How to start an online business?

Thinking of starting an online business? Your thoughts are definitely moving in the right direction, as running a business online can be very profitable these days. Whether you’re thinking of an online business as a side hustle or starting your entrepreneurship journey by starting your own online business, we’ve got you covered.

So in this post, we will explain how to start an online business.

India’s e-commerce revenue is expected to grow at an annual rate of 51%, the highest in the world.

Benefits of starting an online business in India

Other than the growing demand for online services and products from consumers, online business have many more benefits like:

• No spending money on buying or renting huge business premises
• Saving on hiring many employees, paying utilities, etc
• Requires less capital investment to start the business
• Provides flexibility as you can work from anywhere at anytime
• Global sales, with business operating 24/7

Definitely, online business has many more advantages as compared to a brick-and-mortar business.

How to start an online business

If you want to step out of the corporate office, stop commuting, work independently of location and become your own boss, you may want to start an online business. If you are ready to take the plunge, peep this post to learn how to start an online business.

Here’s what we’ll cover:

• Researching online business ideas
• Choosing a niche that works
• Checking the online competition
• Creating a business plan
• Choosing a business structure
• Registering a domain name
• Building your website or online store
• Marketing and growing
• FAQ

1. Research online business ideas & choose the right business model

To make your online business succeed, you need to make money. So, the first step in starting your business is deciding how you will generate revenue. This is the start of your market research process, as you seek out new business opportunities to meet market demands.

The first step in how to start an online business is to decide whether you want to sell a product or service — or both — online.

Retail goods like electronics and clothing are popular online purchases.

Make sure you do enough research about the market and demand of the business you are looking at.

Hence, to make your business exclusive and profitable, it’s imperative to have a unique business idea that can address the problems or fulfill the requirements of your prospects. It is equally important to learn a lot about your target audience and competitors.

When it comes to online business ideas, you have a few options.

Sell products online – traditional e-commerce model

Over the past few years, people have grown more comfortable shopping from their couches, which means there’s never been a better time to start an online store or add ecommerce functionality to your website. It’s never been easier for small businesses to get into the ecommerce game, either.

If you’re an ecommerce noob, however, you may need help selecting the right products and platforms to sell online, learning how to build and launch your ecommerce site, finding your target customers, and closing the deal. We’ve gathered all the information and tools you’ll need to easily launch your online store and list your products on all marketplaces, both quickly and effectively.

You can sell products that you make or buy from a wholesaler and then sell on your website. For this business type, you might need to store and ship products to customers.

In this case, you would need some courier companies that can deliver the products to customers. There are a few specialist companies in India that handle logistics and product delivery for e-commerce like Delhivery.com, DotZot.in and Chhotu.in.

Try dropshipping

Many first-time ecommerce entrepreneurs start their careers with no physical inventory. Through a process called dropshipping, you can act as a wholesaler of products that you curate on your site, then purchase directly from the manufacturer to ship to your customers. A dropshipping business might be just what you need!

Sell courses

Online courses that you create yourself or sell on behalf of others. Like digital products, online courses can be set to automatically deliver to customers upon purchase.

Start a blog and become an affiliate

Affiliate products that you sell on behalf of another business. When selling affiliate products, you usually don’t have to store or ship products. The merchant deals with delivery, and you simply receive a commission for helping sell their product. Many affiliate programs also offer good incentives when you attain a certain volume of sales, which can be helpful once you generate enough traffic for your blog or website.

Create a SaaS product

Software as a service (SaaS) is an offering that falls somewhere between a product and a service. If you develop software — say, like a scheduling app for small business — you can have customers sign up and pay a recurring fee to use the tech you developed. For this type of product, a platform with membership functionality helps a lot.

Offer services

You can start an online business based on selling consulting and freelancing services that are completed online or over the phone. When you sell services online, you can find customers and make sales on your own. Or you can sign up for sites that manage the process and allow you to connect with clients through their platform.

The type of services you can offer your customers are endless. From web design, graphic design to content marketing, let your potential clients benefit from your expertise, whichever that might be.

Editor’s Note: Check out this article to understand the various types of business model you can deploy for your online business as a business owner!

2. Choose a niche that works

The best product ideas are often born from hobbies and passions, where you discover an opportunity in a niche that no one is serving.

For example, pet products are always popular in the e-commerce sphere, but competition can be high. But if you choose a niche like organic pet products, there’s less sellers offering similar products and a greater opportunity to refine your catalog.

Search for keywords or phrases that your target market will likely use to find your niche product or service, and note if the market is saturated.

If that is the case, it could cost you extra money and time to stand out in an already crowded marketplace. Sometimes, it’s better to start small in an underserved market.

3. Check the online competition

Once you have positive product feedback, research your competition and gain market insight online.

Start by searching for and visiting popular product review sites, where you can find lists of top websites  for specific categories, compiled by experts. Read what the experts like and visit the websites to see how they’re doing it. Additionally, look at customer reviews to learn what people like and dislike about them.

Likewise, go on social media to see what people are saying. Do people complain about them, or do most of their customers sing their praises? This exercise will give you an idea of how much brand loyalty the competition has. Also, see if those brands respond to customer questions and complaints, and list what the common issues might be.

Subscribing to your competitors’ email lists is another effective way to analyze how they are talking to your target audience. Make note of their pricing and promotional strategies, which we’ll detail later in this post.

Research keywords and difficulty

Use a keyword planning tool such as Moz, Semrush or the Google keyword planner tool. These will show you search volumes for a particular keyword, as well as how much competition there is when it comes to ranking for it.

As you research keywords, it’s important to strike a balance between search volume and competition — there’s not much benefit targeting a keyword nobody searches, yet it’s best to avoid high-competition terms.

Check the SERPs

When you start getting your head around the keywords you want to target, plug some of them into a search engine and check the results. Note who’s at the top of the page — they must be doing something right, so pay a visit to their websites and ask yourself some of these questions:

• How are they incorporating keywords into the website text?
• How does the language they use establish their brand?
• Are there any design elements that jump out?
• What other things make this website special?

While you should never copy a competitor’s website, there’s nothing wrong with getting inspiration from it. Jot down notes that you can refer to as you continue to start an online business.

Ready to dig in? You can do this!

Before jumping right in, it’s important to understand how to go about selling online — below mentioned tips will help you in that.

1. Build a simple and attractive website.
2. Get business licenses and permits.
3. Sign-up with online payment gateway.
4. Promote your business to grow.

Let us look more closely at each element of a successful online store.

4. Create a business plan

A business plan can be like a roadmap that guides your business from starting to succeeding. And if you’re planning to apply for a loan or attract investors, a solid business plan is evidence that you’re a safe bet. At a minimum, your business plan should include these sections:

• Executive summary — Be brief in describing, from a high level, what your business will do or sell.
• Organization and management — Introduce key members of your team, and how their skills and experience will help you succeed.
• Service or product line — Describe your offering, how it works, and why there’s a demand out there for it.
• Marketing and sales — Explain how you’ll get your product or service in front of the largest possible audience.
• Funding request — If you’re seeking external funding, specify your needs and what the funding will support.
• Financial projections — State how much revenue you expect to generate. This can strengthen your case for funding.
• Appendix — If you have reference materials, technical specs or certifications, include them here.

Ready to start planning? Check this post on how to write a business plan (step-by-step) for more info.

Consider funding options

Unless you have that rich uncle everyone dreams about, you’ll need to secure funding before you successfully start an online business. Business startup costs can vary, and there are a few routes you could take here:

• Secure a loan — If your business idea is compelling and you have a rock-solid business plan, you might persuade a financial institution to front you the startup funds. Just be sure to understand any interest and potential penalties.
• Attract investors — Investors also could show interest if you have a great idea and business plan to put in front of them. However, you might need to relinquish some control of your venture to accommodate them.
• Bootstrap it — This would be the most direct route. If you have savings, investments or other assets, using them to bootstrap your idea gives you total control. But you need to consider the ramifications if your business idea falls through.

Related: Where to find SME business loans

5. Choose a business structure

Separate yourself from the business by setting up a C-Corp or LLC status that limits your personal liability for the company. This protects you and makes you appear more professional to customers and clients. Here are three structures to consider:

• Sole proprietorship — The business is nor incorporated, with a single person designated as the owner.
• Partnership — Two or more people are designated owners, contributing toward expenses and sharing profits.
• LLC — With a limited liability corporation, definitions can vary by region, but essentially the business exists without owners, offering legal and tax protection.

Separating your personal and professional finances will make it easier for you to file your taxes and keep an eye on your financial situation.

Once you establish your business as a separate entity, you can get a tax ID number for the business, allowing you to better manage your taxes and open a business bank account.

Check laws for online businesses

Here, you might need to source some professional advice or at least do some comprehensive research. Don’t start an online business only to discover there’s a law that creates a conflict leaving you dead in the water.

There’s likely a local government agency — such as a Department of Revenue — that could provide a checklist of applicable laws.

For example, in some regions there are very strict laws that apply to marketing to individuals online. And if you’re setting up an online store, it’s crucial to understand all the regulations that cover privacy and data protection.

Obtain permits and licenses

At the very least, you’ll likely need a license issued by your regional authority to start an online business. And if you specialize in a particular product or service, there might be additional permits or licenses you need to secure.

For example, a barber or stylist would need a license from their local cosmetological authority. And many home services require specific licenses or permits, for example, to excavate or operate heavy machinery.

The first thing to know is, any online business that wants to accept online payments needs to set up as a registered company.

Once you set up your business as a separate entity, get a tax ID number known as Employer Identification Number (EIN) for the business. EIN will allow you to manage your taxes and open a business bank account.

The business licenses and tax required to be paid for an online portal depend on the type of products being sold at the site. Some such taxes include CST/VAT, service tax and professional tax. Service tax is applicable only on services being provided. For the sale of goods, VAT, excise and sales tax must be charged.

 

So, it is advisable to check your respective state policy about these registrations.

6. Register a domain name

When choosing your ecommerce business name, consider something that is short, memorable, and marketable. A thorough search for a domain name can also help you find the right name for your ecommerce store.

The cost for a domain name can range anywhere from $2 to $20, but there can be hidden costs. Review this guide on how much a domain name cost for more details on what to include in your budget.

You might also consider using .shop or .store for general ecommerce, or get more specific with .jewelry, .clothing, .coffee and more.

7. Build your website or online store

Once you decide on a business model, you need to choose the best place to build your business online. How you make money online will dictate which platform you should build your business on. Choosing where to build an online business is just as important as learning how to start an online business.

Nowadays, building and designing your website is very easy as there are many companies like GoDaddy that can help you in doing so. You simply have to set up an account, register a domain name for your business and pay an annual fee.

Use an e-commerce website template to get your online shop up quickly.

Remember to keep your website simple. Configure the site to look the way you want and include the features, logo, catchy text and design to attract more customers to your website. Read this post for a step-by-step description of how to get a website.

Whether you plan to create a website or use an online store builder to get online, be sure to evaluate all your options, taking cost and complexity into consideration.

Target your main keywords

Do some research to discover what select words and phrases people use to search for your type of business. Sprinkle these keywords throughout the content on your website and create pages that focus on your target keyword. These might represent services — such as “lawn care” — or products if you’re operating an online store. Here it helps to check what the competition is doing to perform well in search results.

Create content that ranks and sells

Whether it’s a shareable infographic, entertaining how-to video, or blog post about why spending time in your online store is more fun than watching a favorite TV show, make content that people can’t find anywhere else.

This is the kind of stuff people will want to link to from their own websites and social profiles (remember backlinks?). Make sure they find that amazing content by optimizing it for search engines.

When it comes to content that ranks and sells, there are a couple main elements to consider: SEO and compelling product listings.

Search engine optimization (SEO): the process of refining a website to get higher search engine rankings and organic visitors to your site, without paying for search engine placement.

Unlike paid listings — advertisements that display in sponsored areas — organic search results are “free” and based on, among other things, the site’s content and how closely it matches the keywords being searched.

After you (or your website guru) does the website backend stuff needed to attract the attention of the search engine bots (like connecting the site to Google Search Console), search engines know that your site exists. They scan it, index the information, and analyze the website’s content to determine how and where your website’s content should display on search engine results pages (SERPs).

Compelling product descriptions that sell

Details can make or break a sales transaction. Since you don’t have a sales clerk to answer your customer questions on a website, start by thinking of all the questions they might ask that person in-store.

For example, what fabrics is a sweater made of? Is it organic and earth-friendly? Was it made locally? What other items might pair well with it?

Your descriptions should be as detailed as possible. However, being honest and upfront about it helps to build trust with customers.

Set up payment providers for ecommerce

The key to closing an online sale is to provide an intuitive and seamless checkout and payment experience.

To do so, you will need to have a payment gateway to accept debit cards, net banking and credit cards on your website.

A payment gateway helps to process different types of payments — without it, you won’t be able to securely charge your customers when they buy items from your website. There are many payment gateway providers in India like Instamojo, PayPal, CCAvenue or BillDesk.

Some platforms offer built-in checkout and payment processing tools. For example, GoDaddy’s Online Store enables you to securely accept all major credit cards, PayPal and Apple Pay — but not all service providers do.

When evaluating options, you’ll need to consider:

• Does the platform’s merchant account accept all currencies and offer SSL certificates?
• What forms of payment can you accept through your account? Credit cards, personal checks, wire transfers, or money orders?
• How about PayPal or Stripe?
• Does your platform offer a payment gateway to verify, approve, and process charges in real-time?
• Does it integrate with your website’s existing platform?
• Do other merchants like or complain about the platform’s checkout and payment experience?

Review all your options and ask the platform provider about the associated transaction rates and processing fees.

Source products

If you’re planning to start an online business to sell products, having a reliable source will be essential. There are a few ways to consider locking this down:

• Find a supplier — A reliable manufacturer or wholesaler can keep you supplied, but inventory control (too much vs. not enough) can present a serious challenge, as can storage and transportation.
• Set up dropshipping — As mentioned earlier, dropshipping lets you sell while your supplier fulfills the orders. This might require specific technology to manage the supply chain once you get things moving.
• Supply it yourself — This option gives you the most control, but you need to think about your workforce. Doing everything yourself could be rewarding, until you find yourself scrambling to keep up with demand.

Build a brand

Even if you hire a pro to build your site for you, you’ll need to make (or at least approve) decisions about the look of the site — its design. Here are a few design fundamentals you’ll want to consider:

Logo. If you don’t have a logo or would like a new one, try our logo maker, where you can make a new logo in a matter of minutes. Once you have it, think about how you want to incorporate your company logo into your website’s design.

Colors. For brand harmony, it’s important to choose the right color palette for your website. Do you own a creative company? Perhaps vibrant colors like hot pink and tangerine speak to your brand. If you’re in the professional services industry, more subtle hues such as charcoal and blue might be more appropriate.

Think about the feelings colors evoke for you and match them with how you want your customers to feel when they visit your website.

Fonts. Think about the fonts that might best represent your particular business — from bold, linear styles to more delicate, feminine fonts.

Layouts and more. Consider the amount of “whitespace” (space between elements) in your design. A lot of whitespace can denote clarity or simplicity, while having very little of it can make your site look active or intense. Other elements, like background colors, gradients, and the “texture” of your overall design, can contribute to your online impression.

By putting a little thought into these basic design elements, you’ll make big strides in telling your story, building your brand, and framing your products and services in the best possible light on the web.

Related content: How to Make a Logo

8. Market and grow

Once you have a product or service to sell, a place to sell it and the peace of mind that you are operating legally and strategically, it’s time to get some customers and get to work. Tell family and friends, market yourself and seek out potential clients and customers.

Here are a the main ways to market your online business:

• Organic search — Learn the basics of SEO and get your content to rank higher.
• Paid search — Discover and bid on keywords to display your ads in related searches.
• Social media — Build a following and promote your online business on social media.
• Email marketing — Curate subscriber lists and develop email marketing campaigns.
• Online reviews — Monitor review sites and work to ensure you hold a high rating.
• Word of mouth — Network in person to build awareness of your online business.

The perk of having an online business is that you can take your work with you just about anywhere. But one of the best perks is that your online business is accessible to a massive audience of potential customers.

So, set up shop and get to work on building, marketing and growing your online business.

FAQ

What kind of business can I start online?

While the limit is your imagination, in this post we’ve covered some of the more popular types of business to start online:

• Ecommerce store — Set up an online store and process sales through your website.
• Dropshipping — Have a third-party supplier fulfill the orders you generate online.
• Online courses — Charge people to access learning material you post online.
• Affiliate marketer — Build a following and sell another business’ products to visitors.
• Create a SaaS product — Develop software and charge a fee for access to it.
• Offer services — Services such as counseling or teaching can be delivered online.

How do I start an online business with no money?

Starting an online business with no money can be a challenging task, but it is possible with the right approach and mindset. Here are some steps you can take to get started:

• Build a website — Use a free website builder to create a professional-looking website for your business.
• Use social media — Take advantage of social media to promote your business and reach potential customers.
• Network — Connect with other entrepreneurs and professionals in your industry through online forums, groups, and events.

Starting an online business takes time, effort, and persistence. Stay committed to your goals and remain flexible in your approach as you adapt to new challenges and opportunities.

What kind of online business is most profitable?

The most profitable one depends on various factors such as the target audience, the niche, and the business model. Here are some examples of profitable online businesses:

• Ecommerce — You can create your own online store or sell your products on marketplaces like Amazon, Etsy, and eBay.
• Online education — Platforms like Udemy, Skillshare, and Coursera allow instructors to create and sell courses.
• Affiliate marketing — Many bloggers and content creators use affiliate marketing as their primary source of income.
• Digital marketing — Provide digital marketing services like search engine optimization (SEO), social media marketing, and email marketing.
• Software as a service (SaaS) — Examples of successful SaaS companies include Dropbox, Slack, and Zoom.

It’s important to note that the profitability of an online business depends on various factors such as the quality of the product or service, the target audience, and the marketing strategy.

Which online business is best for beginners?

There are many online businesses that are suitable for beginners, depending on their interests, skills, and resources. Here are some ideas:

• Dropshipping — Set up an online store and sell products without holding inventory. A third-party supplier ships the products directly to your customers.
• Affiliate marketing — Promote products or services on your website or social media platform and earn a commission on each sale made through your referral link.
• Blogging — Start a blog and create content around it. Once you have built up an audience, you can monetize your blog through ads, sponsorships, or affiliate marketing.
• Online courses — Create an online course and sell it to people who want to learn the same skill. You can use platforms like Udemy or Teachable to host your courses.
• Social media management — Offer your services to small businesses or individuals who need help with their social media presence.

Ultimately, the best online business for beginners is one that aligns with their skills, interests, and goals. It’s important to do your research, understand the market, and be willing to put in the time and effort required to succeed. Good luck!

NOTE: This article was first published on 20th May 2019 and updated on 4th July 2023. The updated version contains content from this article.