traceable numbers are important as well. These can include seeing your business’s advertisement reach the general public or receiving a terrific client review. These goals are important for the direction you take your business and the direction you want it to go in the future.

The business plan should have a section that explains the services or products that you’re offering. This is the part where you can also describe how they fit in the current market or are providing something necessary or entirely new. If you have any patents or trademarks, this is where you can include those too.

If you have any visual aids, they should be included here as well. This would also be a good place to include pricing strategy and explain your materials.

This is the part of the business plan where you can explain your expertise and different approach in greater depth. Show how what you’re offering is vital to the market and fills an important gap.

You can also situate your business in your industry and compare it to other ones and how you have a competitive advantage in the marketplace.

Other than financial goals, you want to have a budget and set your planned weekly, monthly and annual spending. There are several different costs to consider, such as operational costs.

Business Operations Costs

Rent for your business is the first big cost to factor into your budget. If your business is remote, the cost that replaces rent will be the software that maintains your virtual operations.

Marketing and sales costs should be next on your list. Devoting money to making sure people know about your business is as important as making sure it functions.

Other Costs

Although you can’t anticipate disasters, there are likely to be unanticipated costs that come up at some point in your business’s existence. It’s important to factor these possible costs into your financial plans so you’re not caught totally unaware.

Business plans are important for businesses of all sizes so that you can define where your business is and where you want it to go. Growing your business requires a vision, and giving yourself a roadmap in the form of a business plan will set you up for success.

How do I write a simple business plan?

When you’re working on a business plan, make sure you have as much information as possible so that you can simplify it to the most relevant information. A simple business plan still needs all of the parts included in this article, but you can be very clear and direct.

What are some common mistakes in a business plan?

The most common mistakes in a business plan are common writing issues like grammar errors or misspellings. It’s important to be clear in your sentence structure and proofread your business plan before sending it to any investors or partners.

What basic items should be included in a business plan?

When writing out a business plan, you want to make sure that you cover everything related to your concept for the business,  an analysis of the industry―including potential customers and an overview of the market for your goods or services―how you plan to execute your vision for the business, how you plan to grow the business if it becomes successful and all financial data around the business, including current cash on hand, potential investors and budget plans for the next few years.

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Julia is a writer in New York and started covering tech and business during the pandemic. She also covers books and the publishing industry.

How to Write a Business Plan for a Small Business

Noah Parsons

24 min. read

Updated September 2, 2024

Writing a business plan doesn’t have to be complicated. 

In this step-by-step guide, you’ll learn how to write a business plan that’s detailed enough to impress bankers and potential investors, while giving you the tools to start, run, and grow a successful business.

• The basics of writing a business plan

If you’re reading this guide, then you already know why you need a business plan . 

You understand that writing a business plan helps you: 

• Raise money
• Grow strategically
• Keep your business on the right track 

As you start to write your business plan, it’s useful to zoom out and remember what a business plan is .

At its core, a business plan is an overview of the products and services you sell, and the customers that you sell to. It explains your business strategy: how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow. 

A good business plan is much more than just a document that you write once and forget about. It’s also a guide that helps you outline and achieve your goals. 

After writing your business plan, you can use it as a management tool to track your progress toward your goals. Updating and adjusting your forecasts and budgets as you go is one of the most important steps you can take to run a healthier, smarter business. 

We’ll dive into how to use your plan later in this article.

There are many different types of plans , but we’ll go over the most common type here, which includes everything you need for an investor-ready plan. However, if you’re just starting out and are looking for something simpler—I recommend starting with a one-page business plan . It’s faster and easier to create. 

It’s also the perfect place to start if you’re just figuring out your idea, or need a simple strategic plan to use inside your business.

Dig deeper : How to write a one-page business plan

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• What to include in your business plan

Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally just one to two pages. Most people write it last because it’s a summary of the complete business plan.

Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. 

In fact, it’s common for investors to ask only for the executive summary when evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation , or more in-depth financial forecasts .

Your executive summary should include:

• A summary of the problem you are solving
• A description of your product or service
• An overview of your target market
• A brief description of your team
• A summary of your financials
• Your funding requirements (if you are raising money)

Dig Deeper: How to write an effective executive summary

Products and services description

When writing a business plan, the produces and services section is where you describe exactly what you’re selling, and how it solves a problem for your target market. The best way to organize this part of your plan is to start by describing the problem that exists for your customers. After that, you can describe how you plan to solve that problem with your product or service. 

This is usually called a problem and solution statement .

To truly showcase the value of your products and services, you need to craft a compelling narrative around your offerings. How will your product or service transform your customers’ lives or jobs? A strong narrative will draw in your readers.

This is also the part of the business plan to discuss any competitive advantages you may have, like specific intellectual property or patents that protect your product. If you have any initial sales, contracts, or other evidence that your product or service is likely to sell, include that information as well. It will show that your idea has traction , which can help convince readers that your plan has a high chance of success.

Market analysis

Your target market is a description of the type of people that you plan to sell to. You might even have multiple target markets, depending on your business. 

A market analysis is the part of your plan where you bring together all of the information you know about your target market. Basically, it’s a thorough description of who your customers are and why they need what you’re selling. You’ll also include information about the growth of your market and your industry .

Try to be as specific as possible when you describe your market. 

Include information such as age, income level, and location—these are what’s called “demographics.” If you can, also describe your market’s interests and habits as they relate to your business—these are “psychographics.” 

Related: Target market examples

Essentially, you want to include any knowledge you have about your customers that is relevant to how your product or service is right for them. With a solid target market, it will be easier to create a sales and marketing plan that will reach your customers. That’s because you know who they are, what they like to do, and the best ways to reach them.

Next, provide any additional information you have about your market. 

What is the size of your market ? Is the market growing or shrinking? Ideally, you’ll want to demonstrate that your market is growing over time, and also explain how your business is positioned to take advantage of any expected changes in your industry.

Dig Deeper: Learn how to write a market analysis

Competitive analysis

Part of defining your business opportunity is determining what your competitive advantage is. To do this effectively, you need to know as much about your competitors as your target customers. 

Every business has some form of competition. If you don’t think you have competitors, then explore what alternatives there are in the market for your product or service. 

For example: In the early years of cars, their main competition was horses. For social media, the early competition was reading books, watching TV, and talking on the phone.

A good competitive analysis fully lays out the competitive landscape and then explains how your business is different. Maybe your products are better made, or cheaper, or your customer service is superior. Maybe your competitive advantage is your location – a wide variety of factors can ultimately give you an advantage.

Dig Deeper: How to write a competitive analysis for your business plan

Marketing and sales plan

The marketing and sales plan covers how you will position your product or service in the market, the marketing channels and messaging you will use, and your sales tactics. 

The best place to start with a marketing plan is with a positioning statement . 

This explains how your business fits into the overall market, and how you will explain the advantages of your product or service to customers. You’ll use the information from your competitive analysis to help you with your positioning. 

For example: You might position your company as the premium, most expensive but the highest quality option in the market. Or your positioning might focus on being locally owned and that shoppers support the local economy by buying your products.

Once you understand your positioning, you’ll bring this together with the information about your target market to create your marketing strategy . 

This is how you plan to communicate your message to potential customers. Depending on who your customers are and how they purchase products like yours, you might use many different strategies, from social media advertising to creating a podcast. Your marketing plan is all about how your customers discover who you are and why they should consider your products and services. 

While your marketing plan is about reaching your customers—your sales plan will describe the actual sales process once a customer has decided that they’re interested in what you have to offer. 

If your business requires salespeople and a long sales process, describe that in this section. If your customers can “self-serve” and just make purchases quickly on your website, describe that process. 

A good sales plan picks up where your marketing plan leaves off. The marketing plan brings customers in the door and the sales plan is how you close the deal.

Together, these specific plans paint a picture of how you will connect with your target audience, and how you will turn them into paying customers.

Dig deeper: What to include in your sales and marketing plan

Business operations

When writing a business plan, the operations section describes the necessary requirements for your business to run smoothly. It’s where you talk about how your business works and what day-to-day operations look like. 

Depending on how your business is structured, your operations plan may include elements of the business like:

• Supply chain management
• Manufacturing processes
• Equipment and technology
• Distribution

Some businesses distribute their products and reach their customers through large retailers like Amazon.com, Walmart, Target, and grocery store chains. 

These businesses should review how this part of their business works. The plan should discuss the logistics and costs of getting products onto store shelves and any potential hurdles the business may have to overcome.

If your business is much simpler than this, that’s OK. This section of your business plan can be either extremely short or more detailed, depending on the type of business you are building.

For businesses selling services, such as physical therapy or online software, you can use this section to describe the technology you’ll leverage, what goes into your service, and who you will partner with to deliver your services.

Dig Deeper: Learn how to write the operations chapter of your plan

Key milestones and metrics

Although it’s not required to complete your business plan, mapping out key business milestones and the metrics can be incredibly useful for measuring your success.

Good milestones clearly lay out the parameters of the task and set expectations for their execution. You’ll want to include:

• A description of each task
• The proposed due date
• Who is responsible for each task

If you have a budget, you can include projected costs to hit each milestone. You don’t need extensive project planning in this section—just list key milestones you want to hit and when you plan to hit them. This is your overall business roadmap. 

Possible milestones might be:

• Website launch date
• Store or office opening date
• First significant sales
• Break even date
• Business licenses and approvals

You should also discuss the key numbers you will track to determine your success. Some common metrics worth tracking include:

• Conversion rates
• Customer acquisition costs
• Profit per customer
• Repeat purchases

It’s perfectly fine to start with just a few metrics and grow the number you are tracking over time. You also may find that some metrics simply aren’t relevant to your business and can narrow down what you’re tracking.

Dig Deeper: How to use milestones in your business plan

Organization and management team

Investors don’t just look for great ideas—they want to find great teams. Use this chapter to describe your current team and who you need to hire . You should also provide a quick overview of your location and history if you’re already up and running.

Briefly highlight the relevant experiences of each key team member in the company. It’s important to make the case for why yours is the right team to turn an idea into a reality. 

Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before? 

If you still need to hire key team members, that’s OK. Just note those gaps in this section.

Your company overview should also include a summary of your company’s current business structure . The most common business structures include:

• Sole proprietor
• Partnership

Be sure to provide an overview of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? 

Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.

Dig Deeper: How to write about your company structure and team

Financial plan

The last section of your business plan is your financial plan and forecasts. 

Entrepreneurs often find this section the most daunting. But, business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. 

A typical financial forecast in a business plan includes the following:

• Sales forecast : An estimate of the sales expected over a given period. You’ll break down your forecast into the key revenue streams that you expect to have.
• Expense budget : Your planned spending such as personnel costs , marketing expenses, and taxes.
• Profit & Loss : Brings together your sales and expenses and helps you calculate planned profits.
• Cash Flow : Shows how cash moves into and out of your business. It can predict how much cash you’ll have on hand at any given point in the future.
• Balance Sheet : A list of the assets, liabilities, and equity in your company. In short, it provides an overview of the financial health of your business. 

A strong business plan will include a description of assumptions about the future, and potential risks that could impact the financial plan. Including those will be especially important if you’re writing a business plan to pursue a loan or other investment.

Dig Deeper: How to create financial forecasts and budgets

This is the place for additional data, charts, or other information that supports your plan.

Including an appendix can significantly enhance the credibility of your plan by showing readers that you’ve thoroughly considered the details of your business idea, and are backing your ideas up with solid data.

Just remember that the information in the appendix is meant to be supplementary. Your business plan should stand on its own, even if the reader skips this section.

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

Adding a business plan cover page can make your plan, and by extension your business, seem more professional in the eyes of potential investors, lenders, and partners. It serves as the introduction to your document and provides necessary contact information for stakeholders to reference.

Your cover page should be simple and include:

• Company logo
• Business name
• Value proposition (optional)
• Business plan title
• Completion and/or update date
• Address and contact information
• Confidentiality statement

Just remember, the cover page is optional. If you decide to include it, keep it very simple and only spend a short amount of time putting it together.

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

Generative AI tools such as ChatGPT can speed up the business plan writing process and help you think through concepts like market segmentation and competition. These tools are especially useful for taking ideas that you provide and converting them into polished text for your business plan.

The best way to use AI to write a business plan is to leverage it as a collaborator , not a replacement for human creative thinking and ingenuity. 

AI can come up with lots of ideas and act as a brainstorming partner. It’s up to you to filter through those ideas and figure out which ones are realistic enough to resonate with your customers. 

There are pros and cons of using AI to help with your business plan . So, spend some time understanding how it can be most helpful before just outsourcing the job to AI.

Learn more: 10 AI prompts you need to write a business plan

• Writing tips and strategies

To help streamline the business plan writing process, here are a few tips and key questions to answer to make sure you get the most out of your plan and avoid common mistakes .  

Determine why you are writing a business plan

Knowing why you are writing a business plan will determine your approach to your planning project. 

For example: If you are writing a business plan for yourself, or just to use inside your own business , you can probably skip the section about your team and organizational structure. 

If you’re raising money, you’ll want to spend more time explaining why you’re looking to raise the funds and exactly how you will use them.

Regardless of how you intend to use your business plan , think about why you are writing and what you’re trying to get out of the process before you begin.

Keep things concise

Probably the most important tip is to keep your business plan short and simple. There are no prizes for long business plans . The longer your plan is, the less likely people are to read it. 

So focus on trimming things down to the essentials your readers need to know. Skip the extended, wordy descriptions and instead focus on creating a plan that is easy to read —using bullets and short sentences whenever possible.

Have someone review your business plan

Writing a business plan in a vacuum is never a good idea. Sometimes it’s helpful to zoom out and check if your plan makes sense to someone else. You also want to make sure that it’s easy to read and understand.

Don’t wait until your plan is “done” to get a second look. Start sharing your plan early, and find out from readers what questions your plan leaves unanswered. This early review cycle will help you spot shortcomings in your plan and address them quickly, rather than finding out about them right before you present your plan to a lender or investor.

If you need a more detailed review, you may want to explore hiring a professional plan writer to thoroughly examine it.

Use a free business plan template and business plan examples to get started

Knowing what information to include in a business plan is sometimes not quite enough. If you’re struggling to get started or need additional guidance, it may be worth using a business plan template. 

There are plenty of great options available (we’ve rounded up our 8 favorites to streamline your search).

But, if you’re looking for a free downloadable business plan template , you can get one right now; download the template used by more than 1 million businesses. 

Or, if you just want to see what a completed business plan looks like, check out our library of over 550 free business plan examples . 

We even have a growing list of industry business planning guides with tips for what to focus on depending on your business type.

Common pitfalls and how to avoid them

It’s easy to make mistakes when you’re writing your business plan. Some entrepreneurs get sucked into the writing and research process, and don’t focus enough on actually getting their business started. 

Here are a few common mistakes and how to avoid them:

Not talking to your customers : This is one of the most common mistakes. It’s easy to assume that your product or service is something that people want. Before you invest too much in your business and too much in the planning process, make sure you talk to your prospective customers and have a good understanding of their needs.

• Overly optimistic sales and profit forecasts: By nature, entrepreneurs are optimistic about the future. But it’s good to temper that optimism a little when you’re planning, and make sure your forecasts are grounded in reality. 
• Spending too much time planning: Yes, planning is crucial. But you also need to get out and talk to customers, build prototypes of your product and figure out if there’s a market for your idea. Make sure to balance planning with building.
• Not revising the plan: Planning is useful, but nothing ever goes exactly as planned. As you learn more about what’s working and what’s not—revise your plan, your budgets, and your revenue forecast. Doing so will provide a more realistic picture of where your business is going, and what your financial needs will be moving forward.
• Not using the plan to manage your business: A good business plan is a management tool. Don’t just write it and put it on the shelf to collect dust – use it to track your progress and help you reach your goals.
• Presenting your business plan

The planning process forces you to think through every aspect of your business and answer questions that you may not have thought of. That’s the real benefit of writing a business plan – the knowledge you gain about your business that you may not have been able to discover otherwise.

With all of this knowledge, you’re well prepared to convert your business plan into a pitch presentation to present your ideas. 

A pitch presentation is a summary of your plan, just hitting the highlights and key points. It’s the best way to present your business plan to investors and team members.

Dig Deeper: Learn what key slides should be included in your pitch deck

Use your business plan to manage your business

One of the biggest benefits of planning is that it gives you a tool to manage your business better. With a revenue forecast, expense budget, and projected cash flow, you know your targets and where you are headed.

And yet, nothing ever goes exactly as planned – it’s the nature of business.

That’s where using your plan as a management tool comes in. The key to leveraging it for your business is to review it periodically and compare your forecasts and projections to your actual results.

Start by setting up a regular time to review the plan – a monthly review is a good starting point. During this review, answer questions like:

• Did you meet your sales goals?
• Is spending following your budget?
• Has anything gone differently than what you expected?

Now that you see whether you’re meeting your goals or are off track, you can make adjustments and set new targets. 

Maybe you’re exceeding your sales goals and should set new, more aggressive goals. In that case, maybe you should also explore more spending or hiring more employees. 

Or maybe expenses are rising faster than you projected. If that’s the case, you would need to look at where you can cut costs.

A plan, and a method for comparing your plan to your actual results , is the tool you need to steer your business toward success.

Learn More: How to run a regular plan review

How to write a business plan FAQ

What is a business plan?

A document that describes your business , the products and services you sell, and the customers that you sell to. It explains your business strategy, how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

What are the benefits of writing a business plan?

A business plan helps you understand where you want to go with your business and what it will take to get there. It reduces your overall risk, helps you uncover your business’s potential, attracts investors, and identifies areas for growth.

Writing a business plan ultimately makes you more confident as a business owner and more likely to succeed for a longer period of time.

What are the 7 steps of writing a business plan?

The seven steps to writing a business plan include:

• Write a brief executive summary
• Describe your products and services.
• Conduct market research and compile data into a cohesive market analysis.
• Describe your marketing and sales strategy.
• Outline your organizational structure and management team.
• Develop financial projections for sales, revenue, and cash flow.
• Add any additional documents to your appendix.

What are the 5 most common business plan mistakes?

There are plenty of mistakes that can be made when writing a business plan. However, these are the 5 most common that you should do your best to avoid:

• 1. Not taking the planning process seriously.
• Having unrealistic financial projections or incomplete financial information.
• Inconsistent information or simple mistakes.
• Failing to establish a sound business model.
• Not having a defined purpose for your business plan.

What questions should be answered in a business plan?

Writing a business plan is all about asking yourself questions about your business and being able to answer them through the planning process. You’ll likely be asking dozens and dozens of questions for each section of your plan.

However, these are the key questions you should ask and answer with your business plan:

• How will your business make money?
• Is there a need for your product or service?
• Who are your customers?
• How are you different from the competition?
• How will you reach your customers?
• How will you measure success?

How long should a business plan be?

The length of your business plan fully depends on what you intend to do with it. From the SBA and traditional lender point of view, a business plan needs to be whatever length necessary to fully explain your business. This means that you prove the viability of your business, show that you understand the market, and have a detailed strategy in place.

If you intend to use your business plan for internal management purposes, you don’t necessarily need a full 25-50 page business plan. Instead, you can start with a one-page plan to get all of the necessary information in place.

What are the different types of business plans?

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. Here are a few common business plan types worth considering.

Traditional business plan: The tried-and-true traditional business plan is a formal document meant to be used when applying for funding or pitching to investors. This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix.

Business model canvas: The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.

One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Lean Plan: The Lean Plan is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance. It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

What’s the difference between a business plan and a strategic plan?

A business plan covers the “who” and “what” of your business. It explains what your business is doing right now and how it functions. The strategic plan explores long-term goals and explains “how” the business will get there. It encourages you to look more intently toward the future and how you will achieve your vision.

However, when approached correctly, your business plan can actually function as a strategic plan as well. If kept lean, you can define your business, outline strategic steps, and track ongoing operations all with a single plan.

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Table of Contents

• Use AI to help write your plan
• Common planning mistakes
• Manage with your business plan

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