With minimal start-up costs and the potential to reach millions of customers, setting up an online business
has never been more popular. Find out what it takes to build a successful online business.
The number of online businesses has skyrocketed in recent years. Easy to set up, online businesses can suit anyone looking to become their own boss. From simple eBay shops and information sites to a full-scale online dating agency, there’s an online business for everyone. Even many traditional businesses can now be set up and run online.
The great news is that online businesses are easily scalable – you can start small to test out a business idea, work on it part-time or as a hobby before deciding to take the leap and commit yourself to a full-time role.
The bad news is that it can be hard work, and a lot of other people may have similar or identical ideas!
There are lots of different ways to make money online, but the most popular business models used for a successful online business are:
Online store – This is one of the most popular forms of online business. Instead of renting or buying a local store, you sell your products or services directly to customers via a website.
Physical goods can be delivered to customers or digital products, such as ebooks, downloaded directly from your site. An online store puts you in direct contact with potentially millions of customers and has fewer overheads compared to a traditional shop. You can take payments via credit cards, or use systems such as PayPal to handle transactions.
Advertising – As with traditional media such as newspapers and magazine, advertisers will pay to place their advertisements on your website. You’ll need to have lots of visitors to your site – known as web traffic – for this to be profitable. This model works best with websites that freely provide information, entertainment or opinions, such as online magazines, popular blogs or help and advice sites. The aim is to attract as many visitors as possible in order to make money from advertising.
Come up with an idea, name and business plan
As with any business, the first step in starting an online company is to decide on a business idea and create a business plan. Having a target audience and clear objectives firmly in your sights will help get your online business up and running quickly.
Successful businesses start by identifying a customer need, rather than focusing on a product. Find the need and you know there’s a good chance people will want your goods or services. Do some research online to find out what people are searching for and how many other businesses already fulfil that need.
It is always worth conducting market research before you take the plunge. The level of detail will be somewhat dictated by your budget, but there are ways of achieving a good understanding of your market on a smaller budget:
• Use social media marketing to reach out to interested parties, or ask trusted followers for advice/feedback on the idea. Be aware that this isn’t the most robust research, but for simple questions, it could be an eye-opener.
• Attend relevant events to see what’s popular and trending in your industry, and perhaps speak to entrepreneurs/start-ups to seek advice.
• Use SurveyMonkey or similar survey software, which can be used to target specific audience types. You can set the size and scope of questioning, but be careful not to ask ambiguous or misleading questions.
• Check potential competitor websites and look at how they sell goods and services and what they charge. Offering unique products or services will help make your business stand out from all the rest online.
• Carry out a SWOT analysis to identify your own strengths and weaknesses and see if they apply to your findings.
Choosing a name
You also need to choose a name for your business. You may want to do this in conjunction with registering a domain name for your website, as the best solution is for the two to match exactly. The right name needs to be short and easy for customers to remember, be available a domain address for your website and not be too similar to the name of another company.
If you’re starting an online business from scratch, spend some time brainstorming a list of potential names and then whittle this down to just three or four. One approach is to register a domain name – or web address – that contains the keywords that people will use to find a business such as yours. For more information on naming your business, see our guide to choosing a brand name.
Create a business website
You can create an attractive, functional website yourself, with no need to spend money on hosting, by buying an off-the-shelf solution from free platforms such as WordPress, Magento or Shopify. You could use a free theme, or pay for a premium theme that may offer more features. One advantage of these sites is that they often feature SEO add-ons, which will help people find your site. Another is that you do not need to have any knowledge of coding or design to create an attractive functional website in as little as an hour or two. Alternatively, hire a website designer to create one for you.
As a start-up, you shouldn’t be spending more than is necessary. Your website should look good and be easy to use and find information. It should not be overly expensive to create. In fact, as an SME it might be better to direct your funds elsewhere, especially if you have concerns about cash flow in the company. Save your money for marketing your business.
Tips for your first website
• When planning your website, concentrate on what’s important. For online stores, for example, a streamlined buying process is vital, with up-to-date stock information and fast delivery of key importance to customers.
• Use one or two fonts at the most, and if possible limit them to one colour. Visitors will put up with a monochrome site, as long as they can find what they need.
• A simple menu containing your homepage, products, contact and history should be enough to get you started. If possible include a ‘contact us’ box so that visitors can make quick enquiries, and be signed up to a mailing list.
• Online stores will need a shopping cart function, a secure payment facility and a way to collect payments. PayPal is popular but most shoppers will want to pay via credit card.
• Alternatively, most small online businesses prefer to use a payment gateway provider to handle credit card transactions in exchange for a fee. There are lots of affordable e-commerce systems available that can be bought off the shelf so shop around for one that suits your needs.
• Don’t overcomplicate things. Videos, interactive elements, slideshows and other impressive features can be added at a later date.
• Endorse the principle of ‘finished, not perfect’ – get a website out there and tell people about it.
• Update it as regularly as you need to; reviews and endorsements are a good first thing to add to the site.
Should I use social media?
This will depend somewhat on the business model you employed (see above), but it’s one of the simplest ways of driving brand awareness and giving your company a voice. Entrepreneur magazine wrote that startups actually have a distinct advantage in the social media marketing realm since users love what’s new – and startups are new by default.
Once the website is complete this should be one of your first jobs; setting up a relevant account showing your personality and products, on Facebook, Twitter, Instagram, Pinterest, and/or YouTube. You’ll be able to engage with customers and answer their questions; promote any new stock or offers, and deal with any complaints.
What are online business regulations?
As with any retailer you’re subject to certain laws and regulations when selling goods and services online. These include:
Overall, the act lays down conditions that goods sold must meet; for example, they must be as described, of satisfactory quality, to an agreed price, and be fit for purpose. If the goods do not meet these conditions, the buyer should have the right to a refund. This applies to both online and offline purchases, ensuring that work must be carried out to a standard or price agreed beforehand and that the professional has a duty of care towards you and your property.
The Consumer Contracts Regulations: This refers to numerous legal responsibilities that a seller must provide about a business, such as:
• Information about the seller (business address and contact details)
• An accurate description of goods and services including a description of your goods or services and prices including VAT
• Payment details
• Delivery costs and arrangements, and exchange details
• Cancellation rights and relevant time limits
• Technical steps of placing an order
• Terms and conditions under which a contract is made
• Prices must be clear and state if tax is included
• The company’s registration number and location of registration
• The name of the service provider, email address and geographic address
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