How to Start an Online Business: 6 Steps to Build a Foundation for Your Successful Online Business

More people these days are choosing to start an online business and work for themselves. With a growing cultural emphasis on work-life balance, and the seemingly universal acceptance of Zoom and other communication technology, working from anywhere with just your laptop and an internet connection is not only possible, but for many, it is the new normal.

Once you start an online business, you can work with people worldwide or serve your local area; it’s up to you. Working for yourself allows you to create your schedule and work on your own terms.

Why Start an Online Business?

Here are some popular reasons people are choosing to start an online business and work for themselves:

No Commute. You no longer need to deal with the hassle of commuting, and you save the time you would otherwise spend driving or riding the train.
Flexible Schedule. Working for yourself allows you to set your own schedule and work at the best times for your lifestyle.
You Can Work Anywhere. You don’t have to work from home when you start an online business. You can be location-independent, working anywhere you have an internet connection. It’s an excellent option for people who travel often or have no fixed address. It’s becoming so popular that people who chose this way of working are now referred to today as digital nomads.
Control Over Your Working Life. You’ll feel happier, healthier, and more creative when you control your own time. Although it’s not an easy change, most people find their work more fulfilling when they’re in charge.
Low Overhead Costs. There are some overhead costs to running an online business, but you don’t need to pay the typical fixed expenses of a brick-and-mortar business, like renting office space.

While many existing jobs have been moved to a home office, this course will focus on the steps you need to take to start an online business wherever you please. These tips will apply whether you plan to start an online business selling t-shirts or other products or providing a local service that you market to your community online.

Ready to start an online business?

Here is the roadmap you will follow through the course:

By the time you finish the course, you’ll have a solid plan to start an online business.

Learning Objectives:

After completing this course, you will have:

Identified goals and reasons for starting an online business to determine if making the leap is the right choice for you.
Considered and decided on your business model.
Select the best payment processor for your target market and business.
Built your start-up budget.
Identified essential tech you’ll need and any specific tech for your business niche.
Established your daily routine to maximize productivity and avoid common pitfalls.
Explored digital marketing strategies to identify effective marketing methods for your niche.
Taken steps to start growing your online business presence.

This course is presented in 7 modules that follow a logical order. You’ll work step-by-step through the process of starting an online business.

You can skip around if you want but working through them one at a time is best.

Complete the Action Steps at the end of each module. In case it helps, here is a separate workbook you can use.

Action Step:

Download a PDF copy of this coursebook.
Download the Action Guide for this course.
Describe what your life will be like with your online business.

Start an Online Business – Module 1 – Set Your Online Business Goals

The freelance lifestyle has plenty of benefits, but it’s not suitable for everyone. Working for yourself presents challenges, and you should consider them before deciding to start an online business.

Is starting an online business the right choice for you?

Consider the following:

Yes, You Have to Work. Ignore those who sell you the idea that you’ll be sipping pina Coladas on the beach daily. Maybe you’re eager to abandon your day job, but much work still needs to be done. In fact, there may be even more work to do at first as you get set up and figure out how to best work in your new environment.

Working from Home Is Risky. The trade-off is security when you give up the office job to start an online business. You must find and secure clients when you work for yourself. Many freelancers face fluctuations in income each month, and this is something you’ll need to prepare for.

Get Organized. You must be self-disciplined and organized without anyone guiding you to ensure you’re on track. You can learn many simple techniques to get and stay organized, but you need the drive and self-motivation to do it.

The Work-Life Balance. With a traditional job, it’s easy to draw a line between your work and not work time. You’ll have to find your own balance when your business location is your home. You’ll need to stay on track when working and make sure you can relax and recover when you’re not.

You will still need to do your least favorite parts of the job, even if nobody else notices.

You can accommodate the changes and mitigate the risks by planning well before starting an online business; that is precisely what you will do in this course.

The first step is to clarify your intentions. Why do you want to start an online business?

Some common answers include:

Working on your own terms
Staying close to family
Flexibility to work around travel or personal issues
Opportunity to strengthen your skills
Owning a successful business
Traveling or relocating to another country
Earning a higher income

These are all legitimate reasons to start an online business as long as you realize that working for yourself is not an easy way out of hard work. Also, consider your personal needs for things like recognition and socializing, and how about brainstorming? If you are a person with a high need for group collaboration, you’ll need to figure out how to create that for yourself.

Envision the life you want. Where will you be a year from the day you launch your online business? How does life look different from your life now? Which of the above goals most appeals to you? Answering these questions will help to clarify your objectives.

Once you have answered these questions, write your big-picture goal in a sentence. This statement will guide all your decisions going forward to get you to that future life you envision.

Whatever your goal, writing it out clearly will motivate you and remind you of why you chose to start an online business.

Action Steps:

List all the risks and difficulties you will face.
List all of your personal pros and cons of starting an online business.
Define your big-picture goal for your online business and write it in a sentence.

Start an Online Business- Module 2 – Choose a Business Model

Once you have your big-picture goal, the next step is to select your business model. As you complete these initial steps, you’ll know whether you should start an online business or not. The answer should become clearer as you move through each step.

You’ll be working for yourself, so you need to first find a steady way to earn an income.

Here are some standard online business models:

start an online business - business models

Who are your customers?

Whatever business model you choose, paying customers will be necessary for you to be successful. Defining your target customer clearly from the beginning will help you make better, more accurate decisions through the remaining steps to getting your business off the ground.

Answer the following questions to create a high-level customer profile:

What types of people do you enjoy working with?
What types of people can you relate to best?
Who will benefit most from your offer?
Where will you be able to find customers or clients quickly?

Once you clearly understand the type of customer you can best serve, do a little more research to narrow that down and create a snapshot customer profile that will include:

Demographics
Top challenges they face (as they relate to your business)
Their biggest goals, dreams, and desires (as they relate to your business)

Over time, you’ll refine this information as you gain customers and learn more about them. But do whatever you can now to create a clear picture of your ideal customer.

How Will You Serve Your Audience?

The answers to these questions will help you create your “value statement”. The value statement articulates the solution you will offer to your ideal customers.

Ask yourself:

Questions to ask about your customers when you start an online business
How can I tailor my business to address my customer’s biggest needs?
What can I offer that’s different from my competitors?
How can I tailor my offerings to address my customer's most significant challenges?
What do I offer that sets my business apart from competitors?

Suppose you find out that one of their biggest challenges is finding ways to get more visibility when they’re already stretched for time. In that case, you might focus your offer around that.

For example, if you are planning to start an online business as a virtual assistant and already know a few business coaches, they may be a great fit as your ideal customers.

Your “value statement” could be:

“I manage business coaches’ daily tasks to free up your time so you can focus on building your visibility and working with clients.”
Sample Value Statement

As with your ideal customer profile, you’ll refine your value statement as you learn more about yourself and your customers. You’ll also see what you enjoy most and where you can make the most significant impact as you earn.

Once you’ve created a picture of a few ideal customers, go back to your business model, and refine it to address the specific needs you’ve uncovered.

Learn the Skills You Need

Looking at your current situation, you may need to learn some new skills before starting an online business.

For this, you can try using websites like Coursera, Skillshare, Udemy, Udacity, and CreativeLive, which offer free or low-cost courses where you can learn practical skills.

Online forums and groups are another good way to learn. If you are a content writer who wants to learn copywriting, join writers’ groups. Online forums exist for freelancers, marketers, business owners, consultants, and coaches.

Another idea is to find a mentor. Anyone who has experience starting an online business in the same industry as the business you want to run or has already done what you’re hoping to achieve can be a mentor. A person further along in their career can guide you, offer advice, and support you in reaching your goals.

Chart Your Online Business Path

Right now, you’re concerned about how you’ll leap from your current work to running your own operation. Be careful not to lose sight of the long-term vision and consider your career path.

Many people working on their own do a combination of roles. They might be an entrepreneur who also offers consulting services and teaches SEO.

To chart your career path, think about what you will do initially to earn a full-time income and what you will work toward next. Many of the ideas listed require learning new skills and building a resume before you can do them successfully.

Think about what you can do now and what you’d like to work toward in the future once you’re settled. For example, you might start an online business as a graphic designer for now but also begin laying the groundwork for building a membership site and offering an online course there. You could start an online business to eventually offer graphic design coaching or consulting services for businesses and individuals.

As part of your planning, consider building passive streams of income. A passive income stream is something you put work into upfront, and once in place, it earns money mainly on its own. Examples include publishing books or creating a largely automated affiliate program.

Establish Your Online Presence

You will need a solid online presence to get clients and work with whichever business model you choose. LinkedIn is an excellent social media platform since it focuses on professional networking. Before you start an online business, you should have your own website and profiles on any relevant social media sites.

Your online presence should explain what you do now so that it’s apparent to those who encounter you. But you should also think about where you want to go in the future. For example, if you’re a writer aspiring to be a marketing consultant, design your writing website to emphasize that you’re a marketing expert. You might create a site with one section for writing services and one for consulting, even if you’re still developing your consulting services.

Even if you don’t have all the details planned for starting an online business, you can still start establishing your online presence by setting up social media profiles and interacting with people in your target market.

Action Steps:

Choose a business model suitable for you and determine who your primary target market will be. If none of them appeal to you, research more online to find other ideas.
Draft your high-level ideal customer profile by answering the questions in the module.
Draft your value statement for the solution you will offer your target audience. Use the questions in the module and the value statement grid as your starting point.
Identify the skills you will need to start an online business using the business model you selected, and find the resources for learning them.
Identify a mentor. If you don’t have someone in mind, research online and on social media to find potential mentors.
Set up, update, or completely overhaul your professional online presence. Make sure each platform includes your business name and your products or services.

Start an Online Business – Module 3 – Set Up Your Financials

Whether you work from home or in another remote location, once you start an online business, you will need a way to receive and access the money you earn.

As you start an online business, you may decide you want to set up a corporation of some sort. In that case, you’ll need to consult with a legal expert to see what special steps you need to take with documents and financials. In this course, we’ll assume you will be an individual sole proprietor of your business.

Online Payment Processors

When starting an online business as an individual sole proprietor, an online payment processor is the easiest way to get paid. These are simply companies that manage transactions between buyers and sellers online, like PayPal and Venmo, for example. Each company has its terms and services, but the best way to choose one is to see what methods are most popular with your potential customers or clients.

You can sign up for all the major payment processors and discover which works best for you and your customers over time. Also, evaluate the transaction fees and monthly rates.

Many payment processors can be accessed worldwide and are easy to use. You can deposit money from any payment processor to a linked bank account. You can send or receive funds by sharing your PayPal-linked email address or Venmo QR code.

Having a designated bank account for your business is also a good idea, as some clients or customers will prefer to pay you via bank transfer.

If your business involves credit card transactions, such as an eCommerce store, make sure you’re set up correctly to take these. Use a payment software like Stripe to process credit cards securely.

Budget For Your Online Business

Since you are starting an online business from home, you’ll need a budget to manage your income and expenses. A common mistake is believing that internet-based businesses have no overhead. Compared to traditional businesses, they have low overhead; however, there are still essential expenses to starting and running your business.

For example:

Internet service, including Wi-Fi
Website domain, hosting, and other platform costs
Office furniture
Computer hardware and other equipment, like printers, cameras, microphones, and
Software and software upgrades
Business-related expenses such as advertising, membership fees, and fees for merchant platforms
Advertising costs

Start by listing your expenses in the Budgeting Spreadsheet provided. Research typical costs and overestimate based on your findings so that you’re safe in case things cost more than expected.

Separate your budget into two categories: fixed and variable expenses. Fixed expenses are essential. Fixed expenses stay the same each month. Variable expenses can fluctuate or are optional. Variable expenses can be cut if needed.

Your initial budget won’t be totally accurate, but you’ll refine it once you start your business. Keep track of all your business expenses, and month by month, you’ll begin to gain an accurate picture.

Tips on Successful Budgeting

In any business, budgeting is essential, especially if you’re working for yourself. You’re in control of every aspect of your business, so you need to budget carefully and ensure you can turn a profit.

Here are some budgeting tips:

Choose a method for tracking your expenses that’s easy to use and understand.
Investigate software programs that can help with budget tracking. Consider free or low-cost options first, such as Mint. For premium programs such as Quickbooks or YNAB, take advantage of free trials to ensure it offers what you need before investing.
Prioritize expenses so it’s easy to know where to cut costs when needed.
Try to forecast trends over the next few months. For example, if you’re a freelance service provider, communicate well with your clients to understand how long projects will last.
Don’t forget long-term expenses like retirement as you’ll have to pay this yourself.

Use the Budgeting Spreadsheet provided to divide your expenses up by:

Fixed costs – one-off startup fees and payments that are the same amount every month (or installment)
Variable costs – payments that can change depending on how much you use them, or charges for services that you don’t need regularly
Hidden costs – costs that are indirectly associated with working from home.

This is an excellent method to start with and adjust as needed.

Set Your Prices

If you want to attract customers AND make a profit from the start, you need to set the right prices for your offerings. Avoid setting your prices too high and pricing yourself out of the market. Conversely, if you price too low, you can de-value your product or lose money.

how to set costs when you start an online business

In addition to the fixed and variable costs for your business, consider the following two factors to help you find the correct starting prices:

Your Target Market

Revisit the Customer Profile and Value Statement you created in Module 2. By understanding your product or service’s unique value, you can determine what it is worth to your ideal customer and what they will pay for the solution you offer.

Your Competition

Your Customer Profile from Module 2 listed businesses you will be competing with. Focus on the ones who offer a similar solution to your target market.

For each competitor, answer these three questions:

How does your competitor market to its customers?
Look at the prices of your competitors.
What is your competitor’s unique value?

When setting your prices consider all this information. You may not get this exactly right initially, but you can always adjust your pricing as you learn more. Some parts of starting an online business involve trial and error, for sure.

Save Before You Start

Ideally, you’ll have some money saved up before you make the leap to starting your business. You may have to live without a full-time income while getting things up and running.

How much you should save depends on how long you can live without a full-time income.

Refer to the timeline you set in Module 2 to determine how long you’ll need funds before you’re earning a steady income. The general rule is to save three months’ worth of expenses – six months to be safe. Three months go by quickly these days. If your business has started generating profit before then, you can use these extra funds you set aside for something else, like starting a retirement fund or investing in digital advertising. Or celebrating your success.

With your budget in place, Multiply the amount you need each month for your expenses by the number of months you think you will need before your business earns the same amount, and you have an amount to save.

Action Steps:

Sign up for all the online payment processor
Test them out.
Fill in the provided Budgeting Spreadsheet for your online business in as much detail as possible.
Tailor the categories to fit your personal needs and your chosen business model.
Set a starting price for your product or service by taking into account the following factors:
1. a. Total costs
2. b. Your target market & value statement
3. c. Your competition
Figure out how much money you need to save and create a savings plan so you’ll have the funds to cover the initial period before you’re earning a full-time income.

Start an Online Business – Module 4 – Set Up Your Tech

Your tech needs will largely depend on your chosen career path. If you’re a freelance service provider, you’ll probably need some tools to help you work. You’ll need specialized software applications to set up an eCommerce store. However, there are some essentials that anyone working from home needs.

Hardware

A computer is the heart of any online business. You should have one that’s in good working condition. PCs are better than laptops in terms of performance and cost, but if you plan to be mobile, you may want to choose a laptop. An entry-level to mid-range computer with the basics such as word processing, spreadsheets, and the capacity to do whatever work you choose is non-negotiable.

In addition to the computer, ensure you have all the necessary devices. These would include a mouse, adapters, headphones, and so on. You can find places to print or scan if you’re on the road, such as internet cafes or coworking spaces, but it’s best to have your own printer if possible.

Internet Connection

Make sure you have a secure internet connection. Internet speed is essential. Without the right speed, you’ll drop calls, have trouble downloading necessary documents, and waste a great deal of time.

The Wi-Fi you use at home for your personal life may not be fast enough to handle work requirements. Connections can also be unreliable, with a stronger signal in certain rooms and a weaker signal in others. You may want to contact your service provider and update your plan.

Online Security

When you work from home, it’s tricky to keep your computer safe. Companies provide software programs and guidelines to protect workers, such as download restrictions. You need a reliable anti-virus software program on every device you use. These can be very low-cost and even free.

In addition, you can prevent any issues by following a few online security best practices:

Security tips for starting an online business
Keep all software programs up to date and make upgrades when offered.
Create strong passwords for all sites and devices. Write these down somewhere safe and easily accessible and change passwords regularly.
Use a password manager https://www.lastpass.com/to securely manage your passwords.
If you’re working in public spaces, close your devices or log out when physically away from them.
Be careful about clicking links in emails as they may be phishing scams. Rather than clicking, access the site through your web browser.
Back up important files regularly.

Communication Tools

Decide what communication tools you’ll need and secure them before launching your online business. Skype and Zoom are popular tools for communicating online. They’re free with some limitations, but there are premium versions for businesses with added features. With Skype, you can call other Skype accounts and regular phone numbers.

Chatting apps like WhatsApp and LINE are increasingly used for business. Find out which apps your clients use, and then learn how to use those so you can interact with your customers in their preferred way.

Cloud Services

Cloud computing allows you to store data “in the cloud,” which means you can manage and access it anywhere. This is very useful for people working from home or remotely worldwide. Cloud services like Google Docs and Dropbox are helpful for extra storage and sharing documents. You can store data, back it up, or share it using cloud services.

Tech Support

Finally, you should plan to receive technical support when needed, especially if you might be considering living or traveling overseas. Save the websites or numbers for any help desk services you might use and give them a call to familiarize yourself with their service. If traveling internationally, make sure help is available in your language.

Action Steps:

Ensure that your computer is in good working condition and obtain any other devices you need.
Decide how you will secure a stable and fast internet connection.
Identify software or tech considerations you will need and procure them.
Identify where you can get tech support if needed.

Start an Online Business – Module 5 – Get Organized – Maximize Productivity

The most significant challenges to working from home are often not financial or technical but organizational. If you’ve never worked for yourself, you have a great deal to learn and new habits to create to manage the work you’ll have to do.

In a formal work environment, operating procedures, established working times, and management systems keep people on track and working efficiently. You must create and manage all these systems yourself if you’re on your own. Although there’s much to learn, these valuable skills can help you work more efficiently and use your time better.

Establish a Routine

Even though your schedule is your own, you should establish set working times. Contrary to popular belief, working from home doesn’t mean lounging around in your pajamas all day. Establishing a routine helps you work more efficiently.

Create a routine to organize your workday. Set your hours for working, hours for relaxing or family time, and hours for creativity or communication. This doesn’t have to fall into the traditional 9-5 schedule, but whenever is most conducive for you to work. You can also organize these hours around any other responsibilities you have, such as childcare.

Maintain a Healthy Work-Life Balance

One of the biggest challenges for people just starting to work for themselves is maintaining a healthy balance between work and life. Working at home, you might feel like you’re always “at work.” If you blur the lines between your career and personal life, you can end up burnt out.

Clearly set aside work time and non-work time and stick to this schedule. This will make you more efficient during your work time and ensure that you’re not working when you shouldn’t be.

Create a Dedicated Workspace

Set aside a part of your house as your dedicated workspace. It should be physically separate from the rest of your home and only used for work if possible. When you’re there, you’re “on the clock.” This will help you maintain the boundaries between your work and home life.

Your workspace should be conducive to getting work done and be pleasant to spend time in. Make sure you have a suitable desk and chair, proper lighting, and everything you need in one place. Keep your workspace clean and organized, free from any everyday clutter. Maintaining an organized workspace will help you stay focused during the workday.

Manage and Prioritize Daily To-Do’s

Without regular workplace systems, each day is your own to plan. Having the entire day at your disposal can be overwhelming. Create prioritized daily to-do lists to manage your time and keep yourself on task. Your lists should include work on projects with deadlines and things you should do daily, such as checking email, monitoring social media, and planning for your business. This way, every day when you start work, you know where to get started and what to do.

Tackle Procrastination

Procrastination is a killer for people just starting to work for themselves from home. You’ll need to develop some strategies to beat procrastination so that you can get down to work. Learn to recognize the “symptoms” of procrastination and do something like take a break or work on another task when you find yourself doing this. Other promising strategies include starting a project or task ASAP to get the ball rolling and developing a routine to get into work mode.

Take Advantage of Organizational Tools

You don’t have to get organized all by yourself.

Here a some suggested organizational tools to consider:

FreshBooks and QuickBooks can handle accounting tasks for you.
Grammarly for writers.
AppPresser can help you make and launch your own app.
Spreadshirt can help you launch your t-shirt business.
WP Forms is an easy way to create sign-up forms and invoices.
StandDesk can help you look after your body with ergonomically correct office furniture.
Shareasale is a great place to sign up if you want to make money as an affiliate.
WP Engine offers 25% off WordPress hosting through this link.
WP Rocket will help keep your site speedy so you have a shot at ranking in SERPs.
Easiest System Ever can help you organize your affiliate marketing efforts.

Know Your Capacity

How much business can you handle at one time? Knowing this is important so you can manage all the work that comes in. Knowing your capacity allows you to plan well and turn work down when necessary. If you don’t already have a good idea of this, start tracking your work, and you’ll be able to gain a good understanding over time of what you can reasonably take on.

Plan and Set Goals

A successful business owner never stops setting goals. As you’re running your own business, you must do this too.

In addition to the milestones you set earlier, you’ll need to add goals for things like ongoing client or business projects based on your business model. Your project management tool is a great place to record those.

But don’t forget about those career path ideas you put in your Home Business Startup Timeline too. Consider your long-term goal for the years ahead, keeping in mind the “big picture” goal you first identified. When you have a long-term plan, you can work backward and create new milestones and timelines as you complete the current ones.

Action Steps:

Establish a routine and schedule for your working time. Add to your preferred calendar and periodically reflect on your most productive times of the day.
Create a working environment that’s pleasant and conducive to concentration.
Make a list of a few organizational tools to try and sign up for free accounts or trials.
Revisit your Home Business Startup Timeline from Module 2 and revise milestones and dates, if necessary. Be sure to add a long-term goal to that outline as well.

Start an Online Business – Module 6 – Craft Your QuickStart Marketing Plan

When you work from home and have your own business, you’ll need to get customers and clients by doing your own marketing. Marketing involves finding the people who need your products or services and putting your offer in front of them, explaining how you can uniquely meet their needs.

Choose Your Strategy

Some marketing tactics work better for particular niches, markets, and industries than others. Remember that target customer profile you created earlier? Now is when it becomes more critical than ever. You will need to find which tactics work best for your audience and what you have to offer.

The best way to identify your ideal marketing approach is to learn about different digital marketing strategies, pick one or two that make the most sense to you, and try them out for a few months. Monitor your results regularly, then decide whether to continue or try a new tactic.

Here are a few low-cost or free digital marketing tactics that you can use:

Of all the marketing tactics listed above, pick 2-3 to start with. Don’t try to implement everything at once, or you’ll get overwhelmed and probably not see results. Each marketing tactic takes some time and effort to implement.

Once you have a few up and running, you can see which ones aren’t delivering results and gradually add new ones as time allows. Eventually, you will have a comprehensive marketing strategy that consistently brings in new business.

Action Steps:

Choose 2-3 of the listed marketing tactics that will be quickest and easiest for you to implement first.
Set deadlines and tasks for starting your initial marketing tactics. Add times to your calendar for when you will check each result.
Identify which marketing tactics you will try after the initial ones and set a date for when you will begin those.

Start an Online Business – Module 8 – Conclusion and Next Steps

You are nearing the end of this course, and by now, you should have a solid plan for getting your online business off the ground.

So far, you have completed the following tasks:

Discovered what it means to work from home and identified your goals for making this change.
Decided on your business model, target audience, and potential career path for the future.
Identified what you need to handle finances, tech, and ways you can make the transitions smoothly in your work.
Selected initial marketing tactics you’ll start implementing to get paying customers and clients.

You’re ready to launch your online business, but remember, the planning doesn’t stop here.

Here are some ideas for moving forward once you are set up and earning a full-time income:

Earning income while you start an online business

Expand Your Business Model. You may start your online business with one business model, but you can expand this over time as your business grows. For example, you could expand your video editing business service to include courses on video editing and high-end packages of professional video shoots for clients.
Explore Partnerships. Look for potential partnerships with people who share the same client base but with complementary products and services.
Earn Passive Income. Set up automated sales funnels that bring in leads and recommend affiliate products that earn you commissions. Or set up passive products of your own, such as recorded online courses and membership sites.
Recruit Affiliates. Set up your own affiliate program and seek out people who can send you referrals and promote your products or services for you.

You aim to build a long-term, scalable business and always look towards and plan for the future. You’re ready now to put into action everything you’ve learned in the course and achieve your goals of launching your own online business working from home.

Action Steps:

Review what you’ve planned for your online business.
Outline your next steps and deadlines.