Given where we’re at in 2020, it’d be easy to simply say “Wait until 2021.” But the truth is, even on the tailwinds of a global pandemic, there’s never been a better time to start an online business.
Easy to use e-commerce platforms make starting an online business something everyone can do, but achieving profitability is no guarantee just because you’re doing business online. Many of the same sales and marketing challenges facing traditional brick and mortar businesses still apply.
And direct-to-consumer businesses offer additional benefits and challenges to navigate.
It’s critical that you build a strong foundation on which to launch your online business. This foundation requires patience and perseverance in selecting and implementing your systems and creating and launching your go to market strategy.
This article covers five critical steps you need to successfully start a sustainable online business.
Here’s how you can start your own online business
- Step 1: Define critical business components
- Step 2: Adopt your software and platforms
- Step 3: Build your online store
- Step 4: Launch sales and marketing strategies
- Step 5: Optimize and refine constantly
What to consider before starting your online business
Before you start your online business, it’s critical that you’ve considered some key foundational components that all businesses must address. Taking the time to work through these components forces you to answer crucial fundamental questions and ensures you’re really ready to embark on launching a business.
Here are three critical considerations you need to work through before launching your online business.
1. What are you monetizing? And how?
Your first step toward launching any business, online or physical, is to determine what you’ll be monetizing. Are you selling products or services? You can have success online monetizing either, but your logistics and digital footprint will look different.
Most new businesses innately know what they’re montezing. Products/services are typically the initial inspiration for starting the business, but this isn’t always the case. If you’re trying to build a brand or a business that curates products from other businesses, you must still define what you’re monetizing.
Whether or not you’ve always known what your business will monetize, you still need to optimize how your business monetizes. This may simply be selling products and/or services through your online store.
There is nothing wrong with this tried and true approach, but what if you could lock in recurring revenue by adding a subscription service as another monetization mechanism?
What’s critical is that you’re thinking through all the angles and weighing options early and often. Visualizing these different avenues for monetization will at the very least open your eyes to more potential revenue in the long run.
2. What does your product life cycle look like?
If you’re monetizing a product or group of products, it’s critical that you consider the components of your product life cycle. This includes all the variables from the product development process to submitting purchase orders all the way through to product decline.
Determine the variables associated with obtaining inventory. Do you control the means of production or are you purchasing your products from other businesses? Consider if you need to implement some client management strategies if you’re working with partner suppliers for the products you’re selling.
Either way, you need to determine how reliable your product’s production is, considering what risks and factors could halt production and whether your production could scale if your business picks up.
You also need to answer questions about the consumer nature of your products before product launches. If you’re selling clothes, will you adjust products as trends change? If you’re selling custom products, are you likely to get repeat purchases or are you wholly dependent on new customer sales?
And while it may seem far away at the beginning, you should consider how you could pivot your business and pricing strategy if your product becomes obsolete.
All of these factors must inform your product positioning strategies. Building vigilance here from the onset will set you up for success down the road.
3. Who are your customers?
It’s important that you keep your customers top of mind as you work through your product and monetization strategy. You must have a deep understanding of your business’ target customers so that you can create accurate customer lifetime value models.
Along with boosting sales and marketing efficiency, this information enables you to calculate how many customers are in your sales universe.
Are your products for women, millennials, football fans? Define the bounds of your shopper by identifying all the personas that are potentially interested in your product. Then combine the sizes of your persona groups to determine the total potential size of your customer base.
Once you’ve qualified and quantified your customer base, you can better project the potential return on investment your online store stands to provide.
This empowers you to make more informed decisions about your prices and product margins, seeking or investing your own capital, and even whether or not the business is viable.
If your product is something universal such as a resealable plastic bag, then your target customer base is huge. But if you’re building your business around a highly specialized or niche product, you must ensure your business is viable given its relatively small customer base.
How you can start your own online business
With products and customers defined, you’re ready to start building your online business. This should be super exciting for you, and it’s totally normal if you’re a little nervous or scared. Try to give yourself some slack and don’t be afraid to fail, just do it quickly, learn, and improve.
Here are five steps to help you along your journey.
Step 1: Define critical business components
By now you’ve hopefully addressed the considerations around your products and customers. Getting these components right gives you a strong foundation on which to build your business.
But there are a few additional fundamental business components you need to consider before you start building your online store.
Tips for defining critical business components:
Here are additional components you need to define. Spend the time now to analyze and determine these critical factors so that you can optimize performance for your online business from its debut.
- Outline your sales tactics: As an online business, customer acquisition is dependent on driving people to your site. You’ll want to focus on implementing digital marketing best practices and defining a conversion funnel to visualize how many leads are in your sales pipeline.
- Conduct break-even analysis: Since building a profitable business is the endgame of this adventure, you’ll want to monitor financial metrics such as break-even analysis and inventory turnover ratio. These formulas provide a pulse on the health of your business and help you forecast profitability.
Step 2: Adopt business software and platforms
You can and should do plenty of planning, analysis, and forecasting before launching your online business. But at some point, you’re going to have to launch your business.
After getting your fundamentals squared away, the biggest hurdle to launch is adopting and integrating your e-commerce platform and other business software.
There are software options for all types of businesses and they can solve nearly every problem your business could ever face. Your challenge here is to select systems that are affordable and provide capabilities for now as well as down the road.
Tips for adopting business software and platforms:
Here are a few critical software and platform capabilities that you’ll definitely want when starting your online business.
- Ensure ease of use: These software systems and platforms are the vehicle through which you drive your online business. There are a myriad of features and capabilities you can demand, but at the end of the day, you need to be able to easily use these systems to complete your work.
- Invest in products and customers: Just as with the considerations above, you need to invest in your products and customers. This means placing high value on a system with inventory management and customer relationship management (CRM) features built in. These capabilities automate inventory and customer analysis, empowering you to save time while making more informed decisions.
- Plan for future integrations: Inventory and CRM are critical capabilities, but there are other systems you may need to add once your business takes off. You can save a ton of hassle down the road by initially selecting a system that boasts sweeping integrations.
Step 3: Build your online store
With systems in place, you’re ready to design and publish your business’ site. Your branding really gets to shine during this step as the aesthetics of your digital storefront are what welcomes visitors to your business.
Your branding doesn’t have to be extravagant in any way, but it should all be intentional. And unless you know how to code, you’ll want to ensure your e-commerce platform includes or supports site templates that provide a digital playground for you to work in.
Tips for building your online storefront:
Designing your online storefront should be a fun exercise. It’s your first chance to showcase your brand aesthetic, and it means you’re close to a full business launch. Here are a few tips to ensure it’s a fun and successful step in the process.
- Simplify the purchase process: However you decide to lay out your site, the most important component is how easy it is for your shoppers to make a purchase. You want to do everything you can to eliminate steps between product selection and online sale.
- Let your products shine: Don’t be tempted with compelling stock images or long corporate manifestos that describe your brand. Let your products speak for themselves across your website. At the end of the day, that’s what it exists for and that’s why shoppers visit.
- Consider your entire site: While products should shine, it’s also important to consider if you’ll have any kind of content strategy. If so, where will that be on the site? Be sure to think through what pages you’d like your site to feature, just don’t let it slow down your purchase process or take away from your products.
Step 4: Launch sales and marketing strategies
You’ve worked through the business fundamentals. You’ve chosen your platforms and built your online store. Now it’s time to launch your online business. This means kicking off your sales and marketing strategies to introduce your business and drive shoppers to your site.
Since you have taken the time to understand your customers, you already know the most effective channels for reaching them. Add to that your product expertise, and you’re all the way to a sales and marketing strategy for your new online business.
Tips for launching your sales and marketing strategy:
Don’t make your sales and marketing strategy complicated at the onset. Trust in your targeted customer base, work up a few messaging variations to test, and set it all loose. Here are two tips to ensure strong performance from the beginning.
- Invest in success: As you’re starting out with your marketing plan, don’t be afraid to double down on what’s working. Find the messaging, channels, personas, etc. that are driving visitors to your online store and spend resources there. You’re better off honing in on what resonates initially and then looking to expand your base down the road.
- Always A/B test: To help you determine what is resonating, always launch campaigns with A/B testing built in. This enables you to market different messaging or products to different groups to find an optimal combination.
Step 5: Optimize and refine constantly
Your online business is launched, and your work has truly just begun. Buckle in because everything with you business is about to accelerate. It is totally normal to feel like you’re just working to keep your head above water at this point. You just have to keep pressing forward.
It’s important you don’t lose sight of potential business improvements. Whether you can bake this into everything you do or you regularly dedicate time for it, you must work to find, test, and implement optimizations across all components of your business.
Look for efficiencies. Try knocking down costs. Parse the data for untapped customer segments. Whatever it is, forward needs to be the direction.
Tips for constantly optimizing and refining your online business:
The great thing about launching your business is that you get streams of performance data coming in. You can set up and monitor metrics to spot and react to positive and negative trends on your marketing, site, products, margins, etc.
The possibilities are endless, but what’s important is that you’re constantly looking for ways to improve. Here are a few tips to boost your perpetual optimization capabilities.
- Invest at the start: Everything you read about the core considerations was to prepare your business to move swiftly and effectively toward improvements. Spend the time at the start getting to know your products, customers, and baseline numbers so that you’re ready to make the tough decisions.
- Record, analyze, react: No matter how many times you refresh your spreadsheet, the numbers aren’t going to jump out and magically show you the way. You have to put in the work, but you also have to capitalize on your measurements by taking actions to better your business.
- Take measured risk: Realize that even the act of launching your online business is risky. We take risks every day in our personal and professional lives. You must take risks with your business to achieve success, but you must calculate the level of risk and the reward before moving forward.
The best e-commerce platforms for starting an online business
Now that you have all the answers to start your online business, here are a few great e-commerce platforms you should consider. There’s tons of similarities between them, so focus on what makes each of them stand out as your deciding factor.
Shopify has become the stalwart in the e-commerce platform space. Its straightforward functions and easy-to-use design don’t require any coding capabilities. And its features scale up and down to suit the needs of all businesses.
Shopify comes with robust analytics capabilities baked in. You’re set up to track sales, inventory, and other KPIs right out of the gate, so you can monitor performance and make more informed decisions for your business.
2. Squarespace Commerce
Squarespace is best known for making it easy to build and launch your own website. But they also provide great support via their Commerce capabilities for small online businesses. Squarespace Commerce offers extensive templates and designs for online businesses to use.
Though incredibly intuitive, Squarespace Commerce packs a decent amount of features. Users can expect all the same great benefits of Squarespace’s general site builder, such as SEO and customizations, along with marketing and inventory management capabilities for your commerce site.
BigCommerce is another e-commerce platform that’s built to scale with your business. Out of the box, it’s a fit for businesses of all sizes. BigCommerce provides deep insight into sales and marketing performance.
BigCommerce provides valuable multi-channel sales capability. We discussed making it as easy as possible for customers to purchase from your business. Well, that may sometimes require you to sell across different channels, such as Etsy, Amazon, and other third-party sites.
BigCommerce tracks those sales as well as it does your website sales, so that your reporting is all tied together on the back end.
Online sales, real-life success
You may have been staring down the online business cliff for a while, or you may be running full speed ahead. Either way, it’s time to take the leap and get your online business launched today. Do the work upfront. Be confident in your informed decisions, and conquer the world one sale at a time.