How Do I Start An Online Business?

Photo Credit: QuattroVageena (Flickr)
Every time I sit in front of my computer, I am itching to start something new. An idea. Implement it. Sell it. I see the Internet as a gateway to opportunities, so imagine my surprise when people say they’ve gotten bored by the Web/Internet. There are a million things you can do online, and starting an online business happens to be one of my favorite pastimes. I don’t start online business myself anymore, I do however, now advice quite a few people on a pro bono basis on how to get started online, and help their idea get off the ground.

So how do I start an online business?”  This question gets asked of me. A lot.

From budding entrepreneurs, to the unemployed, from students to housewives, from the elderly to the very young. Those who want to have their own thing on the side or to have their own business. What to do? How do I start? Where do I seek help? What are the steps? Where do I go? What do I need to learn? How much money would I need?

You’ve been thinking about all these questions for month or years, but have never really gotten to finding answers.

As a starting point, I want to make you aware of a very moving Quote. If you don’t understand this quote, you might as well skip this article and go back to whatever you were doing.

The right time is Now. Not tomorrow, not next week. Its now! What you put off today, will only prolong the situation, not improve upon it.

Over the course of my career, I have come across literally 1000s of people who seek advice on how to start their own business. They have ideas, dreams, ambition yet they lack the inertia to take the first step or maybe they are just clueless about it.

As the famous Chinese philosopher Laozi said: A journey of a thousand miles begins with a single step.

So here’s are the first steps.

Starting an online business if not difficult at all. Its just a series of steps that need to be executed successfully that will have you owning an online business in no time. I would like to clarify one thing here. This article does not cover affiliate marketing, something which I absolutely am odds with. To read up on why I think there is no money in affiliate marketing, click here.


Have a Business Plan? No? Then you need one. To start with an online business, you first need to decide what type of business you want to enter into. When choosing what type of business, you must take into consideration your knowledge and know-how of that particular business. It is equally important that you are cognizant of the geographic area you would be operating out of and the geographic regions that you would be selling to.

Let us say, your forte lies in clothing and fashion niches. Now it might or might not be foolhardy for you to venture into the online world of software sales. You might just get lucky at it, but the probability of you failing in that specific niche, is quite high. Why? It has quite a lot of do with domain knowledge.

Important Note: Stick to something you know or are passionate about.

A business plan gives you not only the holistic view of what you are trying to do, but also puts things into perspective for you. The Harvard Business School has a great resource section to help you make a business plan.  Here are some other free/paid resources you can also reach out to regarding your business plan:

  • Bplans – an online paid website that allows you to choose from 100s of business plans and allows you to write your business plan online.
  • Microsoft Word Templates – You can search through this resource for “business plan” templates.
  • – Business planning templates.
  • US Small Business Administration – Online business plans.
  • Inc. Magazine – Artemis Free Business Plan Template.
  • BizGym – All in one (paid) business planning and pitch development website.

A well-researched and thought out business plan, will make you more acutely aware of the competition, the opportunity that exists, the pluses and minuses of the industry, and more importantly, what is your unique selling point. What makes you so inherently different that buyers will flock to your website for the products/services you sell?

All this added clarity is only due to a business plan and all without investing a time in the business. As much knowledgeable you may be in the field, a business plan also serves a dual purposes – it also acts as a sales pitch book. You, yourself, would be your best critic and have answers to all the questions a ‘devil’s advocate’ may ask.

If your financials are correct, you will know very clearly, about what your expenses will be, and what it will cost you to run this business.

You wouldn’t buy land without having it properly appraised and thought over it a 1000 times before constructing your house. You look at 100s of factors, the neighborhood, the location, the locale, the commute factors, the town itself, taxes, schools, job opportunities, etc.

Your online pursuit, should be no less.

Once you have determined your vertical and niche (for your product &/or service), the next step to naturally ask yourself is where will you source your goods/services from? and for how much?

Some questions to consider are:

  1. Is your supply line competitive and reliable enough?
  2. What is the competition like?
  3. How many competitors show up on the 1st, 2nd, 3rd, page of Google? (for your country? worldwide?)
  4. Will you be able to compete against these search results and make your way into these search engine results pages?
  5. How many of your competitors are buying ads? What is the average price they are paying per click? Will you be able to compete with them?
  6. Average selling price?
  7. What is your unique selling point? (free shipment, extras? discounts?, etc.)
  8. Whatever you are selling, is it cyclical in nature?
  9. Does your market scale horizontally or vertically?
  10. You need to invest in inventory? If so, how much does that cost?
  11. You may also need to look into Affiliate Marketing and Drop Shippers. These two options also represent a great way to start without having to worry about any sales process. You simply divert the user to the sale mechanism of the company whom you are representing for affiliate marketing or drop shipment and al is usually taken care by them. Referral sales are how 1000s of businesses today are doing business on the web. [but I digress]. Affiliate Marketing in my opinion will bring you traffic, but hardly any sales. With Millions of affiliate program out there, I would recommend you stay focused on your business plan and marketing it in the traditional way.

All these answers will come out from a well-researched business plan. Hence, I keep stressing the importance of it. A business plan gives clarity from all perspectives and serves as a cheat sheet and your focus document, should you go astray.


The basic Internet Marketing Model (or online business model) is pretty much the same for most businesses.

Basic Internet Marketing Model

You can have the best website on the Internet, selling the best product or service, but if you don’t have any visitors to your online shop – you will not be seeing sales anytime soon. We concentrate too much in making our perfect online websites, and completely ignore the need and necessity of visitors (traffic) to make sales.

Traffic = Sales

There is no other way to explain it. The more visitors you have to your website, the more sales you likely to make.  To understand traffic, let us understand our visitors first:

Destined: Those visitors who are destined for your website, i.e. they are typing the URL or click on a link to come to your website.

Transit: These are the type of visitors who use your website to go to another one.

Accidental: These are the type of visitors who did not mean to come to your website.

So now that you understand your visitor types, what sort of traffic types exist?

Different Types of Traffic

The Four traffic types are, Organic, Referral, Paid and Direct:


  • that comes and builds up naturally
  • usually involves search engines traffic as well
  • comes through relevant linkages
  • is slow to build up – takes time
  • Google loves organic traffic as it is well-behaved


  • also Organic in nature
  • comes through articles or linkages
  • is usually a derivative of SEO (Search Engine Optimisation)
  • when optimised – search engines are a major driver of traffic


  • not Organic at all
  • existence is based directly on your ability to pay
  • is “keyword” specific
  • expensive – but the more sure was to instantly generate traffic for your website
  • most preferred / utilised method
  • hinged on your ability to go keyword research


  • again, its Organic in nature
  • word of mouth / offline referral / brand-identity
  • repeat / bookmarked visitors constitute largest segment
  • most internet marketers would not relay on this method alone
  • largest contributor  if you have a brand – Apple (you don’t search for Apple, you directly go to


Important Note: Whatever money you spend on your online endeavor – you should be able to risk it all. After all that you may do, you may find out that the business never really took off and you want to throw in the towel. Be prepared to lose that money. What will be done with the inventory (if any), are things you need to think of. As in life, I say, there is a 50-50 chance. Either it will work or it won’t. If it doesn’t – and you are ready to call it quits, then understand the gamble to take with your money. Be prepared to lose it all, if worse were to happen.


To be online, you need a domain name. You can opt for a generic domain name, or a unique domain name. if you are selling Bicycle Seats, your domain can be (if you are lucky enough to grab something like this). If you are a multi-product line store, you might opt for something like or something of that nature (nomenclature notwithstanding).

Do keep in mind, today’s online stores heavily rely on online optimization and marketing. Choose your words for your domain name carefully. SEO is something you will have to consider later on. (SEO = Search Engine Optimization).


Once you have your domain name, you would need hosting. There are plenty (actually 10,000s) of web hosting partners you can go to and get your web hosting. The most preferred ones are HostGator, BlueHost, GoDaddy, Verisign, 1and1, LiquidWeb, iWeb, etc.


Once your hosting aspect has been taken care of, you would most likely need to have a website developed. I am going to assume that this is something you are familiar with and can work around to have this website (your online identity) sourced from somewhere and taken care of. You are free to choose from a whole host of web hosting providers like MangoMatter.


Important Note: If you are going to use a hosted shopping cart, most of the time you would not even need a website developed. If your prime goal is to sell online via the shopping cart, just go ahead with that. The shopping carts mentioned below are good enough to be strapped onto your domain and you get started right away. This only implies if you are okay with a online hosted shopping solution and do not want a website developed.

Three things to consider when doing your website:

  1. The content and copywriting is unique and up to par. Content is King. Don’t ever forget that. Your website copy should be error free, grammatically correct and on the dot, meaning, the headlines, the opening sentences, the descriptions, etc. all need to have a proper sales copy feel to it.
  2. You have the ability to change the content of the website without a need for a web developer, etc. (a Content Management System) is a must. A good and perhaps the most prevalent CMS out there on the Internet is WordPress, check it out and see on how to get started, or alternatively, read this article on How to Get your Business Online using WordPress.
  3. You will most likely need some form of a shopping cart system for your website. Though there are 1000s of free and paid for shopping cart systems out there, my advice to you would be to free your time, outsource it. Opt for a SaaS (Software-as-a-Service) hosted shopping cart app. Of the few (best) shopping cart systems I would recommend are:
    1. Shopify
    2. Magento
    3. Big Commerce
    4. Volusion
    5. Etc.

A good shopping cart system will have plenty of options for your store layout, discounts, coupons, loyalty program, shipping integration, payment handling integration (especially look out for PayPal integration, a lot many users prefer to pay via PayPal), etc.

Unless you are a techie, and really have extra time on your hands, just opt for an online-shop builder solution (also known as hosted shopping carts). There are no steep learning curves, safe and secure (read: hassle-free) hosting and above all, you get technical support. Remember, time-saved is money earned.

Once you have take care of your shopping cart, website, domain and hosting. You are essentially online. However, you still need to process payments.


I must point out here, that today’s shopping carts are very advance. The hosted shopping cart solutions like Shopify etc. do not require that you have a separate website all together. In fact the GUI / Design of the shopping cart is such so as to give a fully functioning website look, feel and experience, whilst still having the entire domain of the shopping cart (product categories, checkout, etc.)

The ability to accept online payments, is a straightforward process. You need to have what is called a Merchant Account (usually provided by a bank, based on your credit history, etc.) and then you need to have this Merchant Account – integrated with your shopping cart system. The merchant account is not mandatory. You can tap into various 3PP (Third Party Payment Processors) to do the same for you, however, do note, your acquiring fees would be slightly higher.

Here, luckily you have many options. 1000s of merchant service providers would be able to assist you. From Cardservice International,, (if you are international or even US concentric), Braintree Payment Solutions (highly recommended), Bank of America, etc.

I would really look at Braintree and see if you can get started with them. Very helpful staff, and very good rates. You need to be aware of:

  • The acquiring fees (usually a percentage). The lower the fees, the better it is.
  • Monthly fees
  • Per approved transaction charge
  • Rolling reserve (some merchant opt for this)
  • Charge back Fees
  • Fraud Control
  • Integration with various shopping cart system?
  • 24/7 Customer and Technical support


If you are selling physical goods, it would be a good idea to sign up with say USPS, Fedex, UPS, etc.

Now that your store aspect is almost complete, you would need to take care of a couple of things:

  1. Telephone Number and Address for your business (I am going to assume you will be a proper business that is registered)
  2. Be aware of what your tax rate is if you are shipping within the state
  3. Your terms of sale, terms of service, acceptable usage policy, privacy policy, service level agreement, disclaimer and legal terms all need to be worked out by an attorney. Money spent on this is well worth it.
  4. Your refund policy and exchange policy needs to be clearly spelled out.
  5. Do make sure your shopping cart can handle refunds, etc.


For your accounting and bookkeeping, you can again resort to an online solution. or are two good options.


You would also need some form of a Customer Support Help Desk, where your users can open support tickets or ask questions, etc. Here again you have many SaaS options like,, etc. Google for “help desk” or “hosted crm” and you should see plenty of results.

With the above your online store is essentially complete.


What you now need to work with, is getting visitors. You have just perhaps spent quite a few weeks in the making your online virtual shop probably the best it is. However, sadly all this goes to waste if you don’t have any visitors to your website (shop). The more (targeted) visitors you have the higher the probability of a sale.

Most online websites that sell fail to see any sales is because they underestimated the importance of post-website construction phase, known as traffic building. Without traffic, there is no sales. Whether you bring in targeted traffic slowly (organically) or via paid clicks, all depends on you, however – this is an area you cannot afford to ignore.

You need to now work with a professional (individual or company) who will work with you, on your limited budget to start online campaign for you. The online campaign is not just for marketing purposes, but it is also geared towards your search engine optimization (SEO). You would be looking at things like acquiring back links, having articles written and placed on various ezine sites, listing your website with the necessary online directories, making sure your site is index properly by Google and other search engines. Make sure you on-page SEO is done correctly. Your META tags and descriptions are well written, etc.

You can also get started with a small online PPC (Pay-Per-Click) campaign on Google, to buy ads and bring (targeted) traffic to your website. PPC is one of the fastest ways to bring visitors to your online store.

Everyday by some estimates 40,000-50,000 blogs/websites, etc. go online. that’s everyday. What is going to make your website stand out is only how effectively people are able to search for the things they want to buy (which presumably you are selling) and how effectively you utilize and conquer (for lack of a better word) the Search Engine Results Page (or SERPs). Don’t ignore the social media either. Today, more and more users can be found spending countless hours on Facebook, Twitter, Google+ (relatively new), LinkedIn, etc. Learn to adapt your marketing and communication by using social media.

In the end, it boils down to two things:

  • The end price the user will pay to have the product/service delivered to them.
  • The user experience.

It is not easy competing with the likes of the web giants, like Amazon or Ebay, or other web stores (albeit Ebay would classify itself as an Auction). You need to give users a reason to come to your website and shop from your store.

One example of a store done very well in my opinion is – you will see what a great feeling it juxtaposes on to the visitor.

Hopefully, this would give you a very good starting point on how to get started with your online store. As I cited, I could have overlooked a few key points, please do not hold that against me. If you need any additional information, feel free to post here as a comment and I shall reply. Good luck on your venture.

Photo Credits: QuattroVageena

This page was last updated on March 4, 2021.

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