There are 31.7 million small businesses
in the U.S. (and more than 20,000 large businesses – those with over 500 employees), according to the Small Business Administration. In fact, many online businesses have a very small team. Sometimes the owner is the only employee.
These "mom and pop" companies often rely on digital sales to make their mark. How big of a mark? Small-team retailers saw more than $1.3 billion in sales
in the U.S. in 2018, and it’s only grown since then.
Whether you run your business solo or you employ a team of any size, here's what you should know about starting an online business in today's often turbulent economic climate.
How to start an online business
First, resist the myth that there is any "right" way to start a business. Your company will be unique in its offerings, goals, and challenges, so one-size-fits-all advice will fall flat. Before you begin, be honest with yourself and consider how these factors may affect your journey:
Your level of experience
- Are you new to the industry?
- Have you run a business before?
Your business niche
- Do you work within a highly-regulated industry?
- Is there much competition?
- Is entry to the market expensive or full of many legal obligations?
- Do you serve an area that’s friendly to online business?
- Are you near the product you sell?
Someone with no experience selling beauty products online in California will have a much different business plan than someone with 10 years of providing coaching services in Texas, even if both want to shift to an online model. You may have legal hoops to jump through, or your transition from physical sales to online sales may be especially challenging.
Regardless of the above factors, all businesses should go through a version of these phases:
Research and business planning
- Is there a market for your business?
- What’s the best way to sell your product?
- How should you price it?
- How can you finance your business until your revenue outpaces costs?
Technical and marketing execution
- What website or ecommerce solutions work best for your product?
- What will you do to get the word out about your business?
- How can you beat out the competition?
Legal compliance and licensing
- Is it legal to make and sell your idea?
- Does it need protection from infringement?
- What permits or licenses are necessary in your state or the states you want to sell in?
10 best tips for building an online business
The steps for creating an online business differ by person and industry, but the best practices don’t. Here are expert-recommended tips for getting the best start in your endeavor.
1. Define your offering and unique selling proposition (USP)
What are you selling, and why is it better or different than what another company sells? Even if you are first to market with a brand-new idea, it’s only a matter of time before someone else comes along and tries to offer something similar.
You should be able to explain to your customers and stakeholders what it is you do (and why it’s the best) in a few sentences. Then, keep this “elevator pitch” in mind as you enter the market and face increasing competition. If you haven’t established this yet, you aren’t ready to start your business.
2. Focus on one or two core products or services to start
Even if you have grand dreams of launching a dozen customized versions of your initial offering, go slow in the beginning. With a small selection of products to start, you can be more agile if you need to make tweaks in design, pricing, or functionality. Developing new products can be expensive, too, and this easy-does-it approach may save on a large initial outlay of cash.
3. Get any registration and licensing handled right away
From patents to permits, don’t put off what’s needed to be compliant and to protect your intellectual property. It may be difficult to resist the urge to move to market, but rushing this part of the process is risky. Do your research into the product’s design and patent rights, and into your given industry, before you launch.
4. Secure your domain and all social media handles
Before you pick a name or brand identity, make sure it's available on all of the major social media sites. You don't have to set them up yet, but simply claiming them is the first step in protecting your brand reputation and ensuring its ownership on the platform (if you use it). The same goes for domain names, which you can secure with .com, .net, and other variations.
5. Create a website that is functional and beautiful
While you certainly can use a number of templates to set up your own website, it’s crucial that it is easy to use and has a pleasing user experience, especially as an online retailer. You may consider using a third-party shopping app or work with a web designer who’s well-versed in the industry. Whatever you do, wait to put your business online
until you’ve done some tests and you know that the process of browsing-to-shipment is a smooth one.
6. Weigh your payment and receivable options early
How will you accept payments? Which cards or payment services will you take? Are you more of an ecommerce company
or would you benefit from a third-party marketplace solution? If you haven’t asked these questions before you start, it’s important to do so immediately. Lay out your receivables goals from the beginning, and work with your web designer or ecommerce platform to find the best solution.
7. Make plans to under promise and over deliver
Brands that have the most loyalty tend to delight their customers. This involves both providing what's expected and offering some enjoyable surprises, too. Think of the ways you can do more than what you promise and outshine the competition. Tell your customers what they’ll get out of each transaction and deliver it – and more.
8. Use one social media platform really well
Do you really need to be on TikTok? Are you speaking the language of folks on Facebook? Know where your customer hangs out online and be there with engaging, thoughtful posts and discussions. And if you’re interested in other platforms, get started there by simply observing any chatter about your brand. You can also hire influencers on these platforms to get the word out about you, if needed.
9. Network with other businesses
You should already know something about the industry you're working in, but if you aren’t familiar with the people within it, now's the time. From virtual events to association networking parties, get involved in at least a few opportunities each year to learn what's important to others in your niche. Don't worry about becoming too chummy with the competition, either, because the benefits of learning outweigh any risks. You'll keep your top secrets to yourself, anyway.
10. Reward customer loyalty
If a shopper has been with you from the very beginning, how is their experience different from someone who just discovered you? If there is no distinction, you may need to develop a loyalty program.
There are formal approaches, such as a discount card or reward points, and organic ones, such as incorporating customer experiences into user-generated content (UGC). Either way, you have a lot to gain from thanking the people who made you successful. Do the math on what each retained customer brings in
to see how much you can afford to spend on these promotions.
Now is the best time to start an online business
A reported 1 million businesses opened
in 2017, with 898,000 businesses closing that same year, and only 80% of businesses
generally make it past their first year. Usually, only half go on after their fifth year, so it’s clear that those first few years are crucial to getting it right. With the steps outlined above, you’re set to face better odds. Take the time to set up your online business with every advantage, and you may have what it takes to face the most difficult economic challenges.
Are you ready for the good news? Between stay-at-home restrictions and the demand for items local stores may not always have on hand, online shopping has proven itself as an essential means of connecting consumers with their favorite brands and products.
You don't need the best widget in your category or even the most unique idea to win here, either. You can find success through steady, reliable, quality experiences that help solve problems for today's consumer. If your product, or the way you deliver it, eases a burden for someone, it's likely to propel your business in the right direction.