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What are the steps to follow to start an online business?
To start an online business, you must perform market research, create a detailed business plan, and set up legal, administrative, and online payment processes. Once your online store opens, you should establish branding parameters, maintain a consistent online presence, and provide excellent customer support.
Starting an online business is quite exciting. It’s a new challenge with the potential for significant financial rewards.
However, it can also be daunting. Before you can officially launch your online store, there are many steps to take.
We’re here to make it easier for you with a thorough online business checklist. It will set you up for success and help you prepare for everything you will face.
1. Market research and business idea validation
People throw the word “passion” around quite often when talking about business. They would say that you should start a business related to something you are passionate about. While it can inspire through tough times, passion is simply not enough. You need to be practical and do a lot of research and preparation.
Identifying a niche or target market
First, you must gather as much information about your business idea as possible. You should identify your target market and determine if you can capture them.
Look at your future competitors—their current customers are your prospects.
You can also hire a research firm to determine the specific demographics of your niche and the people who may be willing to spend money on your product or service.
Analyzing competitor and market demand
What is the market demand for your proposed item? Monitor industry trends to see if there is interest in your product and where your niche is headed in the near future.
When researching marketing demand, you need to check on the following:
- Customer preferences
- Customer buying power
- Pricing
- Performance of competitors
Surveying potential customers for feedback
Once you’ve identified potential customers, you can tap some of them for a survey or focus group discussions. Ask respondents what they look for when shopping for your product. For focus group discussions, soft launch your new product and solicit constructive comments and discussions about its pros and cons. Use these comments to improve the item before the official launch.
2. Business planning
A detailed business plan is critical to the success of your business venture. There’s a reason it is one of the requirements when applying for a business loan.
Crafting a detailed business plan
A business plan is a document that contains the company’s specific goals and the steps it will take to achieve them.
Startups and large enterprises alike all begin with a detailed business plan that outlines the following:
- Executive summary
- Company description
- Market analysis
- Management and organization
- Description of offered products or services
- Customer segmentation
- Marketing plan
- Logistics
- Financing
Information gained from market research should be integrated into your business plan.
Setting clear objectives and goals
Your business objectives and goals will set the tone for your company moving forward. Aside from the obvious target of generating revenue, your objectives should cater to and power your business’s longevity.
Some business goals and objectives include:
- Boost brand awareness
- Increase customer reach
- Make a profit and increase return on investment
- Improve company value
Budgeting and financial forecasting
Another critical element of a business plan is financing. It is especially crucial if you plan on courting investors or applying for a loan. Financial institutions and prospective investors will want to see how you plan to make money and recoup investments.
Budgeting and forecasting are two different things, and are equally important. Budgeting is the process of allocating funds for the company’s daily operations and setting financial targets. Forecasting involves predicting the future of the industry and market trends that may affect the business's financial health. It usually comes before the budget, which is created based on the forecast.
3. Legal and administrative setup
Legal and administrative processes may be difficult to navigate for new entrepreneurs with a limited background in business. It is best to tap experts to help you out and ensure you won’t run into trouble in the future.
Choose a business structure
Choosing the structure that best suits your business will determine how it is taxed and its liability. It is also easier to secure funding when you have the structure in place.
There are four business structures:
- Sole proprietorship - This is the most straightforward business structure where there is no distinction between the company and the owner. It’s the most basic option that you can expand or transform to another later on.
- Partnership - This is a business setup with two or more owners, where each partner contributes to the company, not necessarily in equal parts. The contribution may be in funds, skill, labor, etc. The partnership can be general or limited—the former is when the business is divided evenly or by percentage, while the latter limits control and liability for each partner.
- Corporation - In this business structure, the company is a separate entity from the owners and members of the corporation.
- Limited Liability Company - This is a hybrid of a corporation and partnership wherein the business is structured and registered as with a partnership, but the company is a separate entity from the partners.
Registering business name and domain
States require businesses to be registered with the Secretary of State’s office or a business bureau or agency. Registering the company makes it a distinct legal entity, and no other entity within the state can take your name.
In the digital age, businesses must also have a corresponding website. Even if you are launching an online store on different ecommerce platforms, it is still best to maintain your own website as it provides a lot of flexibility.
You can check the availability of your business domain name and register it through any of the following hosting platforms:
- Bluehost
- Domain.com
- GoDaddy
- Google Domains
- HostGator
- IONOS
- Namecheap
- Shopify
Obtaining necessary licenses and permits
Every state has different requirements for business licenses and permits, so it’s best to visit your local Office of the Secretary of State, Department of Commerce, or even the Corporate Commission.
In general, new businesses need the following licenses and permits:
- Business operation license
- Employer identification number
- Doing Business As (DBA) license
- Seller’s permit
- Sales tax license
- Home occupation permit
- Occupational license
You can apply for some of these online.
Understanding tax obligations and setting up an accounting system
Remember that Uncle Sam must always get his due. Make sure you have an accounting system in place that will help you create accurate reports during tax season. Some states don’t require sales tax for online businesses, but a business owner, sole proprietor, or partner is obliged to pay income tax.
Small business owners can make use of online accounting tools to make it easier for them to manage finances, pay bills and payroll, and withhold taxes. When the company grows, you can seek out an accounting firm to handle your more complex finances.
Set up accounting software to streamline the company’s bookkeeping processes. Here are some of the best options for small businesses:
- FreshBooks
- Intuit QuickBooks Online
- Wave
- Xero
- Zoho Books
4. Branding and design
Establishing your business goes hand in hand with launching your brand. Your business offers products or services to customers while your brand establishes your company identity. Your brand must be memorable to capture your audience and succeed in the long run.
Creating a memorable business logo
A swoosh is a simple curving checkmark that millions of people know stands for a high-end brand. The same goes for a big, yellow M.
Creating a logo for your brand must represent the company adequately while still being attractive and easy to remember.
Here are some tips when creating your brand logo:
- Understand your brand and your customers—what imagery would they be attracted to?
- Brainstorm ideas with brand experts and business partners.
- Sketch out multiple ideas.
- Test your sketches with design professionals and people in your customer demographics.
- Improve the original sketch and finalize it.
- Create different versions of the same logo: one with the brand name and a simplified version.
Establishing brand guidelines
Your logo must have distinct color schemes that will also be reflected in the rest of your branding materials, such as your online storefront, website, packaging, newsletters, and more.
Designing business cards and other promotional materials
Your branding must also be reflected in your business cards and marketing materials. These assets, such as social media profiles and product packaging, must be consistent with your brand theme in terms of colors and fonts.
When designing your business cards, include your brand’s website, social media accounts, and official email address.
5. Setting up an online presence
In the digital age, your business’s online presence should not stop at setting up a website and signing up for one or two social media accounts. Your brand must be discoverable when your target audience is browsing online.
Choosing a reliable web hosting provider
There are around 126 million web hosts worldwide, which shows how important websites are. With so many options, how do you choose the best one? Reliability is paramount as it will reflect on your brand—a slow website could turn off interested visitors and potential customers.
Compare different web hosts to find one that will provide what you need. Look up client reviews for all the information you need about the host.
Designing and launching a professional website
You can hire a professional designer to create high-quality websites with seamless user experience. However, their fee may be quite high.
If you have a limited budget, you can create your own website using WordPress and its many plugins via HubSpot, Weebly, Webflow, Wix, and Google Sites.
Setting up business email accounts
You need a business email account for all official correspondence with providers, partners, stakeholders, and even customers. Use your domain name to create business email accounts for all of your team members.
So, if your domain name is www.yourbrandname.com, set up an email account like info@yourbrandname.com for general communications. Team members can also have individual accounts like name@yourbrandname.com—this demonstrates professionalism and provides formality in all of your business transactions.
Implementing SSL certificates for website security
Website security is critical—your customers need to trust your brand with sensitive information. If their data is compromised, it will be hard for your business to recover. This is where the SSL or Security Sockets Layer certificate comes in. It is a digital certificate that ensures encrypted connections for all website visitors.
6. Ecommerce and payment systems
If you already have a website, why do you still need to sign up at other ecommerce platforms? There are many advantages, as these platforms already have built-in systems that allow you to sell products with ease.
Most ecommerce platforms ensure quicker buying processes with features designed for store and product listing creation, and advertising and marketing. They also ensure faster responses to buyer/market demands and easy exports.
Ecommerce platforms also make it easier for entrepreneurs to set up online payment systems.
Selecting an ecommerce platform
There are millions of ecommerce platforms in the world. How do you choose which one to tap? You don’t have to land on just one—diversifying will help you reach a wider audience.
When choosing an ecommerce platform, consider the following:
- Web design
- Programming
- Functionality
- Security
- Maintenance
- Cost
These are the most popular ecommerce platforms where you can sell your items:
- Adobe Commerce
- Amazon
- BigCommerce
- Open Cart
- Salesforce Commerce Cloud
- Shift4Shop
- Shopify
- Square Online
- Weebly
- Wix
- WooCommerce
Integrating payment gateways
You need flexible payment gateways to make it easier for customers to shop. They ensure transaction security and increase conversion. They also improve the overall customer experience.
Here are the top payment gateways to consider:
- Chase for Business
- Helcim
- HubSpot Payments
- PayPal
- Shopify Payments
- Square
- Stripe
Setting up shopping cart and checkout processes
Ecommerce platforms also need shopping cart and checkout plugins. These features should be optimized to ensure customer satisfaction and make it easy for them to shop and complete a purchase. Put yourself in their shoes and design a checkout process that would encourage more sales and even repeat purchases.
7. Product of service preparation
Once the skeleton of your online store is up, it’s time to put the focus on the products or services you intend to sell.
Sourcing or creating products
Are you manufacturing your own items? If so, you must ensure that every product shipped is of good quality to minimize returns and low ratings. You need to set very specific standards for quality control and establish multiple checkpoints along the manufacturing process.
It is very convenient to simply outsource your products. SaleHoo has an expansive directory of more than 8,000 suppliers to choose from. It will be a significant load off your shoulders if you don’t have to worry about making the items you will sell.
Setting pricing strategies
Pricing products or services must be done carefully. When you price an item too high, shoppers may turn to your competitors instead. But if you price it too low, you may not make a profit. Due diligence and accounting are critical to setting prices that will be attractive to your market and generate healthy revenue.
Organizing inventory and fulfillment processes
Many entrepreneurs launch online businesses because operations are cheaper than brick-and-mortar stores. The fulfillment and dropshipping model takes this further by handling inventory for you. Simply tap a third party to handle fulfillment and dropshipping processes.
SaleHoo also provides a dropshipping service through over 8,000 suppliers that have been thoroughly vetted and proven reliable.
8. Marketing and promotion
You’ve got your licenses and certifications, and your website and ecommerce platforms are ready. What’s the next step? You have to market your brand and advertise your products or services.
Developing a digital marketing strategy
In the digital age, you must be discoverable to your target market. The key to this is through a robust digital marketing strategy that covers all the most important channels:
- Email marketing
- Newsletters
- Social media posts
- Social media responses
- Blog posts (with SEO component)
Setting up social media profiles
There are dozens of social media platforms, several of which have over a billion users. You don’t have to sign up for all of them, but you should build a presence where your target audience can find you.
What are the top social media platforms for business?
- YouTube
- TikTok
- X (formerly Twitter)
- Quora
- Snapchat
When setting up your profiles, maintain brand consistency across all platforms. Of course, the precise tone and type of posts will vary depending on the platform. LinkedIn is more professional compared to the more laidback and versatile Facebook.
You need to post high-quality videos on YouTube and Instagram and brief yet highly informative posts on X, which many still call Twitter.
Planning for content marketing, SEO, and PPC advertising
Create a detailed content marketing calendar to schedule when to post blogs, graphics, photos, and videos to promote your brand and products. All content must be optimized for maximum visibility on your chosen platform to ensure your target audience will come across them.
Taking advantage of PPC (pay-per-click) advertising is also a good idea—it won’t eat up too much of your marketing budget. All your blogs, photos, and videos can be repurposed for PPC advertising.
Building an email marketing list
Create an email marketing list and strive to expand it every day to further improve your brand’s reach. Curate your email list so that you are not bombarding customers and prospects with too many marketing messages. Always send informative and highly valuable content with ties to the brand or product. Regularly inform customers about promotions and rewards to balance out marketing emails.
9. Customer support and service
Customer service will make or break your brand. A dissatisfied customer won’t just purchase from your competitor. They could also post about their negative experience on social media, which can be seen by hundreds or thousands of people. It can be difficult to repair your brand reputation when this happens.
Implementing customer support tools
Leverage cutting-edge tools to deliver the best possible customer service. For example, you can implement AI bots for your live chat function. Then, your team (outsourced or in-house) can handle more complex concerns escalated to them by the AI chat. Additionally, integrating contact center software can enhance communication channels and streamline interactions with customers.
Customer relationship management (CRM) software can further streamline customer-related tasks and processes to keep all of your clients happy. Additionally, implementing effective global workforce management strategies can help streamline your operations and ensure smooth payroll processes across different regions.
Creating a clear return and refund policy
A return and refund policy is a must for any online business. You must have clear and transparent procedures that customers can easily find and understand.
A robust return and refund policy can also help improve customer satisfaction.
Setting up feedback and review systems
Regularly collect customer feedback and internalize their comments to improve your business.
If issues are raised in your feedback and review systems, try to solve them immediately. Do not wait for the problem to escalate. Reply to negative reviews in a professional manner and assure the customer that you are taking these issues seriously.
10. Continuous learning and adaptation
The last step is to continue learning from your customers and competitors, take measures to improve business performance in all aspects, and pivot gracefully in the face of challenges.
Staying updated with industry trends and technologies
Don’t get left behind. It is more important than ever to keep up with industry trends and adapt to the changes and emerging innovations as quickly as possible. You can be so knowledgeable about your industry to the point where you can predict future trends and get ahead of the movement.
Technology is ever-changing, and it is a critical element of every online business. Continuously leverage cutting-edge tools and software to take your operations to another level.
Investing in personal and team education
Experience is the best teacher, and you will surely have lots to learn as you go through each of these steps. However, you should also actively study your industry and how to improve your online business. Schedule seminars and workshops for your other team members, too.
Conclusion
This comprehensive checklist is a valuable guide to opening your own online business. The overall process is not easy, but take it one step at a time, and you will thrive soon enough.
SaleHoo is a fantastic resource with a directory of thousands of suppliers to get you started!
