How to start an online business
With relatively low start-up costs and access to a global audience, learn how to start an online business from home – in just seven simple steps
Put simply, an online business is one that sells something on the internet – be it a product, service, download, subscription, or advertising – usually via a website, a series of websites, or social media. Some examples of online businesses include:
- Ecommerce (those selling products via the internet)
- Freelance services, such as translation or administration
- Creative services, such as blogging or illustration
- Web design services
- Consultancy (PR, HR, SEO)
- Software-as-a-Service (such as CRM)
- Trading in stocks and cryptocurrency online
Starting an online business comes with fairly obvious appeal. Websites can be built cheaply, and run from home in your spare time. Not to mention there’s a global audience to tap into – did you know there are over four and a half billion internet users worldwide?
Keen to get your venture going? Read on to find out how to start an online business…
1. Conduct market research
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?
Find out how to calculate your target audience size here.
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.
Learn more about this process here.
2. Choose your online business model
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.
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.
- Freemium. 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.
3. Build your website
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.
- Use a website building tool. 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 web 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.
4. Fill your site with optimised copy
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.
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
5. Comply with online business legal regulations
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.
Read more about GDPR, and how it might benefit your business, in our guide to the regulation.
Privacy and Electronic Communications (EC Directive) Regulations 2003
- Inform website visitors that you’re using cookies
- Tell users how to turn your website’s cookies off
Odds are that you’ve visited a website since 2012 – in which case you’ll have been confronted with 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.
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, 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 just that
- Make sure the sender of any communication sent by your company is identified
The Consumer Protection (Distance Selling) Regulations 2000
Covering B2C (business to consumer, rather than business to business) dealings, these regulations protect the rights of your customers.
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.
6. Launch social media channels
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).
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.
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.
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.
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.
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.
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.
Visit our guide to building a website in seven steps, or – for more hands-on help finding the right website builder for you – try another way.
Simply provide us with a few details about the online business you're looking to create, and let us know more about your website's requirements. We'll then match you with tailored quotes from leading ecommerce website builders, who'll be able to help you find the plan that's best suited to you. It takes just a minute, and is completely free!