The Ultimate Guide To Starting An Online Business

How to start an online business

Are you keen to start an online business but don’t know how to do it? You have come to the right place!

Online businesses and modern life go hand in hand. Starting an online business and making money online has never been easier, thanks to advanced technology. The internet allows us to build a platform, start a business, grow an audience, and generate an income. You can sell your products, services, or subscriptions from the comfort of your sofa through a website or social media. 

There are plenty of online tools you can utilize to build a business. No technical or marketing experience is needed. You also don’t need a lot of startup investment to reach your potential customers and start making money. You can do it whether you are looking for a passive income or want to quit your job and dedicate yourself to building your brand. For example, you can start a blog for free using WordPress. One thing you do need to have is an idea. You need to know how to turn your talents and skills into a profitable e-commerce business, according to the market demand. 

If you think you are ready to become the next prominent entrepreneur online, read on to find out how to start an online business step by step.

Why are People Starting Online Businesses?

Starting an e-commerce business is something everybody should try to do, and anyone with a computer actually can. But why are people starting online businesses? What makes them so popular? Is it because you can run it regardless of your location? Is it because of the flexibility that comes with scheduling and working hours? Or is it the fact that you have 24/7 access to a worldwide market, with over 4.39 billion internet users? It is probably all of the above, plus the freedom of being your own boss.

Personal freedom

When you own your business, you control your time. You set your schedule and create rules that work for you. You work as little or as much as you want, instead of working 40 hours or more a week. You are your own boss, and you can do something you love, which gives you personal freedom. Being tired of working hard to build someone else’s dream can be the motivation you need to start a business of your own.

Financial freedom 

Entrepreneurs also like the idea of financial independence. Owning your own business gives you control over your finances. When you have control over how you earn and spend your money, you have better control over your life. You make money for yourself, not someone else. And you can reap all the rewards of your hard work. You might even become a millionaire and live the life of your dreams. Anything is possible.

However, making more money should not be your primary goal when starting an online business. A lot of people think starting a business is exciting and fun, and a lot of them jump into it without knowing which way they want to go. But if you’re going to build your brand online, you must know why you want to do it. Otherwise, you could be wasting your precious time and moving further away from where you want to be.

Creating Your Own Company: Is It for You?

In addition to the numerous benefits of starting an online business, there are also the challenges of entrepreneurship. To determine whether starting an online business is right for you, see the following cons.

More responsibilities

When working for someone else, your responsibilities appear huge. All those deadlines, meetings, and pressure might be overwhelming. However, they are the main reason for your responsibility. You have something that moves you forward and inspires you to get the job done. Once you become an entrepreneur, you will not have these guideposts anymore. You must manage your time and increase productivity. On top of this, your business is open all the time because the internet is on 24/7. You motivate and depend solely on yourself. 

Unsteady income

You can never know how much time it will take to start generating money. Beginnings are not easy, especially if you rely on the unpredictable online marketplace instead of your steady paycheck. You might have low startup costs, but you should not expect to get rich quickly. Hundreds of competitors around the world make it even more challenging to find your place in the market.

Customer service challenges

Some online businesses, such as Rackspace, are known for excelling at customer service, while others struggle with overcoming the lack of face-to-face communication. Some customers prefer to speak with a person instead of communicating via email, chat, or phone lines. Do you have what it takes to be personable with your clients even when communicating via email or phone? More importantly, will you be able to deal with a lack of human interaction as an entrepreneur?

Online Business Models You Can Start

After you carefully consider both the pros and cons of starting an online business, choosing the right business model is the next thing to focus on. The key to online success is picking the right business model and finding sources of traffic for potential customers.

There are six major online business models you can use. Some of them come with substantial profit margins and require minimal time, while others need a lot of time to grow and have a lot of overhead costs. Let’s check them out.


Advertising is the most common online business model. We have all seen little advertisements on the sidebars of a website. This is how it works.: Ad networks like Google AdSense pay you to advertise on your site and provide free sponsored content or visual ads. Each time a user clicks on an ad, you earn a few cents or even a few dollars. The more traffic you attract to your website, the more money you receive. However, to make a good income from ads, you need millions of visitors per month. 

Affiliate marketing

Affiliate marketing is an easy way to start earning passive income. Affiliate networks like Amazon Associates pay you a commission for selling their products and doing their marketing for them. You market their products by embedding a unique URL linking to the sales page. Every time you get a click on that link, you earn money. Commissions for selling products through the links on your page are typically up to 10 percent, which can add up to a lot of money over time.

The most important part of affiliate marketing is choosing a niche. You should fill your e-commerce website with relevant content.


The software industry has become very popular with the rise of the software as a service (SaaS) model. Instead of selling an e-commerce software license once, you get recurring revenue by hosting an app on your server. You charge a monthly fee for a subscription. This online business model is one of the most expensive because you need significant investment to create an app. The good news is that it can also generate the most recurring and steady revenue.

When it comes to software, there are three different billing models:

  • Freemium – Customers get a basic version of your software. They can upgrade to a paid subscription to get additional premium features. A great example is LinkedIn. 
  • Free trial – Customers get access to the full version of the software and its functionality for a limited time. If they want to keep using it, they will have to pay for it.
  • Free software supported by ads – Customers can use e-commerce software for free, but you earn revenue by running sidebar ads for related products.

Physical products

Shopping habits have changed. Instead of opting to purchase the products in brick-and-mortar stores, many consumers today prefer to buy them online. You can build an online store and offer physical goods. You have a digital store with actual products you ship to customers.

You can source physical products in many ways:– by creating them, dropshipping them, acquiring them through wholesale, or getting them manufactured.

The Profit margins are low with this business model, in comparison to selling digital products.

Digital products

Physical goods are not the only type of product you can sell online. Many entrepreneurs opt for selling digital products, such as e-books, content, apps, membership sites, and more, for many reasons. For example, digital products are easier to create than physical products, and you only need to create them once, but you can sell them over and over again. Moreover, you don’t have to worry about suppliers, inventory, or shipping.

Coaching and consulting

If you are an expert in some areas, you can start selling your expertise and offer coaching/ consulting services to clients. This model is based on personal relationships, referrals, and testimonials. It enables you to connect with tens of thousands of people seeking advice and training in your area of expertise.

The coaching and consulting model is one of the fastest ways to earn money. How much money can you make? The hourly rates are relatively high, ranging from hundreds to thousands of dollars. 

Choose Your Niche

How to start an online business

Once you know what online business model you want to run, you must choose your niche within that market. A niche represents a specialized subsection of the target market. When it comes to selecting a profitable and sustainable niche, passion is an essential component that will keep you motivated even when the cash does.

Essentially, your niche determines the types of products or services you will start selling, and the industry you will operate in and in and earn your reputation. However, sticking to your niche is crucial for running a successful business. It is one of the ways to stay on top of your game and stand among the competition. Specializing in one service rather than offering a variety of different services and goods increases your chances of success. Additionally, people appreciate and value loyalty in online businesses. When people know what to expect from your products or services, they are likely to become repeat customers.

How To Pick The One

You want to find your niche in the early stages to give your business direction. There are thousands of niches out there. The big question is: how to pick the right one for you.? Choosing the most profitable or the easiest niche just won’t cut it. Since you plan to invest your money, time, and resources in your online business, ask yourself the following questions to find your niche:

  • What is your passion and interest in life? What do you enjoy working on for fun?
  • What are you good at?
  • What comes naturally to you? Do people come to you for instructions or advice?
  • Do you have a hobby or skill that you can turn into a profitable business?
  • What’s in demand? How can you help people?

Write down anything that comes to mind. You can narrow down the list to the top five niches. Now, look at the list carefully and do a small amount of research online to determine if you could profit from it. Your goal is to find a niche you are both passionate about and which has profit potential. To do that, you must go through the criteria below for each niche idea.

Conduct a Google search for broad phrases related to your niche, more specific words. For example, if you are passionate about makeup, you could search for “makeup,” but also “makeup videos,” “makeup kit,” and “cruelty-free makeup.” 

Your goal is to find existing content on websites, blogs, and articles, and other online businesses in a specific niche. This way, you can evaluate perceived demand in each niche. Competition is a good sign; it means – the market is ready to buy. All you have to do is stand out from the crowd or offer something better. If there isn’t much competition and you don’t find many results, chances are that niche doesn’t perform well online.

Conduct a keyword search by using the Google AdWords Keyword Planner. You can search for the same keywords. If you see plenty of search activity, you will likely find interested consumers. For example, finding over 10,000 searches per month for your “main” keyword (“makeup”), and 50,000 total for the more specific keywords (“cruelty-free makeup”) is a good sign of a winning niche. Anything less than this probably means there’s not much of a market for it.

A keyword search showed that “makeup” had 1 million to – 10 million monthly searches, while “cruelty-free makeup” had 10K-,000 to 100,000K. This means that there is a market for our niche.

Search with Amazon 

While Google is a great place to kick things off, Amazon is the next starting point for entrepreneurs who want to find their niche and start making money online. Amazon is the most significant online retailer, but it is also a handy search engine. With Amazon, you can search the same keywords you did using Google and Google AdWords, and others related to your niche. When you enter makeup-related keywords, you will find a ton of results, including makeup products, digital books, instructional materials, and so on. Finding a lot of results is a good indicator of profit potential and that there is a market for your niche.

Affiliate marketing can be helpful when finding your niche. You can use sites like ShareASale and ClickBank to find products or services that align with your niche. Product availability indicates market readiness. Affiliate marketing research can be extremely convenient when looking to set up extra income streams for your online business.

Picking a niche involves a lot of research and effort. The good news is that all this will pay off because now you have laid the foundation for a successful online business that will make a profit.

Conduct Market Research

Before you invest time and money into your business idea, you must choose know the market you want to enter. The better you understand your market, the more success you will have when offering the right products and services. The following market research methods can be helpful:

Analyze your competition

Conduct an analysis of your competitors. Do a small amount of research into what they are doing, how they operate, who their clients are, and other relevant information. You can learn from their mistakes. The goal of the research is to use your biggest competitors to find out what can you can improve upon. 

Define your target audience

Defining your target audience is crucial when starting an online business. It is the most important part of your marketing strategy. Only after you understand the needs and wants of target customers, will you be able to market your products. 

Get feedback

Ask your target audience or other people you know what they think about your idea. Interacting with people is a great way to validate your idea. You can ask them about their first reaction or whether they would pay money for it. Let them walk you through that potential solution.  

The Google Usability Cafe model could be handy. The idea is simple.: set up a simple workstation at your local coffee shop and ask people for their feedback. Make sure you are not picky about who you talk to. In return, buy them coffee.

Build the Brand and Website

Deciding on a name

Let’s start by choosing the name for your online business. While selecting the name might sound insignificant, it has to be a good name because a lot of people will use it. You do not want a name that is already taken or is too similar to another. You want a unique name people will remember. It should also be short, with no more than ten characters. 

Also, think about branding your name. Can you envision a perfect logo for your name? Can you trademark it? Are domain names for your idea available? Having a domain name that is identical to your business or product name has significant benefits. You can purchase a domain through GoDaddy.


Online business must be more than a compelling name. It must be a recognizable brand because you won’t have a brick-and-mortar store and employees to represent your strength and firmness. Your brand and your online store will do that instead.

Online business branding refers to logo design, font style, colors, and other visual features your business that will be connected to your business. Paying attention to these details will boost your advertising, and help you create a consistent e-commerce and website experience. If you are design-savvy, you can use Canva or another graphic design app. If you want to hire a professional web designer, try Upwork or Fiverr.

Creating and building your website

Building a website might seem challenging, but in fact, it can be straightforward and easy. There are many options out there, but you should make a decision based on how you want to set up your business.

For example, if your product is SaaS, you might already have the needed technical skills to build your website. This approach will save you money, and you will have complete control over your site. You can also use some of the many website building tools, such as or Wix, which will guide you through the entire process of building a website. WordPress is ideal for those who are starting a blog. If you are an online retailer, you might choose Shopify or another more expensive platform for e-commerce activity through your website.

Another option is hiring a web developer. You can hire a top developer, but that will cost you money. A cheaper solution is hiring a freelance designer who will charge a lower rate. 

Web hosting

Web hosts are the companies that provide storage for your content. It is essentially a place where you will upload web pages, images, etc. There are four types of web hosting: 

  • Shared Hosting 
  • Virtual Private Server (VPS)
  • Dedicated Hosting 
  • Cloud Hosting

They all rent you space, but they differ in the amount of that storage, server speed and control, performance, and security. When choosing your web host, you should also consider other criteria, such as tools for e-commerce, marketing tools, whether it offers WordPress compatibility, and more.

If it is your first online business, it is recommended to start with a shared hosting account. It will offer 24/7 customer support in the event of a problem. As you scale your business and website, you can upgrade to web hosting that is more expensive, and secure, and that will provide you with more server control. HostGator and iPage are some of the most popular web hosts, but before you choose a hosting company, make sure you compare service providers.

Optimizing your website for SEO

Regardless of the purpose of your e-commerce website, the written copy on your site must be well-written, interest-inspiring, clear, and primed for SEO. Search engine optimization will make it easy for your text to rank higher on Google Search results pages, which will attract more visitors. You also want to optimize your website because you want to make it useful and give people what they want.

There are a few ways to optimize your website for Search engine optimization. You can start by incorporating relevant high-volume search terms, getting backlinks, and optimizing for mobile devices. You aim to provide a smooth and fast user experience. Speeding up the pages can help you achieve that. 

Additionally, you can optimize your website for SEO by creating long, and quality content, like a blog. Adding blog posts about your business, or related subjects can keep customers on your site longer. Moreover, articles offer more content to be listed by search engines. To rank higher, you also must think about the length of your posts. According to Buffer, the optimal length for a blog post is 1,600 words.

Comply with Online Business Regulations

One of the first steps when starting an online business is researching the restrictions and regulations regarding it. There are important laws that an online business needs must abide by, and some of them are listed below.

Tax obligations

When it comes to taxes, know that each state and country has different obligations. That’s why you need to research the target market to know whether to display your prices exclusive of tax or not, for example. Some goods are taxed, while others are not, depending on the state. 

It is wise to consult a lawyer to make sure you are covered. They will help you understand your state sales tax obligations and, online sales tax requirements. Perhaps you are eligible for certain tax deductions, or you need help to apply for a tax ID. Your lawyer or other tax authority is an essential element in creating and running a successful business, especially with ever-changing tax regulations.

Setting up the business structure

Picking your business structure is another important choice you must make when starting an online business. An appropriate structure will help you define certain aspects of your finances, such as the amount you will pay in taxes. In the United States, the business structures you can choose to comply with the law are:

  • Sole proprietorship
  • Partnership
  • Limited liability company (LLC)
  • Corporation

A sole proprietorship is a basic business configuration in which the business is synonymous with the owner. Some of the benefits this structure provides are low startup costs, maximum control, and easy setup. The major downside of a sole proprietorship is that there is no legal separation between your assets and your business assets. The owner and the business are the same entity. 

A partnership involves two or more entrepreneurs who share ownership, profits and losses, and the same liabilities as a sole proprietorship. Partnerships are governed by state laws that require a partnership agreement.

Corporations are complex business structures owned by shareholders. They are suitable for established companies with many employees and are designed to protect the business owner from liability. If you choose this type of business structure, you are eligible for corporate tax breaks as corporate taxes are filed separately from personal taxes.

Similar to a corporation, an LLC offers liability protection and is a pass-through tax entity. However, an LLC is less formal, and it can consist of a single member in nearly all states.


Online business owners must make sure to put customer privacy and security first. Since most e-commerce businesses collect customers’ personal information, including their phone numbers, addresses, and credit card numbers, they are responsible for keeping it safe. This is good for your business, but it also will keep you away from legal issues.

The privacy policy on your site must contain information on how the business uses any of the personal information it has collected.

Children and age restrictions

As an online business owner, you must comply with the Children’s Online Privacy Protection Act (COPPA) created in 1998. According to COPPA, it is illegal to knowingly collect personal information from children under the age of 13. If you design your website to sell a product or service to children, you will need to abide by COPPA regulations.

Social Media Presence

Social media is a free marketing tool that has millions of daily users around the globe. You can take advantage of the opportunity to get your business in front of potential customers on these platforms. Of course, you don’t have to launch on every social media platform out there. You can start with the biggest social media platforms: Facebook, Twitter, and Instagram. These platforms will also enable you to pay for your ads to appear in target customers’ feeds.

The key is to select the social media format that best fits what your business offers. The goal is to attract the most engagement possible, including followers, likes, comments, shares, etc. For example, fashion retailers will have more success sharing content on Instagram, while a blog might prosper with text on Twitter or another app.

How to grow your online presence

  • Identify your audience
  • Show the human side of your brand
  • Get people to engage with your brand by running giveaways 
  • Provide discounts
  • Create a hashtag for your brand
  • Ask people to share and connect
  • Link social media profiles to your site
  • Provide responses to customers’ queries or messages
  • Post consistently
  • Tackle complaints fast and efficiently

Get Traffic to Your Website

Even the most innovative businesses or products are worthless if they cannot find their way to potential customers. To generate sales online and start making real money, you must attract traffic to your online business. In addition to engaging social media profiles and ranking high with SEO, there are other methods of promoting your new site and getting the traffic you want.

Pay-per-click advertising (PPC)

An easy way to draw traffic to your website is pay-per-click (PPC) advertising. It is also one of the most popular forms of advertising among small businesses. In PPC marketing, a search engine ensures that a link to your website appears at the top of its results page each time a user searches for a particular keyword. In return, you pay whenever a web user clicks on your ad and goes to your website. Google Ads is perhaps the most popular PPC system, mostly thanks to its reputation and the fact that owners control their expenses. With PPC, your business can appear as ad links on search engine results pages (SERP) or sites which are connected to the keywords you are targeting.

Email marketing

Email marketing is another critical method of getting traffic to your site and building a successful online business. This involves building up a list of email addresses from your website visitors. You aim to turn visitors into buyers and buyers into repeat customers.

Email marketing helps you bond with your clients and lets you market new products. Send marketing emails (such as e-newsletters) to your customers at least once a week with news, information, or promotions. You can also add new subscribers with a special deal, discount, free report, or other offers. Implementing an email marketing strategy is affordable and highly efficient. Consider AWeber or another email marketing service provider to get traffic to your site.


The demand for audio-only content is high and increasing every day. The best way to consume this type of content is through a podcast. Podcasts are top-rated and profitable, and they enable you to reach out to larger audiences. You can feature your podcasts on sites like iTunes, and target a specific audience with content adjusted to their interests. 

Why would you want to start a podcast? First, it is not technically complicated. Second, nearly 70 million Americans listen to podcasts every month. Make episodes that last 20 to 45 minutes. Feature them on your site and upload them to some podcast-streaming platforms. 

Video marketing: – YouTube

Video content is so huge that it is estimated that more than 80 percent of consumer internet traffic will involve watching online videos by 2020. For you and your business, this data means one thing.: Start a YouTube channel as soon as possible. YouTube provides benefits, such as building an audience to send back to your website and offering content people already want. 

When creating your YouTube channel, make sure you optimize it for search engines. Finally, link YouTube videos on your website.

Content marketing

You will get the traffic you want only if your customers see that you want to educate, inform, and help them. If your only goal is to sell your products to them, they won’t be interested. This is what content marketing is all about. Exceptional content will provide authority to your brand and ensure an online presence.

Content must be search-optimized. Therefore, the keywords your target audience uses to search for content are a shortcut that leads them to your site. One of the best ways to use content marketing for traffic growth is to start a blog for your online business. Many studies have shown that businesses that publish content regularly (16+ blog posts) have 3.5 times more web traffic in comparison to companies that don’t.

Monitor Growth and Activity

Tracking the activity and traffic of your online business has never been easier, thanks to simple free tools like Google Analytics. You can track traffic sources, real-time site activity, audience behavior, and popular pages. Moreover, you might consider monitoring email activity, such as the number of people clicking on the website links they receive in the emails.

These metrics are crucial when determining what’s working and what needs to be improved.

Grow Your Income

To grow your money-making machine, you must grow your income and expand your customer list. You will want to have something to fall back on in case your business starts experiencing problems. Buyers who have purchased from you once will often buy from you again if you follow up with them. In other words, making the first sale is the most critical and challenging part. Luckily, you can use upselling and back-end sales strategies to motivate your customers to buy from you again. You can achieve this if you offer products that complement their original purchase or other related products. Additionally, rewarding their loyalty is something customers will appreciate, and that will keep them coming back.

Do you have questions about how to start an online business? Would you like to share some tips with fellow entrepreneurs? Feel free to comment and share your experiences!