How to start and grow your first online business
Launch your new business and earn a profit with this comprehensive guide on starting an online business and the tools of the trade you need to make it happen.
You’ve been working on your online business idea for months now. You have all of the essentials tools you need to launch an online business and maybe a few extras. You’re ready to take the plunge to make your dreams a reality.
There are just a few things holding you back:
Worry and confusion top the list, among the other most common excuses holding would-be entrepreneurs back.
You think to yourself, “Am I doing the right thing?”
Some other questions that come to mind are:
- How do I know I have a good business idea?
- Will anyone buy from me?
- Do I have the budget for starting my online business?
- Can I really do this on my own?
Before you second-guess yourself, rest assured being a solopreneur doesn’t mean you have to come up with all the answers alone.
Today, we share with you vital details for success, beginning with what you need to know before starting your online business, then covering five proven online business models, and wrapping up with key resources and tools.
Ready to get started? Great, let’s dive in.
What do I need to know before starting my online business?
Before starting your business online, or even your offline side-hustle, the most critical step is to ask yourself the hard questions before launching your business -- like if you're ready for it or not -- and then, if you decide you are, determine if there's a market need for your idea. The last thing you want is to launch a business, poised and ready to go, with no customers in sight.
The best way to identify if you’ve landed on a profitable niche is to validate your business idea through market research first.
(A profitable niche means serving a particular need within a specific, rather than broad, audience. If you’re in the idea generation phase of starting your business, you may find these 10 online business ideas helpful while brainstorming.)
How should you conduct market research?
Simply gather data from your audience to find out their biggest problems. Then, confirm that those problems align with your business idea.
It’s easier than it seems. You have two main options for doing research into those problems:
#1. Gather primary data (aka new data) using surveys and interviews
If you have a growing subscriber list or audience, you’re ahead of the game. All you need to do is send an email or publish a social media post linking to your survey to start generating primary data right away.
The linchpin to make your survey, and thereby your research, is effective is to keep it short. 52% of respondents say they won’t spend more than three minutes on a survey and by the 20-minute mark, the quality of data and attention of respondents greatly diminish.
It’s also crucial to keep resolutions and devices in mind for surveys, creating a frictionless experience for both mobile and desktop users. While one-third of surveys are carried out on mobile devices, survey completion rates are better on larger screens.
You can take your surveying a step further and set up interviews with prospective clients using the phone, video chat, or even in person.
Whether in a survey or interview, some question categories worth asking are:
- Demographic - Age, gender, household income, location, or profession.
- Behavioral - Interests, hobbies, lifestyle, preferred resources, or communication channel preference.
- Demand - Knowledge about competing products, past related experiences, product pros and cons, or recommendations.
- Willingness to pay - Low, high, and fair price points, or detail on what drives value for individual customers.
During your questions, dig deep to find out your target audience’s main priorities, concerns, and the emotion behind their answers. The more you can find out about the people in your market, the easier it will be to create products and marketing that resonates with them.
But don’t stop at just getting primary data. While interviews and surveys can deliver a wealth of fresh insight, secondary data can fill in the gaps and is often far easier to source, which brings us to your second research option.
#2. Collect secondary data (aka existing data) by searching the internet
To build up your secondary data, search the web to find relevant conversations about your business idea on social media platforms, online forums, and discussion threads.
Specifically, use social platforms like Reddit to hunt for data. For example, if you’re looking to start an online business targeting gardeners, try searching terms like “vegetable gardening” to narrow in on your winning idea.
As you can see, the Reddit “vegetable gardening” community is 10,500 members large with hundreds of “subreddits” to peruse through. You can find a multitude of questions, concerns, and even conversations to join in a matter of minutes.
Another effective option for finding secondary data is to search for related discussions in Facebook Groups.
For instance, a quick search for “vegetable gardening” pulls up numerous Facebook groups with thousands of members. These make for great online dialogues to read through and join.
Plus, with such plentiful search results for this particular topic, you can tell there’s likely demand in the market. All you have to do is narrow in on the parts of the demand people are willing to pay to have answered.
The key takeaway:
Your job while researching is to find a deeper problem your business solves or adjust course until it does solve it.
Otherwise, pay close attention to your audience’s biggest problems and desires while validating your business idea. They’re the star of your show, after all -- the more of a spotlight you put on them, the more you can tailor your business for them.
Now, once you have a validated business idea in hand, it’s time to decide on a business model.
5 proven online business models
#1. Use advertising to drive revenue
Let’s start with the quintessential online business model, advertising. Whether as a primary or secondary source of income, you can use an ad program like Google AdSense to earn revenue from a website.
While the intricacies of AdSense warrant their own article, the long and short of the service is this: AdSense allows you to publish relevant ads targeted to your site’s audience in exchange for a payment per 1,000 views (aka cost per thousand or CPM).
You can choose from a variety of ad types to display on your website including text, display ads, rich media, animated images, and link units.
Top performing ad formats include large rectangle, medium rectangle, leaderboard, half page, and large mobile banner.
Note, however, that this business model requires significant traffic to be either sustainable or profitable.
For those with the resources and experience, people like Jerry Banfield who earned over $100,000 in a year on Google AdSense, it’s a model well-worth its challenges, but for those in the earliest days of business growth, the sheer scale required may not be tenable yet.
If you’re in that position, or if you just don’t want to clutter your website with ads, our next business model is another way to earn money from outside entities and far easier to break into.
#2. Use an affiliate marketing program
Another proven business model is to use affiliate marketing to drive revenue. To use an affiliate marketing program, partner up with outside businesses and promote links to their products and services in exchange for a commission on each earned sale.
This is also a profitable option if you have a growing blog, podcast, or video channel audience.
For example, popular podcaster and founder of Smart Passive Income, Pat Flynn, earned over $3 million in affiliate revenue.
A quick but important word of caution for affiliate marketing: If you’re interested in becoming an affiliate, you’ll need to keep any legal requirements in your country in mind.
Specifically, you’ll want to look into regulations around disclosure. In the US, the FTC requires affiliates to disclose their relationships to their audience as you see Pat do below in his blog article.
Of course, outside of legal obligation, this disclosure is also important for your overall brand image. By disclosing that he earns a commission from any links that lead to purchase, Pat solidifies himself as a trustworthy resource for his audience while still netting (big) profits.
So if there’s any doubt about whether or not you should disclose, err to caution. It can only benefit your bottom line.
Prefer to steer clear of outside links and relationships? No problem. The next business model accommodates that preference perfectly, though it’s not without its own challenges, as well.
#3. Set up an ecommerce site to sell physical products
If you have physical products to sell, setting up an ecommerce or dropshipping site is a viable option for you.
You can create an ecommerce site using marketplaces or your own site to sell your goods.
As an example, Warby Parker, a philanthropic eyewear company, sells and ships their products to customers directly from their site.
Another option is to set up a storefront using a marketplace as Rebekah Hemmer does on her Etsy site.
Or, if you’re looking for a middle-ground solution, you can pursue a dropshipping business and sell, but not ship, the goods from your own operation.
If you’re unfamiliar with the term, dropshipping is a model where products are shipped to your customers on your behalf from the manufacturer. This setup means you don’t package, or indeed, house, any inventory at your physical location.
Sounds almost deceptively easy, right?
While it’s true that dropshipping is one of the fastest and lowest-risk ways to enter online business, it’s also one of the most competitive and lowest-yielding options. You’ll pay the bulk of your revenue to the third party or manufacturer who handles your inventory and shipping.
In other words, your profit margins won’t be wide or high with dropshipping, and because it’s so easy to enter, you can anticipate ample competition from other dropshippers.
Regardless, if you’re interested in selling physical goods but want to dip your toes in before wading into the deep end of inventory, insurance, and taxes, dropshipping is an excellent solution for first-time business owners.
If you’re not deadset that your goods have to be physical, however, there’s another option with high profit margins, easy entry, and zero inventory maintenance.
#4. Sell digital products to productize your business
One of the most profitable and scalable business models is selling info/digital products like online courses, digital downloads, and membership sites.
Remember what we said about inventory frustrations? Selling info products takes it out of the equation altogether, allowing you to sell to an unlimited number of customers. Once your product is created and published for sale, the bulk of your work is complete.
Check out Sef Chang’s Product Licensing Masterclass online course for an example of an info product in action.
You can follow in Sef’s footsteps and create an online course of your own or explore the multitude of other popular digital download formats like written, audio, and video products.
Still, all of these examples answer the ‘how’ behind digital products but do little to satisfy the ‘why’. Digital products are a great solution for new businesses for a few reasons, but the most important are these:
- You have limitless inventory, and hence, earning potential
- Once you’ve got your storefront up and running, your business is simple to maintain
- You don’t have a lot of overhead costs
- Likewise, you have minimal (if any) startup costs.
Best of all, however, is the maintenance behind digital products -- after you’ve done the legwork to create and publish your product, your only obligation is marketing to your customers.
Which means you can leverage your time and focus on growing your business rather than getting lost in the administrative minutia.
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OK, we’ve got one last business model to share with you today.
#5. Sell your services to earn an income
Whether coaching, consulting, or freelancing, service-based businesses are another proven model for new business owners. Much like they sound, a service-based business can fit into any niche, including marketing, writing, virtual assisting, wellness coaching, and more.
Beyond their flexibility, these types of businesses are also exceedingly profitable. Life coach Stefan James makes over $40,000 per month coaching and consulting online.
Here’s a glimpse of his online business storefront Project Life Mastery.
Life coaches aren’t the only entrepreneurs profiting from service-based businesses, though. Business consultants, people like Alex Hillman who sells bundled strategy sessions for $799, are also reaping the rewards.
Consulting or coaching not your speed? Making money as a freelancer by offering services such as copy-editing, graphic design, and data analysis, is just as lucrative.
This is the gist of it:
Regardless of the business model you choose, there’s ample opportunity for growth online.
Like freelancers, digital buyers are burgeoning and anticipated to constitute 2.14 billion of the global population by 2021, so there’s no shortage of customers, and thanks to ecommerce, there’s no shortage of business model options, either.
Luckily, the same holds true for the tools and resources you need to make each of these business models work.
What are the steps and tools needed to launch my online business?
#1. Use a logo maker to establish your brand identity
It’s hard to overstate how important it is to establish your brand’s identity with a signature logo.
From the moment someone visits your website, you have the opportunity to build loyalty with your brand. Since your logo is the signature symbol that associates their experience with your business (or it should be), it’s the most important visual asset in your brand identity.
It’s also often the first, which makes a big impact on audience affinity. 48% of consumers report first impressions are incredibly important for developing loyalty.
Wondering why loyalty is so important to your bottom line? Put simply, a loyal audience is a profitable audience.
Customer loyalty can be worth 10 times as much as one purchase.
Fortunately, designing these vital pieces of branding is a cinch. Here are just some of our favorite tools you can use:
- Canva - This free tool allows you to choose from hundreds of free design elements and stock images to drag-and-drop into your logo design.
- Designhill - You can create a logo yourself or launch a design contest and choose from dozens of new concepts submitted by professional designers. A low-res self-designed file costs $20, and high-res custom expert-designed file costs upwards of $150.
- GraphicSprings - Design your logo by choosing from a gallery of templates organized by industry. Then edit your graphics and text and pay $19.99 to download your new logo file.
- Logojoy - Easily walk through a guided process and narrow in on design choices. You pay as little as $20 once you land on your ideal logo.
- Logoaster - Use this online tool to design your logo and receive modified versions in a zip file. Pay from $9.99 for your high-resolution files.
- Ucraft - Ucraft is another free tool that allows you to create a logo by following a series of prompts. Designs are cartoonish in style and downloadable as transparent high-res PNG files.
You may also want to check out these 50 clever logos for inspiration.
Or, you can take a swing by this guide to entrepreneur branding.
As you can see, your options for logos range from free to over $150 with varying styles and involvement levels. As always, choose the option that best fits your business needs and budget.
Now that you have your brand identity established, let’s back it up with your domain name.
#2. Purchase your domain from a registrar to match your branding
Because your website’s domain goes hand-in-hand with your branding, it’s critical to select and purchase a domain name that reflects your business identity.
However, although it’s ideal for your business and domain name to match, the domain may not be available, and that’s OK. Here are some naming tips to follow if you end up in that position:
- Make it easy to type
- Keep it short and memorable
- Avoid numbers and hyphens
- Research it to ensure you’re not infringing on copyrighted or trademarked names
- Use an appropriate domain name extension
When choosing a domain name extension (i.e., .com, .org, .net), we recommend purchasing, at a minimum, one of the generic top-level domains (gTLD) to cover your bases:
Here’s a breakdown of the most popular extensions with 43.33% registered as .com, making it the most common.
Your next step is to purchase the name from a domain name registrar, which is a company accredited by ICANN (Internet Corporation for Assigned Names and Numbers), a non-profit organization responsible for managing domain names.
If you’re not sure which registrar to purchase from, here are a few options to consider:
- Bluehost - One of the largest hosting companies in the world, they offer free domain registration with all their hosting packages. For $2.75 per month, you can get a free domain name with your hosting.
- Domain.com - This is a good option if you’re looking to purchase a domain name only without the hosting. They have a powerful search tool to help you land on the best domain name. Plans start at $9.99 per year.
- GoDaddy - With over 18 million users, they’re one of the oldest and most popular registrars. You can purchase from a wide variety of popular domain names and extensions. Prices start at $2.99 per month.
- HostGator - You can easily search for domains and manage both your domain name and shared website hosting here. Their domain management is beginner friendly. Plans start at $2.64 per month.
- Namecheap - They have a powerful search and suggestion tool that helps you find the right domain name. They offer free domain privacy with all their domain names. Prices start at $8.88 per year.
Regardless of the name or registrar you decide on, be sure to align your branding across the board, just like the founder of Tiny Signs, Lane Rebelo, does.
As you can see, Lane matches her subdomain name with her business name, logo, digital download name, and product image, creating a cohesive and compelling brand presentation.
Once your branding is underway, your next step is to dive into some logistics and choose your storefront platform.
#3. Choose a storefront platform
To choose a storefront platform for your business, you have three main options:
Option A. Use a content management system (CMS)
R.E.D.D.’s protein bar product page is an example of an online storefront that uses WooCommerce.
Pros: You have control over the branding, content, design, and functionality of your online store.
Cons: CMS tools aren’t typically designed for selling digital products, but rather physical products. You’ll need to be comfy (and willing) to wade into technical headaches to manage any plugins required for digital goods.
Option B: Use a managed platform
Pros: They offer high-end and robust storefront capabilities with professional-looking design.
Cons: Managed platforms are typically expensive, can require strong coding skills, and tend to be better-suited for physical products.
If you’re looking for a platform designed specifically for digital products, our final option is your ticket.
Option C: Use an all-in-one platform
You can use all-in-one platforms designed specifically for digital products like Podia. Here’s a glimpse of creator Kristin Anthony’s clean and seek storefront for her online course, Skill Trees, on our platform.
Look up your alley? Try it for yourself for free today.
Pros: All-in-one platforms offer seamless storefront management and have an easy-to-use dashboard with full customer support. You have control over your branding and content, and with a platform like Podia, you can use a subdomain to brand your storefront further.
Con: If you don’t want to use your own site to sell your products (i.e., prefer the marketplace environment), this likely isn’t the right fit for your online business.
Whether you choose a CMS, managed platform, or an all-in-one platform for running your online business, it’s essential to lay a foundation that allows you to scale without being overwhelmed in the process.
Likewise, it’s just as important to streamline your business operations as you’re growing, which brings us to our next set of tools and resources.
#4. Use tools for streamlining and automating your business
It’s vital to tap into resources that allow you to streamline and automate parts of your business as you scale.
Two powerful tools we recommend using to do this are:
1. Email marketing tools
With email marketing earning 174% more conversions than social media, we highly recommend automating this part of your business.
If you’re worried about conversion rates dropping by automating this process -- instead of personally sending individual emails -- don’t be.
You can still personalize your automated emails and drive powerful results. In fact, automated emails drive conversion rates 180% higher than batch emails.
Some popular email marketing tools for you to shop are:
- ActiveCampaign - They provide a robust dashboard that allows you to create automated sales and marketing funnels based on a wide range of email behaviors. Packages start at $9 per month for your first 500 contacts.
- AWeber - This autoresponder tool gives you access to over 150 email templates and the ability to integrate with your storefront platform. Their monthly plan goes for $19 for up to 500 subscribers.
- Drip - Drip is a versatile platform that allows you to personalize and analyze your messages and integrates with your storefront. The starter package is free for up to 100 subscribers, and the basic package starts at $49 for up to 2,500 subscribers.
- Mailchimp - They offer free subscriptions for your first 2,000 subscribers or 12,000 emails. Mailchimp allows you to create email sequences and auto-responders using either your own design or their templates.
Basically, while an email marketing suite may feel superfluous when you only have a handful of customers, that same handful will eventually grow, and without automation, that growth could very easily drown your day-to-day schedule.
So, save yourself time both in the short-term and long-term and make email marketing your first automation. After that, look to our next tool category.
2. Customer service tools
Another vital component of your business to streamline with tools is customer service. Whether you're trying to build a business that runs without you or staying at the helm from start to finish, customer service tools are a must for delivering best-in-class experiences.
If you don't, you're likely to fall short of expectations. Globally, 54% of consumers say they have higher customer service expectations than they did a year ago.
Using tools to streamline your customer service process is key to meeting those expectations and eliminating conversion-killing hiccups like lost emails and long wait times.
You can use helpdesk services like Kayako to manage a customer service ticketing system, live chat widget, or triggered actions such as “high priority” tickets. Pricing starts at $15 per month.
Another helpdesk service worth checking out is Help Scout, a platform that allows you to build a knowledge base to answer frequently asked questions. Pricing starts at $20 per month.
Finally, if you want an all-in-one customer service platform you may want to look into options like Zendesk, which offers a ticketing system, live chat capabilities, phone and text support triaging, content management for your knowledge base, and analytics.
Pricing ranges from $5 to $199 per month.
So long as whatever solution you choose provides a live chat channel for your customers -- the channel 42% of consumers far prefer over others for support -- you’re golden.
All in all:
There are plenty of tools and resources to choose from to help you automate and streamline parts of your business. The biggest factor is to use tools that help you leverage your time, grow your business, and connect with your customers.
The rest, as they say, is gravy.
(But if you want to check out said gravy in more detail, take a swing by our recent article on marketing an online business to get even more tool reviews and actionable tips.)
Your online business venture awaits
Starting your online business doesn’t have to be a spine-chilling journey.
With reliable research methods, proven business models, and effective resources and tools readily available, you can simply review previous successes and follow suit.
Here’s the rundown:
- Before starting your online business, you need to validate your idea through market research by collecting primary and secondary data from your target audience.
- Then, choose the best business model to help you narrow in on your product offerings, such as advertising or ecommerce.
- Some useful tools and resources to tap into after that include a logo maker, domain registrar, storefront platforms, email marketing, and customer service tools.
- As you start your online business, focus on items that will help you leverage your time, and hence, grow and scale your business.
So, now you’ve got a trusty roadmap in hand, it’s time to embark on your new journey.
As always, we’re rooting for you.