How to Start an Online Business in 8 Simple Steps

Running an online business is often the solution for people looking for extra income. This solution is supported by the rising eCommerce popularity, which is expected to account for 17.5% of global retail sales by the end of 2021.

However, the problem with online businesses is the starting process. More than 90% of online businesses fail in the first 120 days. Fortunately, this is preventable with thorough business planning and the knowledge of the right first steps.

Lucky for you, this article lists how to start your online business in eight simple steps.

Without further ado, let’s get started.

1. Identify Your Target Audience and Market Gap

Your target audience is the people who are interested in or would benefit from your business. Meanwhile, a market gap means a business opportunity. By identifying the market gap, you also identify your target audience.

All successful businesses filled specific market gaps with the right target audience. For example, Netflix has filled the gap by replacing movie-renting companies with digital movie streaming, targeting the audience aged between 25 and 34.

To identify the market gap based on your target audience, first assess your products’ or services’ strengths and weaknesses. Then, display the benefits instead of features. Lastly, study the current trends and research your competitors.

2. Determine Your Business Model

A business model covers how you plan on making money from your business. Choosing your business model is about considering aspects like the product or service, marketing campaigns and angles, expenses and related investments, and, finally, profit.

There are seven types of business models:

  • Manufacturing. It’s one of the traditional business models that use raw materials to create products to sell.
  • Bricks and clicks. It combines both online and offline presence, creating an omnichannel retail strategy.
  • Advertising. This model uses the display of ads to monetize the business, with the leading advertising medium being online, mixed-media format.
  • Marketplace. It’s about creating an account on an existing marketplace and, in return, gaining profit from each transaction’s commission.
  • Subscription. This model sells subscriptions in addition to their offline or online products and services.
  • Direct sales. Direct selling works by cutting the middlemen between the producers and customers through a network of sales representatives.
  • On-demand. This model focuses on serving customers when they need it. It aims to deliver the products or services in the shortest time possible.

Choosing a suitable business model is about understanding several factors. They are consumer needs, initial capital, purchasing power, value proposition, and key processes.

3. Take Care of the Legal Matters

Taking care of the legal matters includes trademarking the business name and domain name. It helps avoid copyright claims, protect brand identity, and grow the business.

To help with this, consider the following steps you need to take:

  • Understand the local and general regulations on online businesses as they differ in each country
  • Apply for a tax ID number if necessary
  • Obtain the essential licenses and permits
  • Open bank accounts for the business
  • Understand employee work contract if you plan on hiring

4. Set Up Your Business Website

Your website will be the center of your online business. If this will be your first website, setting it up can be a challenging task. Here’s what you’ll need to get:

  • eCommerce platform. There are plenty of eCommerce platforms for online businesses, such as WordPress’ eCommerce plugin WooCommerce. In general, WordPress is a scalable, beginner-friendly CMS with plenty of helpful themes and plugins for an online business.
  • Web hosting plan. For online businesses, it’s best to use Cloud or VPS hosting. If you choose WooCommerce as your eCommerce platform, a WordPress hosting plan may be the most suitable option.
  • Domain name. Some hosting plans include a free domain name. If not, register an SEO-friendly domain name at credible registrars.

Choosing the right website platform will help the long-term growth of your business.

It will also make way for scalability.

5. Set Up Payment Methods

Cart abandonment is often the problem of online businesses that have a low turnover. There are plenty of reasons why customers may abandon their orders, one of them being the time-consuming payment process.

Therefore, offer a fast checkout process and set up the proper payment methods to prevent this problem. Here are some popular payment methods that might be right for you:

  • Bank transfer
  • Credit and debit cards
  • Third-party platforms, like PayPal

Think of yourselves as the customer. Would you like to pay using one or more of these methods? Go through different purchasing scenarios and implement the fastest and most reliable options.

6. Develop Your Product

Product development is a process of a business product that begins from concept and goes all the way to market release. By practicing good product development, you can reduce the costs and improve product quality.

There are seven steps of product development:

  • Idea generation
  • Research
  • Planning
  • Prototyping
  • Sourcing
  • Costing
  • Commercialization

To develop your product, understand your business niche and its essential factors. For example, fashion brands need to calculate factors like labels, regulations, and warnings. FNB businesses have the same factors, plus shelf life.

Understand the factors for your niche and be open to trial and error when developing products.

7. Build Sales and Marketing Plans

Sales and marketing go together in increasing business profits. To make the process smoother, thoroughly organize both sales and marketing plans, then divide them into funnels. Consider using the AIDA funnel that consists of:

  • Awareness. Building awareness includes all marketing activities, like creating blog posts and promoting the website. The goal is to let the target audience know your business exists.
  • Interest. Audiences who are aware of your business will start gaining interest in it and will take further action to learn more about it.
  • Desire. The audience becomes leads that might or might not purchase your product or service. Increasing desire is the first step of the sales process.
  • Action. Taking action is about making the purchase or subscribing to your content. Your leads become customers once they’re in this part of the funnel.

To build your sales and marketing plans, first, focus on creating both short and long-term plans. Then, calculate and plan the budget for profit-building actions. Lastly, develop long-term strategies based on the website and marketing performance.

8. Improve the Website with SEO

Once the website is ready to be published, remember to apply SEO strategies. SEO helps improve the website, compete with other businesses, and build page ranking, which is beneficial for potential customers and search engines.

Some SEO strategies suitable for small businesses include:

  • On-page SEO. This strategy consists of keyword planning and building internal links. It helps maintain your search engine ranking.
  • Making the website user-friendly. A user-friendly website has simple page navigation, fast loading time, and is compatible with mobile devices.
  • Register your website on Google Index. Go to Google Search Console to enlist your site URL and domain. This allows your website to be automatically discoverable.
  • Rely on content. Create and publish high-quality content on your website. This increases your page quality and helps it land on the first page of the search results.

However, the best SEO strategies should work together with your budget and marketing plans, both short and long-term.


This article has covered eight simple steps of starting your online business, along with the practical steps to prevent failure.

To summarize, here’s how you can have it up and running in no time:

  1. Identify the target audience and the market gap.
  2. Choose the most suitable business model.
  3. Register your business legally.
  4. Set up a website.
  5. Include a variety of payment methods.
  6. Decide if you’ll be producing your own products.
  7. Arrange sales and marketing plans.
  8. Don’t forget the SEO.

Most importantly, remember to carefully plan each step and consider its outcome for the business. Good luck!

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