How to start an online business

How to start an online business

Reading Time: 11 minutes

In pre-internet times, starting your own business used to be a luxury few could afford. But that’s no longer the case. As people have grown more comfortable with online shopping and selling, the rising popularity of e-commerce shows no signs of stopping.

In 2022 e-commerce sales worldwide are projected to reach a staggering $5.4 trillion in revenue. Nearly anyone can start an online business without investing considerable startup capital, cutting the expenses involved in running a traditional brick-and-mortar business.

While the low startup cost and not having to operate a physical retail location are enticing reasons to get the ball rolling, there are still a few things to consider before jumping into your next big venture.

From coming up with the best online business ideas to ensuring a top-notch customer experience, we’ll walk you through the necessary steps which will turn your side hustle into a lucrative internet business.

First, let’s look at why getting into e-commerce is a great idea for aspiring business owners and entrepreneurs and how to start an online business.

Why You Should Start an Online Business

Just because your business is set up online, it doesn’t mean it won’t take any effort. Of course, you’ll still have to put in the work, but the numerous advantages of operating an online business will make it worth your while.

It’s Inexpensive

Brainstorming how to present what you’ve got to offer will cost you nothing. If you’ve got enough motivation and creativity, having access to a computer or laptop will open many doors for you. Once you’ve landed on a potentially feasible idea, you can test out the consumer waters by running a quick internet version of the coffee test.

Basically, before launching your store or webpage, you’ll introduce a minimum viable product (MVP) to see how much interest your idea generates among potential consumers. A basic page showcasing your MVP can cost as little as $10, and it will help you determine whether people are actually interested in buying it. By adding a simple button for people to show their interest, you’ll know whether it’s time to take the plunge and build a proper website.

Getting a domain name will cost you about $10, while website builder pricing can vary depending on the site’s purpose. For example, a personal Squarespace plan starts at $12 per month, while the advanced e-commerce plan bumps the price to $40 per month.

Compared to the expenses of running a brick-and-mortar store model, where you’ll have to pay for the location and your employees’ salaries, e-commerce comes up as a cost-effective option in the long run.

Time and Location Flexibility

A 9-5 store in the city center will generate income only during business hours. Plus, the storefront needs to be compelling enough to get them to step into your shop. An online business will help you do away with these time and location constraints and reduce your working hours.

What’s important is not how much time you’re spending on the job, but the quality of your goods and services. As a result, you’ll have a more flexible schedule and be able to tap into a worldwide audience, with the value of your product attracting prospective buyers from all across the globe.

It Works for You

Regardless of the type of product, an internet business can run 24/7. Sales will go through whether they occur at 2 a.m. or 2 p.m. As you’re sound asleep, someone on the other side of the country could be browsing your site, getting ready to make a purchase. Since sales don’t depend on your physical presence, you’ll also have more time to rest and brainstorm better ways to grow and expand your business.

5 Popular Online Business Models

With online trends constantly coming and going, it can be challenging to decide whether jumping on the bandwagon of a seemingly lucrative business idea will pay off. These five popular options will help you decide where to head next on your business journey.

Go Freelance

Whether you’re looking for a part-time job to earn some extra pocket money or thinking of turning your hobby into a full-time gig, freelancing is the way to go. Websites such as Upwork or Fiverr will help you determine which of your skillsets are in most demand.

Once you get your foot in the door, the quality of your work will ensure customer loyalty, with people coming back to you to help them with similar projects.
If you’re unsure how to kick off your freelance career, these are some popular options:


If writing is your passion, becoming a blogger seems like the natural next step. While there are more lucrative business models out there, a well-written and informative blog will help you garner a loyal audience. You can sell original products, and the size of your following will also attract many brand deals and sponsorships. If you’ve carved out a niche space on the internet for yourself, you will be indispensable to brands looking to broaden their customer range by running ads on your blog.


When your creative juices are constantly flowing, being a freelance illustrator might be a challenge for you. All industries, from apparel and textile to publishing and gaming, need creatives to help them achieve a desired aesthetic. Take on as many or as few jobs as you want, but the more you network and build a name for yourself, the more companies will seek you out first for projects.

Look Into Dropshipping

Dropshipping is a retail business that allows you to sell physical goods without personally keeping them in stock. Here’s how dropshipping works:

  1. The customer will place the order through your online store.
  2. You forward the order to the manufacturer or supplier, who ships the goods straight to the customer.
  3. When you’re first starting in business, manufacturing and storage can eat up a lot of money, so dropshipping is an excellent way to avoid getting in over your head financially.

Anker Innovations Technology, a giant in smart charging technologies, started as a small dropshipping venture run by the Yangs, a husband and wife duo. As their sales increased, they decided to take their business to the next level, and soon Anker grew into the tech leader it is today.

Launch an Ecommerce Store

In 2016, 209.6 million Americans shopped online, while the number of digital shoppers is estimated to have reached 230.5 million in 2021. With more and more people looking for a quick and seamless online shopping experience, there has never been a better time to launch your own e-commerce business.

When you know what types of products you want to offer, pick the platform that aligns with your vision (Shopify, Magento, BigCommerce, Wix, Squarespace, etc.) Alternatively, you might be interested in selling through online marketplaces like eBay and Etsy.

Become an Affiliate Marketer

Affiliate marketing is an excellent way to make money through the internet when you’re not interested in creating original products. It typically looks like this:

  1. Sign up for an affiliate program with a company or affiliate network.
  2. Once you’re approved, you’ll get a referral link for goods or services to share with your audience.
  3. You earn a commission when someone uses your referral link to buy goods or services.

Since links are great for working into blog posts, it’s common for bloggers to write up entire dedicated posts centered around the goods or services being advertised. To make the most out of affiliate programs, it’s also great to promote them on your social media accounts and generate traffic that way.

Register as an LLC

Thanks to the internet, small businesses everywhere have found a new and ever-expanding space to grow and flourish. However, when you first set up your business, you must choose the best business model for your goals and vision.

The simplest way of registering your online venture is as a sole proprietorship. However, while you won’t have to deal with many legalities here, it also means that you, the sole proprietor, and your business are seen as one and the same. So when things go wrong on the business side of things, you’ll be viewed as liable, which can put your personal property and bank accounts at risk.

However, a Limited Liability Company (LLC) removes that risk. Limited liability means that the owner is under no legal obligation to take on business debt they haven’t personally guaranteed. Instead, these debts can only affect the accounts and assets of the LLC. In addition, since most LLCs are pass-through entities, they qualify for the 20% pass-through deduction, effective until 2025.

Keep in mind that other regulations regarding LLCs vary from state to state, so make sure to get all the necessary information on your state’s official website.

How to Start an Online Business From Scratch

  1. Find Your Niche

When you find your business niche, you’ll also find the most opportunity for business growth and the best ways to maintain and expand your target audience. First, think hard about what you want to offer and see whether you can identify a need for it on the market. Once you find a need that you can meet, you can evaluate how many people are interested in your goods or services and how much they are willing to pay.

As a business owner, you constantly have to keep up with customer requests; otherwise, you’ll fall off their radar and lose revenue.

Additionally, suppose you join an already oversaturated market. In that case, your business has little chance of standing out, so your product idea should meet the needs of the consumers in a fresh and unique way.

Use Google Trends to see what people are searching for online. When you notice similar keywords stacking up quickly, this indicates a void in the market. And that may be a void that your online business can fill. Another excellent free tool to help you understand what your audience wants is Google Keyword Tracker.

  1. Decide on the Types of Products

When you’re running an e-commerce business, these are the types of products you can offer:

Physical Products

Physical products are made and kept in storage units or warehouses until they are sent off to customers. When you start your business, it will initially be a small-scale operation, so make sure to consider manufacturing costs. When overlooked, they can seriously lower your sales income.

Digital Products

Anything you can download onto your device counts as a digital product. Online courses, audio files, photography, apps, video guides, and paid subscriptions are just some of the downloadable content sellers can offer to their customers. The problem is that sometimes people firmly believe digital products can’t be as good as their physical counterparts. Of course, this is where the quality of your goods will have to shine through, but it’s always good to have a marketing strategy in place to maximize growth and exposure.


Even when you have no physical or digital products to offer, you can still find a marketplace for your services. For example, if you’re only looking to gain more traction around your business, you might want to add an online option for booking appointments. However, you can also choose to go entirely online and deliver services remotely using your website.

It’s getting increasingly common to have your dermatology or ophthalmology appointment done online. After that, you can start freelancing until you build up a loyal client base and think of a long-term business strategy.

  1. Research Online Business Laws

Your online business model will also determine your legal obligations as a business owner, so you need to know what the law requires you to do. Carefully look into :

  • The different types of business licenses and whether you need to apply for one
  • Tax laws and regulations
  • A legal structure that suits your venture- (a sole proprietorship, LLC, or a corporation, etc.)

Online business laws are constantly being changed and revised, so even if you’ve gone through them once, it’s wise to double-check them. Your business must be in compliance with the necessary requirements. Since these laws vary from state to state, look into the correct information for your specific state. If you feel that you need expert legal advice, then seek out professional counsel before deciding.

  1. Find Your Products

The quality of your products will also impact the image of your entire brand, so they need to be made with care and sourced from reputable sellers and companies.

  1. Do It Yourself

Once you’ve created a digital product, you don’t have to worry about running out of stock. You can keep it in your online store for as long or as short as you want. Physical products, however, require more time, effort, and finances.

The manufacturing costs can be very high, but the return can be even higher if you’re determined to build your brand. Handmade goods are unique selling points, and people are willing to pay a lot of money for a singular customer experience.

  1. Start Dropshipping

You can get into dropshipping if you’re not ready to deal with more substantial business costs. It’s a great business opportunity to learn more about the market and gather useful experience for future endeavors.

  1. Team Up With a Wholesale Company

When you work with a wholesaler, you buy their products and then repackage and sell them in your store. Before you agree to sell their goods, ask questions about quality control and potential discounts on larger orders. Remember to keep a detailed financial log of the costs so that you can adjust your prices to increase profits.

  1. Build a Strong Brand Image

The presentation and feel of your online business is the first thing potential customers will see, so this first impression needs to be a strong one. Your brand image will mirror what you do and how you do it, and it needs to be backed by solid marketing. To make sure your business is sending a strong message, you should take care of:

The Visuals

Your name, logo, website layout, videos, graphics, pamphlets, etc., should all have a cohesive look. In addition, it should firmly state that you take your business seriously and are willing to go the extra mile to ensure customer satisfaction.

While your website needs to be professional, it should also match the nature of your business. For example, if you’re selling handmade pottery, you’ll probably go for warm earthy tones. If you’re working on campaigns for other companies or sponsors, pay attention to ads or sponsored content placement. Ads and sponsored posts should be organically integrated into your website so that your customers don’t feel swamped with too much product.

SEO Friendliness

Search engine optimization (SEO) will help your website appear higher in search engine results. As a result, your website gets more traffic, and your products or services are exposed to a whole new audience. SEO will also make your page user-friendly, which is extremely useful for converting one-time customers into returning customers.

  1. The Pricing

Many websites selling goods or services offer several pricing schemes that are rarely straightforward or upfront.

Why does one subscription cost more than the other when they’re virtually the same?

Unclear pricing scales will drive away customers and brand your business as unreliable.

It’s good to have your prices clearly stated on your website or explained in the product description. Then, customers will know that you value your business and that you are an owner that cares about them getting their money’s worth.

Launch Your ECommerce Business

When starting an online business, taking the appropriate steps will lead to a successful launch and help your brand maintain that momentum.

Choose Your Platform

Now that you know the best online model for your business and what products you want to offer, you need to choose an ecommerce platform that will enable you to make sales online. It allows consumers to go through product catalogs, manage their orders through the online shopping cart, and make payments to the seller.

Building a custom e-commerce platform is quite expensive, but luckily small businesses can choose from several options, including:


Shopify is a cloud-based platform where you’ll pay a monthly subscription to keep your store up and running. However, you won’t have to worry about upgrading your software or maintaining servers. You’ll be able to handle your online business from anywhere in the world as long as you have a decent internet connection.

Shopify doesn’t only let you run your online store; you can sell in several different places, on the web, on mobile devices, and across your social media accounts as well.


BigCommerce is easy-to-use and has several unique features. For example, it allows you to set different prices for different customer groups without setting up a new seller account. But one of its most significant advantages is that it offers several SEO-friendly features, which are invaluable for boosting sales.

BigCommerce has excellent built-in tools that help you track your analytics so that your business can seamlessly adapt to and meet the market’s demands. For example, the Store Overview Report logs all sales across your market channels, while the Abandoned Cart Report identifies products that people often leave in their carts. It’s information that will help you decide on better business practices.

Add the Products

When you’ve found a platform that aligns with your business ideas and budget, it’s time to build your product catalog. The images and descriptions of the products need to emphasize that they are both appealing and functional. Dry instructions on how to use a product will quickly bore readers. Instead, focus on why this product is necessary and how it can positively impact potential customers.

Shipping Methods

Sending physical goods to customers costs money, so it’s essential to have a system that ensures the goods will reach the customer in perfect condition. Some of the options to consider are:

  • Table Rates: The cost of shipping is calculated based on several factors, including weight, color, size, destination, etc.
  • Flat Rates: You always charge the same amount for shipping, regardless of the product.
  • Free Shipping: Everything offered ships free and is an excellent way to encourage shoppers to spend more on your products.

Finishing Up

At first, starting an online business may seem like a scary task. But when you understand what it takes to launch an online store, the variety of products offered, and how to define your audience and brand vision − the steps are actually quite simple.

There’s never been a better time to turn your passion project into an online career through e-commerce. Your computer will help you figure out what market to tap into and how to refine your skills so that your customers will have the best service possible.

As long as you keep learning about the market as you grow your business, you’ll never suffer a lack of customers.