Not long ago, starting a business meant significant capital investment with physical location and a period of preparation that could take months or even years. The advent of starting an online business with ecommerce changed this, creating the opportunity for anyone with a computer and internet connection to become an entrepreneur with less upfront costs.
Today, the opportunity with starting an online business in general, whether in ecommerce or services, is perhaps more accessible than it’s ever been in terms of both time to start and investment required.
However, while launching an online business is easier than it’s ever been before today, success is far from guaranteed. The sheer amount of information and options available today often works against new entrepreneurs, creating overwhelm that prevents them from taking effective action. Whether you want to start a simple side hustle with reselling or launch the next big ecommerce brand, you need a clear roadmap to follow.
Starting an online business in 10 steps
1. Choose your business model
The very first step to starting an online business of any kind is picking the right business model that aligns with both your goals and resources. This decision will impact everything from your startup costs to your potential timeline for profitability, so it’s critical to make an informed choice.
Online businesses are started by selecting the best-suited business model for one’s goals and resources. The consideration will affect everything from startup costs to probable time style for your process before profits start coming in. It’s a vital decision to make wisely.
When choosing your business model, you’ll need to consider the following factors:
Skills required
While it’s possible to acquire just about any skill to operate an online business, it’s best to overlap your current abilities and interests with a profitable business model to have your best shot at initial success.
Specific skills will vary depending on which business you choose, but in general, operating an online business will require some degree of marketing ability and understanding what a target customer wants and how to sell that to them.
2. Market research & validation
The second crucial step in starting any online business is thorough market research and validation. While it might be tempting to skip this step and jump straight into launching, understanding your market can mean the difference between success and failure.
Market research might sound intimidating, especially for those who are new to it, but it doesn’t need to be expensive or complicated.
Here are some essential areas to focus on:
Trends
The market is cyclical and always changing, and while it usually isn’t the best idea to chase trends that are overhyped and often short-lived, hopping on a trend that still has momentum can be a viable path to profits both short and long term.
Simply browsing the right corners of social media can be sufficient to give you an idea of what trends are hottest right now, and if you want to go deeper with broader insights, you can use free tools like Google Trends.
Competitive analysis
While too much competition and oversaturation is definitely bad, some competition isn’t only inevitable, it’s a good thing as it proves market demand. You can study your competition to see what they’re doing that is working, and you can also see how you can frame your specific offering to stand out and attract customers even if you’re brand new.
Demand validation
Validating demand goes beyond just seeing if people might be interested in your offering–you’ll want to confirm that they’re actually willing to pay for it. Existing competition can help validate this demand. Pay attention to which platforms and marketing methods drive the most demand, and be sure to position yourself where the majority of buyers are.
3. Define your target audience
The next step is defining your target audience. While this is part of overall market research, it’s important enough to be listed separately. Even if you’re selling a popular product, you can’t have the mindset that absolutely everyone likes it.
Get used to figuring out and defining exactly who will be most likely to buy from you and how to find them as this will help guide every marketing decision you make moving forward.
Understanding your target audience requires looking at both demographics and psychographics. Demographics include basic information like age, location, income level, and occupation. However, the real gold lies in psychographics–that is, understanding the psychological characteristics that drive purchasing decisions.
Here are some key areas to focus on when defining your audience that include both demographics and psychographics:
Pain points and specific problem that a specific audience is trying to solve
Where they currently shop to solve this and why
What brands they trust and follow
Goals and aspirations
Daily routines and habits
Values and beliefs that influence buying decisions.
Remember, the more specific you can be about your target audience, the easier it will be to create effective marketing and drive sales. While it might feel counterintuitive at first to narrow your focus, remember that targeting everyone can effectively mean resonating with no one.
Target audiences thrive within specific niches–here are some niche market examples that you can use to find one that resonates most with you. Also check out our guide on how to create a target persona.
4. Create your business plan
Many newer entrepreneurs completely skip the step of creating a business plan. While this might seem like overkill if you’re doing something simple like reselling on eBay, it’s still important to define your plan so you can pursue the opportunity more efficiently and also to get a better idea of whether or not it’s even worth going for.
Unless you’re raising money or vying for a partnership with someone serious, don’t worry about drafting a full-on traditional business plan. You can simply make note of the following:
Expected startup costs and time investment
Your business model and revenue streams
Pricing strategy and expected profit margins
Marketing and customer acquisition plans
Growth targets and milestones
Required resources and tools
Overall goal at the end: scale or exit
Your business plan may change over time, and it might be hard to put exact numbers on these aforementioned factors in the beginning, but even making general estimates is better than going in with no plan or forecasts at all.
For more guidance, read our guide on how to create a business plan and check out these business plan templates.
5. Handle legal and tax requirements
The online space is nowhere near as legal or formal as traditional businesses, so a lot of entrepreneurs skip the step of properly handling legal and tax obligations. You’re best off setting these areas up the right way sooner rather than later, because eventually, you’ll have to face them, and if you didn’t properly prepare, you can be in for a huge headache in the future.
Here are some essential requirements and things to consider for the tax and legal side of setting up your online business. While the specifics will vary by region, these are some overall considerations that broadly apply:
Essential tax requirements:
Tax ID or EIN: Decide whether or not this will be tied to you as an individual or as a separate business
Tracking of expenses and profits
Understand your tax obligations for the type of product or service you’re selling
Essential legal considerations:
Consider setting up a business structure and choosing one that is best for your situation (e.g. LLC, sole proprietorship)
Register your business name
Review if it’s necessary to obtain permits or licenses
Review platform-specific requirement
If applicable, comply with customer data privacy and create terms of service and disclaimers
It’s always a good idea to hire a professional rather than guess when it comes to both legal and tax areas–doing so is well worth the investment even if it might seem steep at first.
6. Set up your online presence
Now that you’ve picked a business model, defined your niche and target audience and made a plan, you’re ready to set up an online presence. This can be as simple as signing up to sell on an existing online platform, or it can involve crafting a custom storefront.
Here’s an example of what each of those two choices might look like when it comes to setting up your digital storefront:
Using an existing marketplace
Selling on an established marketplace holds numerous advantages which makes it the most attractive option for online entrepreneurs both new and experienced. One of the biggest perks is instant access to a massive customer base, eliminating the need to build traffic completely from scratch. Additionally, these platforms will handle much of the technical heavy lifting, from payment processing to basic marketing tools. In the world of physical products, Ebay and Amazon are top choices.
If your goal is to get into the profitable game of selling digital products, Whop is a top choice. With the platform, not only do you get access to a thriving marketplace that’s full of a primed target audience, you will also get the assistance and tools to quickly launch a digital product completely from scratch.
Read more about selling on Whop here.
Custom storefront
Building your own storefront will require more work up front, but it also gives you a much higher degree of control of your brand presence and customer experience. Some niches like dropshipping benefit most from having a custom storefront, but other than that, you’re probably better off starting by selling on an existing platform first before taking the time to transition to a custom storefront.
Check out: Best ecommerce platforms to create online stores
7. Create your offering or source your products
Whether you’re selling physical products or digital goods, the success of your business largely depends on what you’re offering. You need to either source quality products with proven demand or create an offering that stands out as a highly attractive option for your target audience.
Here are some specific tips depending on which product category you’re selling in:
Physical products
Finding a consistent supply for profitable products is key. In addition to opportunistic one-off sourcing using lowkey methods like
Digital products and services
Unless you’re selling a quality ready-made PLR product, digital products and services need to be created from scratch. Take time on the previous steps regarding market research and refining your target audience so you can launch something that truly solves their problems and stands out in the market.
Whether it’s a course, ebook, or consulting service, focus on creating clear value that customers can’t easily find elsewhere. Once you get your offering right, you’ll then be able to benefit from all of the associated perks of selling digital products which includes high profit margins, scalability, and passive income potential.
Find out how to create digital products in this guide.
8. Build your brand
Anyone who wants to scale beyond a simple side hustle to steady cashflow will need to understand how to build a brand. Your brand is more than just a logo or color scheme–it’s the tone and voice that speaks to your audience and creates the whole experience that they have with your business.
With more new businesses popping up online than ever before, strong branding is often what separates successful businesses from those that struggle to gain traction.
Quick tips for effective brand building:
Start by putting yourself in the shoes of your target audience
Develop a clear visual identity and messaging that connects with your target audience
Consider split testing, measuring key metrics like engagement or directly asking for customer feedback to further refine your brand voice and image
Be authentic–while you can take inspiration from what’s working from competition, find a way to stand out and attract your own tribe to foster loyalty.
9. Launch your marketing strategy
Now that you have your offering complete and your branding on point, you need to put in the work to market everything. Remember that no matter how good your product or service is, if no one hears about it, you won’t be able to build a profitable business, let alone make any sales.
While creating a full comprehensive marketing strategy is a daunting task that will take time, simply start step-by-step and don’t be afraid to fail along the way while building out your strategy.
As a whole, marketing can be divided into two methods: organic and paid
Organic marketing
Generally speaking, you should always begin with organic marketing before jumping in with paid advertising. This will start with understanding where your target audience spends their time online and what they like so you can learn how to reach them.
While hopping on trends and using viral videos can help shortcut your path to success, consistent content creation and community building will be key to sustaining your business in the long run.
Paid marketing
Once you’ve gained initial traction and validated your offering and message with organic marketing, you can start exploring paid advertising. Start with a small test budget and focus on the platforms where your organic efforts have shown the best results.
Remember that your success in terms of ROI or ROAS (return on ad spend) can vary quite a bit depending on which platform you’re advertising on, so in addition to testing yourself, do research to understand which platform might be best for your niche. UGC content is also an excellent way to increase sales and is quickly replacing previously successful methods of influencer marketing.
Read: Ecommerce marketing strategies to increase your sales
10. Scale and optimize
The final step to achieving the base for long-term and abundant levels success in your online business is focusing on growth and optimization.
In short, this means analyzing your current operations and finding ways to improve efficiency while keeping in place the things that are working.
One of the biggest shifts for any business owner is going from working in your business to working on your business. This starts by looking for tasks that can be either automated or outsourced, or perhaps even eliminated entirely. Remember, data is your friend, so the more of it you have to review, the more you’ll be able to make accurate decisions–reviewing relevant KPIs is the best way to do this.
While scaling and optimizing will look a bit different for everyone, the key areas to focus on generally remain the same:
Delegation and automation
Start by listing every single task you personally handle in a week. Out of all the tasks, honestly ask if you’re the only person who can handle this or carry it out efficiently or if it might be possible to hand it off to someone else.
While it might be scary to give up control in the beginning, you might find that automating or delegating might yield the same or even better results while freeing you up to do more high-leverage work. Explore the top tools to automate your ecommerce business.
Profit margins
While this area might seem obvious, some business owners fail to properly review how profitable they are overall, sometimes to the detriment of their business. Remember to review all costs regularly, including fees and subscriptions or services that might be killing your profit margins unnecessarily.
Operational efficiency
In addition to delegating and automating everything that you can, focus on other places where it’s possible to improve your operational efficiency. Identify bottlenecks in your processes that might be slowing growth. This can manifest in order fulfillment, customer service response times and protocol, or content creation.
Look for where you might be spending more time than necessary, and strategize on how you can effectively cut down.
Customer feedback and satisfaction rates
Any company that has reached an impressive level of scale and traction has done so by listening to their customers. Pay close attention to reviews, comments, and direct messages. While some things might be one-off complaints, if something is repeating, be sure to address it–this is true in both positive and negative areas.
Marketing performance
At a certain level of scale, the only difference between a business in the top percentile in its domain against one that is just slightly above average comes down to the marketing performance.
If you want to beat competition and get to the top in the realm of marketing, start by tracking which channels bring in the most qualified traffic with the highest conversion rates. Focus on cost per acquisition and lifetime customer value to make informed decisions about where to invest your marketing budgets
Team building
It’s basically impossible to build a one-man business at scale. As you grow, you will need to build a reliable team. This will start when you outsource and delegate, but rather than relying on one-off freelancers that might come and go, look for longer-term individuals that have the capability to take an even greater role in the company.
Creating an overall company culture and vision in addition to SOPs (standard operating procedures) can help you recruit a loyal team. Together, you can carry out your grand vision for the company that will bring profits not just for you but for everyone involved.
Pro tips for succeeding as an online business owner
We’ve laid out the steps you need to start your online business the right way, but if you want to join those who are making six, seven, or even eight figures online, you need to operate a bit differently. Here are some pro tips for succeeding at the highest level, from those who have already found success:
Think long term
It’s tempting to chase quick profits or hop on trending opportunities, and sometimes doing so can even result to making significant amounts of money fairly quickly. However, if you want to reach the place that true full-time entrepreneurs operate in, you will at some point need to shift towards long term thinking.
This means building something that lasts, and sometimes making decisions that will sacrifice short-term gains for long-term growth.
Focus more on building a strong brand foundation, reliable systems, and fostering genuine customer relationships and loyalty rather than just maximizing immediate revenue. Your future self will thank you.
Innovate, but stick to what is working
One of the biggest mistakes of new entrepreneurs is constantly changing direction when they see new opportunities. While it’s true that online business trends and best practices are always changing, sometimes at breakneck speed, the evergreen principles of solid business practices remain the same.
The most successful entrepreneurs know how to balance innovation and pivoting with sticking to what’s already working. You should always be testing, but be quick to cut something if yields poor results, and if something is working, double down on it until the numbers say that you should do otherwise.
The key here is finding balance between staying current while maintaining operational efficiency and stability for both yourself and the team.
Think big-become an industry leader
This might be an obvious tip, but it comes with a prerequisite as a caveat in terms of why thinking big on its own won’t produce the success you desire. Before you can truly think big and aim for industry leadership, you need to be genuinely aligned with your chosen niche. The most successful entrepreneurs aren’t just selling in their space–they live and breathe it.
This authentic connection to your market is what separates the temporary opportunists from those who go on to become true industry leaders.
Once you’ve found this alignment, thinking big means going beyond just revenue and numbers to establish yourself as an authority. Continue to share your unique expertise through valuable content, engage meaningfully with your curated community, and consistently demonstrate your deep and current understanding of your market’s needs.
Remember that you can’t fake expertise in today’s market–customers are increasingly savvy and can sus out surface-level knowledge shillers quickly.
This is why the most successful online businesses are often built by people who would be doing what they’re doing already, regardless of the money–they’ve simply found a way to monetize their passion which manifests as expertise