Benefits of opening an online business

Opening a business online can offer financial, lifestyle and operational benefits. For first-time entrepreneurs, running an online business can let you explore business opportunities without securing a physical location or hiring employees immediately. If you plan to start a business online, consider these key benefits.

Flexibility and freedom

As the owner of an online shop, you can set your hours and work from anywhere. Due to the nature of the internet, you can choose any location as the headquarters for your business.

Because you use the internet as the primary point of contact with customers, you can respond to alerts from a laptop or mobile device. As your business expands, you may also be able to hire remote employees, giving you access to a broader talent pool.

Scalability

Online businesses are typically easier to scale than brick-and-mortar stores. If you’re unsure of the product’s demand, you can pursue a make-to-order strategy in the beginning. This involves producing an item only after a customer places an order, which helps limit inventory costs.

Once business stabilizes, you can start manufacturing products in batches, utilizing bulk-ordering discounts on parts and raw materials. Keeping inventory in a warehouse generally makes it easier to fill large orders when they arrive, so you’re prepared and able to meet the customer’s delivery deadline.

If you sell digital products, you can go from selling one or two items daily to thousands of items weekly with a relatively small investment.

Accessibility

Anyone with an internet connection can find and access your online business, making it available to many markets and customers. Online customers can shop on their own time by visiting your website and placing an order.

Passive income

Online businesses can make money even when you aren’t actively working. For example, if you sell digital audio files, customers can purchase the files in the middle of the day or night.

The best online business ideas are also highly automated, letting you generate revenue as long as you manage administrative tasks.

Lower overhead

While you may eventually need an office for your employees or a warehouse to manage inventory, you can initially avoid paying for a storefront.

You may not need employees to build a successful business. As a result, starting an online business may help you save on wages, health benefits and employee perks.

Reduced waste

Selling services and products online can optimize your efficiency and reduce waste with digital receipts and sustainable packaging.

Simplified distribution

With an online business, you can mail products directly from your warehouse or use drop shipping to deliver products directly from the manufacturer to the customer. You can even sell digital products, such as ebooks and online courses, eliminating complex distribution practices.

Costs of starting a business online

The total cost of starting your online business depends on your products or services, but you should expect to spend a few thousand dollars to build a professional website and produce your initial inventory.

You can potentially save money using a content management system (CMS) to create product listings, publish blog posts and oversee other website tasks.

You may need to cover the following costs:

Inventory

To start making money online, you need something to sell. This can range from access to services or tools to physical products. Some products require more overhead than others.

Website

Your website lets customers purchase products or services, so you likely need to invest in its development. Several costs are typically associated with starting a website:

• Web hosting: You need to pay to put your website on a server and support the activities of customers who visit your page. Basic shared servers cost a few dollars a month, while powerful private web hosts may cost about $200 per month.
• Domain name: Registering your website’s URL typically costs between $1 and $20 per year.
• Website design: If you use a website builder, expect to pay between $100 and $400 per year. It typically costs more to hire a professional designer, but it may be worth the investment to create a high-end website with custom features. Compare quotes from multiple design professionals before you hire one.

Software

While your website handles the front end of customer interactions, you may need additional computer software to help you manage your inventory, track shipping, send invoices and handle employee payroll. Software subscription costs usually vary from about $20 and up per service.

Insurance

All businesses should generally have insurance to protect their assets. Insurance costs may increase as you require more coverage for inventory, warehouse space or company vehicles.

Shipping

Investing in shipping equipment can make it easier to process orders. A few hundred dollars can supply a label scanner, a printer and packaging materials.

Licenses and registration

You may need a license or permit to operate a business in your jurisdiction. Licensing fees may range from $50 to $550, depending on where you establish your business.

If you start a limited liability company (LLC) or a corporation, you also have to pay filing fees. Although you can file the incorporation paperwork, many entrepreneurs hire attorneys to guide them, which can add legal fees.

Office equipment

Even if you work out of your home, you still need basic office equipment to run your business. Invest in a computer, a router and a modem to access your website. You might also invest in filing cabinets, writing implements and office supplies.

Selecting your niche

When determining your business type, consider your natural talents and interests. Then, research the market to identify an unfilled need.

If you can solve a unique problem for customers, you likely have a better chance of attracting site visitors and making sales. Once you find a niche, you can focus on developing a business plan for long-term success.

Creating a business plan: How to start an online business

Consider these steps as you learn how to start an online business that succeeds in a competitive marketplace.

Plan your brand and identity

When running an online business, your company’s brand helps you attract customers. Think about your company’s core values and how you hope to accomplish them with your business. Decide on a voice to use online, whether that involves a professional or casual tone.

List resources and expenses

Make a comprehensive list of your one-time and recurring costs and potential sources of income. You can use this information to create a pricing model to help your business become profitable in the desired time.

Source vendors

After you choose a product to sell, research vendors that can help make your ideas a reality. Having a list of possible vendors and their costs is an important element of your online business plan because it ensures your supply chain runs smoothly, even if you outsource elements of your operations.

Make a plan to fulfill orders

Decide how to connect customers with their products. You can manually check customer orders, package items yourself and take them to the post office, but as your business grows, you may need a robust system to deliver products.

Set goals and measure them

Document goals for your business so you can measure its growth over time. Your goals can be financial, cultural, operational or related to your customer base.

How to establish a web presence

Your web presence is an essential part of your marketing strategy and business plan. Because online businesses target customers who use the internet to shop, your company should have a strong online presence. When learning how to start an online business, following these steps can help you establish a positive reputation.

1. Select a great domain name

Your website’s domain name is the URL customers type into their browsers. Having a simple yet memorable domain name can help you create a comprehensive identity for your business. If possible, include your business name or a variation in the URL so customers can easily find you.

2. Build an interactive website

The easier your website is to use, the more sales you can make. Use attractive graphics, a memorable logo, interactive buttons and a simple navigation menu to guide potential customers through the sales process. Consider registering your website on search engines, integrating it with your company’s social media pages and posting a contact number or email for customers.

3. Set up diverse ecommerce tools

When developing your website, set up as many payment options as possible. Consider accepting credit card payments, PayPal and Apple Pay.

4. Engage on social media

In addition to your website, set up pages on social media and regularly interact with your followers. Consider partnering with social media influencers who can use their social capital and large following to introduce your product to a wider audience. Engaging with people on social media can strengthen your brand’s voice and promote customer loyalty.

5. Follow a smart SEO strategy

Add engaging, research-oriented copy to your web page so customers can find your website. When you include appropriate keywords in your content, your website becomes more visible to customers using search engines. Good content also makes your website more valuable to shoppers.

Tips for hiring employees at an online business

As your sales volume increases, you may need to hire employees. For example, you might hire a marketing specialist to promote your business or an inventory manager to ensure you have enough stock. When you’re ready to hire your first employee, these steps may help.

Write a thorough job description

To find qualified candidates, you need to craft a job description that explains the support you need. Talk about the company culture, the benefits you offer and the duties involved in your open position. You might also specify whether the role is remote or in-person at a warehouse or office.

Prominently post job ads

You can post jobs on your website, job boards and freelancing websites. Make posts on social media explaining you’re expanding your team. You may find someone who’s invested in your brand and excited about your company’s mission.

Create an interview plan

Decide whether you want to interview candidates in person or via telephone or videoconferencing. Compile a list of job-related questions to help you assess each candidate’s knowledge, skills and abilities.

Best methods for marketing your online business

Marketing your online business is an important part of cultivating its growth and reaching your target market. Try using these strategies to develop a well-rounded marketing strategy that drives sales:

• Email leads. Collect information about potential customers and send regular emails to remind them of the products or services you offer. Create email campaigns for previous customers and customers with products sitting in their carts.
• Start a blog. Starting a blog filled with useful, relevant content can help boost your website in search rankings.

Use web and print ads. Place targeted ads on social networks and other websites frequented by your ideal customer. Even though your business is online, consider running print ads or TV commercials for more exposure.