This is a guide about how to start an online business, so we're going to talk about 1) brainstorming ideas for your online business, 2) figuring out how your business will operate to do what it does and 3) how you'll make money and how to create your online presence with a website and social media channels.
Foundr writes that “the ideas themselves are dirt cheap, and whether you have a million of them or only one, all you really need is a pen and piece of paper in order to start working on your business idea.”
With that in mind, let's get started! This is the first in a series of guides on how to start an online business, so check back in the future for updates. In this guide, we'll focus on the beginning phase. Click or tap on the links below to jump right to that segment:
You can sell services like consulting, design, marketing or software as a service (SAAS). Other service business ideas include life coaching or e-courses and online learning through video seminars and packages.
Alternately, you can sell products on platforms like Amazon, Shopify or Instagram. Advertising is another revenue opportunity depending on what platforms you choose to do business on. Lastly, the social media influencer business model is going through a lot of changes but is still a very relevant business model.
Generate multiple ideas for the business. This is an important exercise, as it will help you flush out a lot of different ideas and concepts for your online business. Generating multiple ideas forces us to think beyond our initial thoughts and come up with more comprehensive ideas. Oftentimes the initial idea is abandoned in favor of a combination of ideas that came after the first one. Some online business brainstorming tactics:
Mind Mapping or Concept Mapping
Put ideas down on paper as a visual representation and literally draw the connections between them. You don't need to be good at drawing to do this, you just need to put down words and draw arrows to show the connections between them.
This involves a purge of ideas to just get your thoughts out of your head and on to a page. Type, write by hand or use speech to text to verbalize any thought you're having. Don't pay attention to editing, grammar or correcting spelling mistakes. Just get the ideas out first, and you can fix the notes after getting them down.
The idea here is to actively move the ideas from your head to a page or screen. If it helps, have a conversation with someone to vocalize ideas and record the conversation on the phone (of course after telling them you want to record the conversation so they know while they're speaking :)). You can then listen back to that conversation and write ideas and thoughts you come up with while listening to that conversation.
Research business ideas on the Internet by looking at what other online businesses are doing. Look at failed businesses to see what they could have done to improve. Consider building an online business with these ideas.
Figure out ways to monetize your business. There's many ways to monetize a business online, including the selling of products and/or services, advertising and more. Selling products or services is the best way to monetize your business, as it gives you the most control over revenue and your options on how you make money.
Selling services for your online business can include consulting, strategizing and brainstorming sessions, as I do here at Flux. Other popular ways to monetize an online business through services is to include any kind of design (think graphic design, website design, architectural design, product design, etc), acting as a marketing agency, life coaching, e-courses through video seminars and bigger packages that include material and documents for a fuller learning program.
Even if you're a solopreneur you can still do an agency model for marketing, consulting and more. Declaring an agency model doesn't mean that you have to have a team of people, but you'll want to be upfront and open about the fact that you're a one-person business.
It's a common online business model these days to be a one-person business, and you can always staff up on a project-by-project basis with independent contractors if you need more people to complete a project.
This is a distinct advantage in starting an online business — you can keep costs extremely low by working out of a home office and only paying people for work they do on a contract basis. The advantage is that you're paying someone only for the work they do. If someone is collecting a salary or an open hourly wage, they don't have a performance-based incentive and can spend too much time NOT working on your project and still collecting money.
A contract-based model works better, as it pays people for the work they've done. The advantage for the contractor is that they're free to do work for other people in addition to you, collecting more clients and having the ability to make more money. Everybody wins this way and comes out ahead.
Selling products is another way to monetize your online business, and has its own unique advantages. Unlike service-based work that comes with last-minute deadlines and a more complex schedule of events, products that you can sell in an online store are more open-ended.
You can create your store, order inventory and set it up in your own type of warehousing, then just spend most of your time marketing your products. Warehousing doesn't need to be complicated either, it can be as simple as storing the inventory in your home and shipping it out order-by-order. You can also do dropshipping, which means you don't buy inventory, you wait for an order to be placed and THEN go and order the product from a dropshipping platform.
The difference between dropshipping and buying inventory is that with dropshipping, your online business doesn't need to take on the risk of buying products and storing them, you do transactions only on a needed basis. You free yourself from buying a large quantity of items at a discount for a bulk order, and then getting stuck with them if they don't sell.
When it comes to choosing an online store platform, there are two basic options: setting up your own online store through an e-commerce platform like Shopify or Squarespace, or selling your products on Amazon. Each has its own distinct advantages — your own store platform gives you more control while Amazon exposes you to a gigantic field of buyers and lets you optimize your products for Amazon Prime customers. Amazon owns 50% of e-commerce, and it's always good to be on a platform where so many buyers are.
The disadvantage of the Amazon platform is the exact opposite of this scenario: it's also where a lot of sellers are, which makes it a crowded marketplace to stand out in. Imagine a scenario in which your product page has less than 50% of its space devoted to your product and more that 50% of its space with links to everyone else's competing products, and that's what you get on Amazon.
You can spend time and marketing dollars to attract buyers only to have them buy someone else's product or get distracted by something else on Amazon. See Blue Ocean Theory to get a great explanation on the difference between competing in a crowded marketplace vs. creating your own marketplace.
This also highlights a distinctive advantage to creating your own online store on an ecommerce platform like Shopify — you can make your store attractive to the type of customers you seek, without the distractions of Amazon. Your potential customers will only see your products. You can also customize the user experience of your product pages, whereas Amazon is a rigid platform with one template that you have little control over.
Another way to monetize your online business is advertising, although this is probably the most difficult one. You can use display ads or video ads on a website, or create advertising opportunities on another platform like YouTube or Instagram.
Placing advertising on your website will require that you have a large audience to make any decent kind of revenue. The same goes for YouTube or Instagram. YouTube has in-stream video ads: pre-roll ads go before a video starts, mid-roll ads happen during a video and post-roll ads happen at the end. YouTube video ads are also available in the form of non-linear video ads like overlay ads that run on top of the video while it's playing, usually with a link to take you somewhere. There are more forms of video ads than these, but these are the most common. It's also worth mentioning that Instagram will also start monetizing its IGTV videos eventually, and this likely to have the same sort of options that YouTube has.
Be A Social Media Influencer
Instagram, though, also offers a way to create revenue through being a social media influencer. It's worth mentioning that right now being a social media influencer appears to some people to be in decline as a way of creating revenue.
I don't think that's the right way to look at it — being a social media influencer appears to be going through a big change as Instagram has been refining its algorithms and making it more difficult to work on the old influencer model. That involved building a large following on Instagram and then offering sponsored posts in which people would pay you to do a post or a video in exchange for payment. This has become oversaturated and Instagram had to change some things algorithmically to make sure that marketing did not dominate the Instagram platform. You can also use Instagram to sell products directly to customers.
The social media influencer concept is not likely to go anywhere anytime soon though, but it's likely to transform itself into a new standard with new opportunities. If you're interested in the social media influencer model it's still a very good model to choose, you can use a variety of platforms like Instagram, Youtube, Facebook, Twitter, Twitch and Pinterest.
Keep in mind that there's also a major downfall to the social media influencer idea though -- you're always on someone else's platform and subject to their rules. Pitfalls here include having your account deleted (!) by the platform, having your posts demonetized, or having your audience reach limited. When it's their sandbox, it's their rules.
It's best to keep in mind that even as a social media influencer, you're going to want to create some alternate ways to interact with your audience. THIS IS TRUE FOR ANY KIND OF ONLINE BUSINESS, NO MATTER WHAT BUSINESS MODEL YOU CHOOSE!!!
A website is always your homebase and you have absolute control over what happens on it and what its potential reach is. An email list is still one of the best ways to sell to people and you will always own your email list.
Social media platforms are then a great way to attract your audience on a variety of platforms. That way when Facebook, Instagram, Youtube or Twitter limits your reach in the feeds, you haven't lost your business. Social media platforms come and go (just ask the people who built up audiences on MySpace, Vine or Periscope and many others).
If you use a website and email list as your home base of operations, you can then pick your own social media platforms to reach people on. As these platforms rise and fall in popularity you can choose where to focus your time and rotate around as you choose.
As a social media influencer, you also have another great opportunity to monetize: affiliate programs. These are programs set up by other businesses that will pay you a commision when you refer a customer that ends up buying from them. This is a great way to monetize! It's low-risk since you don't have to research and buy products, store them as inventory or any other obligations of selling products. You just connect with online businesses and register with their program.
You’ll always want to research the integrity of affiliate platforms to make sure that they are transparent with your data for revenue and make prompt payments to you. There are a variety of good affiliate platform that give you access to thousands of online businesses, and some of these include affiliate platforms like Awin, ClickBank, Partnerize or Impact Radius.
Now that you’ve brainstormed ideas for your online business and figured out how you’re going to make money, you can combine all of those things into a business. You can now write a paragraph or two that describes what you do and how you make money. This is your general plan or description of what your online business is.
Now it’s time to get started! It’s best to keep things very simple and straightforward to get going. You’ll want to use the Lean Startup model popularized by Eric Ries to get going. This means you’ll want to begin with a bare bones offering and not go too deep on long-term planning.
There’s a good reason for this: you’ll want to see what the public reaction is and modify your approach as you go. If you do a lot of deep planning before you start, you can end up wasting time on a set of ideas that won’t work. If you do a lean start to your business, you can modify based on feedback and improve as you go.
Keep in mind that starting your online business doesn’t mean you have an iron-clad idea, it means you have an initial idea. A business is never complete and should always be continuously improved and adapt every month as you move forward.
IT'S BEST TO KEEP THINGS VERY SIMPLE AT THIS POINT
Brainstorm The Logistics
Figure out how you’ll get products or create services, or determine if it's a solopreneur idea or will you need people to work with you.
Don’t Discard Ideas You Didn’t Use Forever
Keep the other ideas handy, these are possible ideas for future businesses or things you might want to work into your current business in the future.
Create A Website
Create a basic website with 3 - 5 pages outlining what you do and how you do it. Keep this simple: don't do a lot of design or coding, you just want a minimum viable product because your ideas, website and logistics will need to be modified in the first six months to adjust to feedback from customers, business partners, competition and just finding what works and what doesn't.
This is THE MOST ESSENTIAL part of the startup process: adjusting in the first six months is critical to your success and will have differences from your initial ideas. To put more simply: some of what you think will work well won't work at all, and things you didn't consider in the beginning will now become obvious paths to pursue. This flexibility to pivot is critical to moving forward on a good footing.
Create Social Media Channels
This is an important next step to promote your business and let people know that you're out there. It's important that you choose three social media platforms to focus on in starting, having too many will be too much to keep up on starting out.
The challenge here is to choose the right ones for who you're targeting for your products or services. For example, if you're focused on retail items for women, Pinterest is a great platform. However, if you're creating a fitness business targeted towards men, Instagram and Facebook are better. The main social media platforms you should consider in no specific order of importance are: Instagram, Facebook, YouTube, Twitter, LinkedIn, Pinterest, TikTok and Snapchat.
ALWAYS REMEMBER that you don't want to build your business on social media (i.e. solely based on your Instagram profile or YouTube channel, etc). You want to use social media only to promote your business.
If you create a revenue stream from your audience on Instagram or YouTube and that's all you have, you don't have a business, you just have a stream of revenue. A business is a core thing that you will always have, regardless of social media.
Different social media platforms will come and go, but your business will remain. The Achilles heel of building your business only on social media is that it can be taken away from you overnight when their algorithm changes or the platform decides arbitrarily that you've violated their terms of service. This can result in them limiting your reach on the platform or deleting your profile outright.
At this point, you've started your online business! Congratulations, you've already come a long way, more than most. At this point you've set yourself up to do a couple of things:
- move forward with your idea
- refine and build your business
- grow your social media following and make people aware that your business exists and how you can help them.
Let’s review the steps involved here in a few actionable pieces to help you get started. First, start by brainstorming ideas for your business. Second, figure out how you'll make money. Third, start your online business. You're now set to move forward and get your ideas out in the marketplace and see how people react!
Since we're using a modified version of the Lean Startup to get you going, you're free to keep things simple at this point and modify your approach as you go. This modification is CRUCIAL to the success of your business, as you'll find that the ideas you weave into your business in the first twelve months will take you in a different direction than when you started, and you'll be improving as you go.