An online business can be a lucrative way to start your own company and make money from home. Online businesses take planning and some understanding of online commerce but are easier to start than traditional businesses in many ways. Craft a business plan for your online business by carefully working through each aspect of your offerings, web presence, marketing, and overall strategy.
Establishing the Basics
Choose an idea or product. The first step in planning a business is deciding what you want to sell. Consider selling a product or service related to your current field of work, because the knowledge you’ve gained on the job will help you start your business. Or, your business could be an extension of a hobby or interest that you have outside of work. If you’re still drawing a blank, try brainstorming ideas using one of the following guidelines:
- Create a business that solves a problem for someone. In many cases, this a problem that the founder has that they are unable to find a good solution to. This also includes things that may become problems in the future.
- Make something cheaper, easier to use, or of higher quality than existing products/services.
- Simplify people’s daily lives.
Define your business type. Web-based businesses can take many forms, from part-time designers operating through a freelancing website to full-blown e-commerce sites. If you’re selling goods, you may choose to operate through a site like Amazon, Etsy, or eBay. Or, you can create your own website to sell your products. Businesses offering services have the same choice.
- Working through an established website gives you the credibility that comes with an established name, but also limits your freedom and may take a bite out of your bottom line.
- Weigh the costs and benefits of your options before deciding where to run your business from. Remember that you can always expand to your own site later if needed.
Clarify your goals. Establish a couple of basic business objectives to guide the rest of your planning. What exactly are you selling, at first and eventually? What is your market niche and how will you compete there? Figure out your goals for growth and expansion, as well as your exit strategy. Do you plan to sell the business after it has reached a certain point or grow it indefinitely? Your answers to these questions may be incomplete or vague, but carefully considering them can help guide your thinking as you create a business plan.
Examine your strengths and weaknesses. Another way to guide your thinking is to perform what is known as Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis. Start by identifying your own strengths and weaknesses as they apply to the business. For example, perhaps you’re talented and skilled in providing your service but lack the ability to effectively promote yourself.
- For opportunities, consider your competitive advantage over other businesses. Is your product/service cheaper, better, or easier to use than existing ones?
- For threats, look at the competition and regulatory issues that may affect your business. Are there barriers to entry in your market?
- By considering these qualities, you can understand your place in the market and build a plan to take advantage of your strengths, sidestep your weaknesses, and address threats and opportunities head-on.
Planning Your Website
Select a domain name. Choose a domain name that’s simple and includes a reference to the industry, product, or service you’re marketing. Try typing related terms into search engines to see if a domain with that term is already in use. Use different combinations of terms until you find one that doesn’t exist.
- Make sure your domain name is simple, easy to type, and as short as possible.
- Watch out for misspellings and avoid using numbers unless absolutely necessary. Numbers may be typed in as words (three) or numbers (3), so people hearing your website name aloud will be unsure of what to type in.
- Remember that you can use other top-level domains besides .com. Depending on the nature of your business, .co, .info, .biz, .me, or another domain might be appropriate.
Register or purchase your domain name. You can register a domain name for an Internet business if it doesn’t already exist. You also have the option of purchasing a domain name that has already been created but is no longer in use. Be sure to verify that the domain is legally available for purchase before you invest money in the name.
Find a reliable web host. It’s important to find a website host that offers reliable technical support, plenty of storage space, and the server options you need for your site to function efficiently when you start an online company. Your hosting needs will vary depending on whether you need to run programs on your site or utilize a secure server. Explore all your options to find the hosting package that suits your business.
Plan out your webpage design. As an online business, your website is like your storefront. Therefore, the same rules apply: if your storefront looks shoddy, it will drive away customers. Start laying out an effective, professional website by drawing how you want it to work and look. Try to make your navigation simple, with product/service description pages easy to get to. Avoid using excessive amounts of graphics, audio, and video.
- Considering looking at existing websites of the same type and noting what you like about them. Don’t directly copy any designs, but allow their successes to inform your design choices.
- Remember, you can always hire a professional to design your website. This may be expensive, but a professional-looking and easy-to-use website is necessary to operate a successful online business.
Creating a Marketing Plan
Identify your ideal customers. To market your product, you will first need to identify who will be most likely to buy it. Narrow down your ideal customer as far as possible, including demographic details like age, gender, income, location, interests, and other personal specifics. Determine what else your ideal customers are interested in and what they value most. The clearer picture of your ideal customer you can get, the most accurate you’ll be able to market to them.
Conduct market research. Do some research within your industry and market to determine key trends and your product’s ability to compete. Start by looking at US government reports and trade publications to assess the state of your industry. Is it a growing, fledgling industry with few players or a large, highly-competitive market? Our yearly sales in the industry declining or increasing? Part of having success in business is getting into the right industry at the right time.
- You should also conduct market research on your product. Try providing your product or service for free or a reduced cost to some testers. See how they react and get feedback about what you should change.
Craft a marketing strategy. Using your ideal customer as a starting place, figure out how you will reach your target market. Determine where you will advertise and what your advertisements will say. Clarify the message you want customers to hear about your offering. What is your business’s “brand?” Your brand is the personality of your business, including its values, reliability, and the nature of your product. Craft a strategy for appealing to and retaining customers.
- Consider where you will advertise. Look carefully for websites, blogs, or other places online where your ideal customer might spend time. These could be ideal places to place advertisements that link to your website.
Take a look at your competitors. Analyze the advertising strategies, offerings, and pricing used by your competitors. What are they doing well and what could be done better? Is your product of adequate quality and priced appropriately for the market? Find out how your product is able to compete and, ideally, your competitive advantage in the market. If you can’t find one, you may need to reassess your strategy.
Completing Your Business Plan
- A business plan (executive) summary.
- A company summary.
- Product/Service description.
- Market analysis.
- Marketing strategy.
- Product strategy.
- Website plan.
- Management details.
- Financial plan.
- An exit plan.
Understand the requirements for your business plan. A business plan lays out all of the specific of your business’s operation, from management to marketing and from products to forecasted sales. A full business plan compiles a large amount of business information using a specific format and maybe many pages all-together. However, this type of business plan is only necessary if you are seeking funding from a lender. Otherwise, you can use a one-page “lean” business plan that includes the following:
2. Include your planned business details. If you’re writing out a full business plan, you’ll need to include about ten full sections that describe your business. Most of these have already been created or explored earlier in the planning process. These are:
- Strategy: Your goals, target market, strengths, offering description, and competitive advantage(s).
- Tactics: Marketing approaches, fundraising strategies, product features, and other operational details.
- Concrete specifics: Your specific goal timeline, tasks for management, responsibilities, and performance metrics.
- Essential numbers: Your budgeted expenses, revenues, and cash flows.
- Then, include your funding sources. Are you finding everything yourself or do you need a small business loan? If you need a loan, where will you get it?
- The financial section of your business plan should also include projections of your revenues and expenses over the first few years of operation, especially if you need a loan. Lenders will want to see this information to know that you can repay your loan.
Discuss your funding needs and sources. Your funding needs will vary widely based on the type of business you are funding. For a service-oriented online business, you may need to buy some office equipment, pay for your website, and allocate some money for advertising. This will mean that your startup costs will be relatively low. However, if you’re purchasing a product, you will need startup money to fund your initial inventory purchase and to store your goods. Assess your initial funding needs and give an estimate in your business plan. Be as accurate as possible by researching market prices for what you need.
Consult a lawyer. Discuss your plans for an online company with a business attorney that specializes in online business. This should be done while your business is still in the planning stages to ensure that you’re doing business legally and that your business investments are secure. Learn how to protect products that are patented or copyrighted, what laws and licenses apply to your type of business and whether you should incorporate your business.
- You can also read up on online business law on your own using the SBA’s guide at https://www.sba.gov/managing-business/business-law-regulations/industry-laws-regulations/online-business-law.
- There may also be tax regulations state-specific legal requirements involved in running your online business. Check your state secretary of state’s website for more information.