How to start a small online business

It takes hard work and dedication to build the relationships that help a company thrive. Are you looking for a new income source and willing to put in the time and effort to launch a digital presence? Then it might be time to learn how to start a small online business. The process below can also be effective for small business owners looking to expand by creating a virtual presence for their existing companies.

Moving your company online

Creating an online platform can be a powerful way to help your business succeed. The internet allows you to connect with customers from around the world instead of limiting yourself to a specific geographic location.

Even though it might seem intimidating to start doing business online, the potential growth is worth the risk. The internet is the backbone of our modern business world. Waiting to create a digital presence means that you’re missing out on untold opportunities.

While it’s smart to have a plan for creating your online business, rest assured that you don’t need to figure it all out right away. Just get started — and the pieces will come together based on your unique needs.

  • Identify your niche. It’s important to understand the needs of your target customers and have a clear-cut plan to meet those needs. A broad demographic might seem appealing, but finding a niche often helps small businesses succeed. Focus and clarity in your online business plan will guide your decisions through this process.
  • Evaluate market viability. Just because you’re passionate about your idea doesn’t mean that others will be willing to pay for the product or service. When you’ve identified your business idea, the next step is to determine market viability and research. Look at trending products, competitors, and other factors that could influence your ability to succeed.
  • Make it legal. Review legal requirements for running an online business, including privacy laws and regulations for intellectual property. The Small Business Association offers a great resource that you can use. Important legal steps include registering your business and meeting tax obligations (including both sales tax requirements and income taxes). Review both federal and state laws that apply to your business location.
  • Establish an online presence. A well-designed website is the hub of your online business. This platform gives customers a place to go when they’re ready to purchase your products or services. Not only do you need a good website, but social media profiles are critical in establishing authority and industry expertise.
  • Choose software. The right software transforms your website from an online billboard to a money-making system. Jotform offers a variety of tools that make it simple to develop digital systems. For example, you can build forms to collect contact information, order forms, and digital payments.
  • Generate customer interest. The popular Field of Dreams quote, “If you build it, they will come,” doesn’t apply to your online business efforts. Your website will go unnoticed if you aren’t proactive with marketing and publishing content. Determine the most effective methods to bring customers to your website, whether through paid ads, search engine optimization, social media engagement, or other places where your customers spend time online.
  • Build customer relationships. Just because someone visits your website once doesn’t mean they’re ready to pull out their credit card. Often, online business success comes when you actively build relationships with people who express interest in your products and services. Look for ways to systematize follow-up practices. For example, email and text message notifications can be a powerful way to keep your customers coming to your website.
  • Optimize each transaction. When a customer finally reaches the point when they are ready to purchase, what can you do to increase the size of the transaction? Don’t overlook the opportunities available for increasing your income using upselling and back-end offers. Offering recommendations improves the customer experience while also boosting your average transaction size.
  • Scale your business. Starting a small online business is the first step on your journey. Now it’s time to turn your attention to things that will help your company grow. The key to scaling any business is to look at the key performance indicators, then leverage this data to increase sales and profit margins.

It can be both exciting and scary to start a small online business, but most entrepreneurs find that owning a company is a fulfilling experience. With a bit of planning, you can avoid some of the most common pitfalls along the way, and enjoy the many benefits that come from business ownership.

This article is originally published on Jul 23, 2020, and updated on May 31, 2022.

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