How To Start An Online Business

Those days have long gone when only privileged ones were able to start their own business. Now, everyone can start and grow their own business, regardless of their professional expertise, background, and experience. Online businesses are comparatively easy to start, and not as much cost is incurred as much as in bricks-and-mortar business. But doesn’t mean to jump and start an online business.

There are a number of benefits to starting an online business. You can set your own specified hours, work from the comfort of your home, and you can avoid huge startup costs.   

How To Start An Online Business

A step-by-step guide to start an online business in 9 steps;

1. Decide On Your Niche and Business Idea

Business niche means your area of focus. A business niche is a market segment or target audience you are going to serve. This could be anyone from any market, like business people, sportsmen, hobbyists, and many more.

But the question arises, how to pick a niche for your new business? The answer is to look at your target audience and check for;

  • A problem they are facing and no one is giving them a solution to it
  • Are they willing to pay for that solution?
  • They can afford the solution on the basis of their income?

Avoid all those business niches that don’t fall under these criteria. Building a brand online is hard enough and takes a lot of effort. But if you are going to serve those people who don’t need your product, or can’t afford it, then you are going to be in great trouble.

There are a few more things to consider when you are starting your online business;

Why are you going to do this?

The answer to this question will determine if your online business will be successful or not. This is because every successful business has a purpose or a mission behind it.

You should have a passion and drive to take your business forward as much as you can. Similarly, you should have the intention to take it forward to the next steps.

Are you going solely online?

You need to analyze whether your business idea can operate online or it can go brick-and-mortar as well. Businesses like online teaching and learning don’t need any physical infrastructure nowadays.

While an e-commerce store has the potential to operate online as well as in the form of a physical structure.

2. Assess The Validity of Your Business Idea

Online businesses are easier to start, but it doesn’t mean that there is no cost or risk involved. Similar to a physical business, you need to check the feasibility of your business idea. Sometimes brilliant business ideas fail too.

You have to check the viability and validate your business idea. You may have a very brilliant idea but it can be unsuccessful if your business idea has no potential market. Or maybe your idea doesn’t have enough target audience to buy your business idea.

So, you need to assess your business idea. You need to ask yourself the following questions;

  • Does your product or service is going to solve a problem and there are enough potential customers for it?
  • Are people ready to spend money on your proposed solution to the problem?
  • Is your product or service a cost-effective solution to the problem?
  • Does your product or service provide enough benefits against the cost?
  • How much cost will it incur to reach the customers who are in need of this solution?

Just like in physical business, you can ask your potential customers. Questions related to their problems, needs, if they are looking for any proposed solutions, and its costs.

But in the case of online business, you can use additional methods as well to test the market;

  • Look for the customer reviews
  • Conduct survey from potential customers

3. Develop A Business Plan

After checking for the feasibility of your business idea, it is time to write a business plan. Online businesses usually don’t need much funding. If you are not planning to get outside funding for your business, still business plan will be beneficial and valuable.

A business plan will not only identify the loopholes but also will help you identify bumps on the path. Similarly, a business plan will also help you in future growth and profitability.

The second step, validating your business idea, will help you a lot and provide a base in developing your business plan. Similarly, there are many online tools and resources available which will help you out.

A business plan will help you in;

  • Gaining funds and investments,
  • Forecasting finances,
  • Identifying markets,
  • Clarifying objectives,
  • Providing a clear road map, and
  • Gaining success

Read more: How To Write A Business Plan

4. Choose A Business Name

Choosing the right business name is a very important step in any business startup process. Your business will operate online, on the website, or on social media, so it must be available for registration as a business name.

Make sure that your chosen business name is available for registration in your local, state, and online space. Your domain, social media platforms, and company or product name should be identical, as it will provide you great benefits.

Make sure that your chosen name is easy to remember and that it is easy for people to find it online. Similarly, it goes the same when you are going to operate on online stores like eBay, Etsy or any other.

But, if your chosen name is already taken by anyone else on the domain or social media, try finding another name. You can check for domain names on Godaddy and Google as well.

Read more: How To Come Up With A Business Name

5. Decide On Legal Business Structure

Choosing the right legal business structure is important for every business. Choosing the right legal business structure will dictate legal and tax requirements which you are required to meet.

Mainly there are four types of legal business structures available;

Sole Proprietorship

It means that you will be the sole owner of your business. You will be responsible for all the profits, losses, and debts while running a business.


It means that you will be having one or more partners in business. All the partners in the business will be responsible for holding liabilities.

Limited Liability Company

It means that owners of the business can limit their personal liabilities but still tax and other benefits will be included in it.


Corporation business allows corporations to take ownership of property, pay taxes, and have contract deals. A corporation legally separates itself from its owners.

It is best to consult a legal attorney. They will help you in determining the legal business structure for your business. Different business structures have different requirements and benefits regarding taxes and legal, so it is better to consult an attorney.

6. Take Care of All Legal Aspects

Like any other business or brick-and-mortar, you are required to file all the required documents and paperwork. So that you can ensure that your new business establishment is legal.

Small online businesses might think that they are running an online business, and business laws will apply to them. But, this isn’t true.

Compared to bricks-and-mortar, an online business needs few licenses and permits to operate. You are required to fulfill important and essential legal details. For this, you need to identify;

  • Any business license you need to start your business operations
  • Any permits you need to obtain
  • Any inspections or observations you need to pass
  • Any sales tax license
  • Any specific regulations on online business
  • Laws and regulations regarding hiring employees and contractors

For that purpose, you need to;

  • Register your business with government authorities
  • Obtain all the permits and licenses to operate
  • Meet federal and state tax requirements

Some of the requirements vary from state to state and the nature of the business. But, you need to do your own research to meet legal requirements and make your business legal. It is beneficial to consult an attorney in this regard. 

7. Build Your Website

After identifying your business idea and covering all the legal aspects, it is time to build your website. A website for an online business is like the physical location for any brick-and-mortar store and is of equal importance.

Decide on your website hosting, and choose the best one. Because having a good host will help your website load faster within no time. Otherwise, if your host has many downtimes, your customer might switch to your competitor.

For that purpose, you can check for customer reviews, and ask existing online business owners for the best and most reliable hosting available.

Other than hosting, you need to decide on a website platform and design that matches your business idea. Your website is the representation of your business, your products, services, and your mission.

8. Choose Your Sourcing, Fulfillment & Payment Method

Depending upon the products or services that you are going to offer, you need to identify, evaluate and choose your sources of supply and inventory. You need to find a trustworthy and reliable source of inventory.

For that purpose you can;

  • Produce your own product
  • You can find a producer that allows you to dropship their product         
  • Collaborate with a wholesaler that can give you products to sell online and vice versa

You must also, identify, evaluate and choose how you will deliver your products. Spend maximum time during this phase as it will be your point to success or failure.

It is time to decide how you will accept the payments. There are various payment options available online. Most popular include accepting credit cards, Paypal, Apple Pay, and Google Pay.

While for a service-based web business, you can use Transferwise, Payoneer, and Stripe.

9. Launch Your Online Business

Now, when you are done with each and everything, it is time to launch your business. You will make your website live, and announce that your business is open.

You can make announcements via;

  • Social media platforms
  • Online ads
  • Traditional ads
  • Email list

The Bottom Line

You can learn how to start an online business, but actually starting an online business takes effort and time. After that, your tasks have just begun, but these 9 steps can help you in building a solid base for your online business.

Build your website, set up an attractive design, add your products and services, focus on driving traffic to your website, and start selling.

How To Start An Online Business FAQ

1. How do I start an online business?

A step-by-step guide to start an online business in 9 steps;

  1. Decide On Your Niche and Business Idea
  2. Assess The Validity of Your Business Idea
  3. Develop A Business Plan
  4. Choose A Business Name
  5. Decide On Legal Business Structure
  6. Take Care of All Legal Aspects
  7. Build Your Website
  8. Choose Your Sourcing, Fulfillment & Payment Method
  9. Launch Your Online Business

2. Do I need an LLC to sell online?

You don’t need an LLC to start or run an online business. But forming an LLC would be better risk management once you are going into the business.

3. How much does it cost to start up an online business?

The cost of an e-commerce store includes;

  • A professionally built e-commerce website takes $5000 – $10,000
  • Domain name takes 2 – 20 per year
  • Hosting takes $300 per month

4. How can I start a small business online for free?

A step-by-step guide to start an online business in 9 steps;

  1. Decide On Your Niche and Business Idea
  2. Assess The Validity of Your Business Idea
  3. Develop A Business Plan
  4. Choose A Business Name
  5. Decide On Legal Business Structure
  6. Take Care of All Legal Aspects
  7. Build Your Website
  8. Choose Your Sourcing, Fulfillment & Payment Method
  9. Launch Your Online Business