There are 11 steps to starting and running a successful online business.
1. An Idea for Your Small Business
The first step, and perhaps the most important, is coming up with an excellent online business idea, and there are thousands of ideas to choose from.
Next, although it may seem counterintuitive, it would be good to look at other businesses and what they have done, especially regarding their approaches.
If it is time-tested and proven to work, there is no reason why you cannot do the same; however, to stand out from the competition, you must differentiate yourself. Moreover, anything the competition does, you want to do better.
It's a good idea to start an online business based on something you enjoy, are passionate about, and are good at.
For instance, starting an online dog training business isn't your best bet if you are a certified nutritionist and fitness trainer.
It helps if you are familiar with the business you want to start. We recommend doing a bit of research on the most profitable business ideas for people who want to work from home.
2. Create a Business Plan
Once you have a good business idea, the next step is to create a business plan. This is essential to your success because it outlines all facets of the business in detail. Generally, you do not want there to be any unknowns, whether it has to do with competition, marketing, finances, licensing, or anything else.
Your business plan should follow a specific structure. It should start with the idea; then you need a company name and description, followed by market analysis, management, organization, the products or services you will offer, your target audience, a marketing plan, your logistics, and your financial plan. Let's look at a few of these factors.
Choosing a good business name is essential, especially for marketing. You want a business name that is simple, concise and focused. You want people to be able to know what your business does simply by reading the name. Therefore, it should be short, uncomplicated, and memorable. In addition, you should register the business name, and you may want to consider trademarking it.
Market research is next. You need to know everything there is to know about your target market and audience. You also want to know what the competition is doing, how they are doing it, and how well they are doing it. The more you know about the niche and market you are entering, the better.
Pay attention to the opportunity size. Small markets are not always the best, but if a big space is not filled in a small market, then small markets work well. It depends on how much competition there is within a given area.
Of course, you also need to determine who your target audience is. Who are your products and services geared toward, and how will you market your products or services to that audience?
3. Secure Funding
No business can get started without funding, and you will need money to start your online business, no matter what that business is. If you have an inheritance or savings, you could use those.
However, most people don't have the money to cover the cost of starting a new business. Therefore, you will need to secure funding. So, what are some of the options?
One option is a personal investor. Maybe you have friends or family who want to help or know someone looking for a decent investment opportunity.
Another modern method is crowdfunding. There are many crowdfunding platforms where you can ask a group of people to invest in you.
Getting business grants is another method. Grants are nice because they usually never need to be paid back. Think of a grant as a donation for your business; however, they typically have requirements that must be adhered to.
The other option is to get a loan, such as a small business loan.
4. Choosing a Business Structure
The next step is to choose the type of business you want to create—the structure of the business. This is important for financial and legal reasons. Different business structures will have varying benefits and drawbacks, and this is one of your most important decisions.
The business structure you create will partly depend on your country, as different countries have different business structures. You then also need to consider the type of business you are starting.
Some businesses are better run by individuals, whereas others may benefit from being incorporated. Also, consider how many people are involved in the business: Are you a single person? Are you working with a partner? Do you have employees?
If you are the only person in the business, you may go for a sole proprietorship. This structure requires the least effort and is the most cost-effective. However, the downside is that you will be liable for your business and all undertakings with a sole proprietorship. With this structure, you may hire employees but need an EIN or employer identification number.
You can also start a business as a partnership, which means working with one or two partners. This is more or less the same as a sole proprietorship in terms of being legally responsible for the business. Here, the partners share liability equally.
Next is the LLC, or limited liability corporation, which is a business structure in the US that is very common. Here, you have liability protection for your business, which means that you as the owner are not legally or financially responsible if there are claims against your company. An LLC can be formed by one or more people.
Finally, there's the corporation, where the owners are taxed separately, not as a part of the greater entity. Some shareholders own a part of the business, and there are stocks to be sold. Not being financially responsible as an owner is a benefit, although forming a corporation is usually reserved for larger entities.
5. Tax ID Numbers
Your business will need state and federal tax identification numbers so your business can pay taxes and you can prove that your business is paying taxes.
First, you will need a federal tax ID number, an EIN, or an employer identification number. This number has 9 digits and is provided to businesses by the IRS for tax purposes. It's like the social security number for your business.
You will need an EIN if:
• You have employees other than yourself
• You have a corporation
• You have an LLC
• You inherited or purchased an existing business
• You have retirement plans
• You want a business bank account
• You need to file for bankruptcy
An EIN will help with filing taxes; it provides legal protection, protects personal info, and helps get good credit with banks.
You will also need a state tax ID number, which is assigned by the state your business is based. Each state has different laws, but generally speaking, this is more or less the same as the federal EIN, but for state-level purposes.
