Things to Consider Before Starting an Online Business
- Is there a need for your product or service as an online business?
- How do you know?
- What research have you done? (I’m sharing a link to help you below.)
- Do you have expert IT help to assist you with technology problems?
- To state the obvious, an online business must be live and functioning properly at all times. Are you an IT expert? Can you afford to hire one?
- You need to ensure you have great security for monetary transactions, and you may need IT experts to set up the options for you. For example, if you are going to create a catalog of individual items, you’ll have to identify each one with a payment option.
- Don’t assume you’ll fail. What if you succeed? Do you have a way in which to send the product to the customer immediately upon payment, or are you required to receive notice of payment and then send it yourself? Can you automate that process?
- Do you have a physical inventory?
- If yes, what space do you have to contain it?
- Where is your backup space, if an emergency occurs?
- What provisions do you have for keeping an inventory of what you have and when you need to reorder or make more of the product?
Dedicated Space and Equipment Separate From Personal Use
- Do you have adequate dedicated space and equipment to run a business?
- FBI points out that mixing personal and business items on a computer can be problematic if, for any reason, an investigation occurs. The equipment can be confiscated, leaving the owner without both personal and business files. That equipment might never be returned.
- This is another reason why it always is good to back up your files regularly on an external hard drive or a cloud server, so you can retrieve items even if your computer is inaccessible.
Good Advice from the Small Business Administration
Regardless of whether you are considering starting a “brick and mortar” business or an online business, many of the considerations and steps are the same. For example, here are some topics for you to explore taken directly from the SBA website.
Market research and competitive analysis
Market research helps you find customers for your business. Competitive analysis helps you make your business unique. Combine them to find a competitive advantage for your small business.
Write your business plan
Your business plan is the foundation of your business. Learn how to write a business plan quickly and efficiently with a business plan template.
How to Start an Online Business in 8 Steps
Jane Haskins, Esq.by Jane Haskins, Esq., a freelance writer, provided an article for Legal Zoom elaborating on these eight steps. I recommend you read it. Here are the main points in her step-by-step guide on how to start an online business plus some of my own comments, based on my experience in starting a business “from scratch.”
Step 1: Choose a Business Structure
Choices are among a sole proprietorship, limited liability company or corporation. Jane describes the various options and clearly explains the differences, as does the SBA.
Step 2: Decide Where to Form Your Business
“You’ll form an LLC or corporation by filing paperwork with the state. For most small businesses, it’s best to file formation documents in the state where you’re located….” She then mentions an exception.
Step 3: Choose a Name
In my (Nancy Wyatt’s) view, you should consider these things as you first start thinking about names for any knd of business.
Choosing a Company Name and a Domain Name for Your Online Business
- What words or phrases would a typical potential customer use to search for the product or service you offer (e.g., in a search on “the Google machine.”)
- How will that name look and fit on business cards, as an email address, and on marketing materials? Don’t make the mistake I did by choosing something that is long and cumbersome. https://www.mypersuasivepresentations.com. (It is more than annoying when you have to write it out on sign-in sheets at networking events or classes in small spaces. It also contrasts with the better (short) name for my other website. https://www.getwell.guru.
- Does that name clearly and immediately tell the potential customer what your business is?
- Can you get the same name for both your business and for your website (domain name)?
- Some people first check on keywords and ad words before making a choice.
How to Use the Free Google Keyword Tool
You might want to explore this BEFORE you choose a domain and/or company name. Click Here for one resource to explain it. There are other articles you can find online for further research into this topic
More Steps for Starting an Online Business and Choosing a Name
Now, let’s go back to Jane Haskins’ article. She mentions that a unique name:
- “Helps you market your business
- Minimizes the chance that a similarly named business will accuse you of trademark infringement
- Increases the chance that you’ll be able to get a domain name that matches your business name
- Complies with state law requirements that corporation or LLC names be different than all other entity names registered in your state.
- Once you have a name in mind, you can conduct a Google search to see if any similarly named businesses come up. You can also search trademarked names at the U.S. Patent and Trademark Office website, and most states allow you to search registered business names online.”
Step 4: Get a Domain Name and Register It
(Again, I refer you to the SBA for great details for all topics above and below this line.)
Step 5: File Your Business Formation Papers
Forming a business entity requires filing documents with the state agency that handles business filings. You’ll also need to pay a filing fee, which varies from state to state. Once your corporation or LLC is formed, you’ll receive a certificate confirming that your new business entity exists. ~ Jane Haskin
Finances, Tax ID, Sales Tax and Licensing for an Online Business
Step 6: Set Up Your Finances
You can obtain a federal tax ID number from the Internal Revenue Service website. If you’re a sole proprietor or a single-member LLC, you can opt to use your Social Security number instead.
You’ll also need to open a business bank account when starting an online business and, if you’re going to be processing transactions through your website, an account with Paypal or another online payment service. ~ Jane Haskins
Step 7: Understand Sales Tax and Licensing Requirements
“…procedures vary from state to state and it’s a good idea to contact your state’s taxation department and/or an accountant to find out your responsibilities. You should check with your city or county to find out if you need a business license or are required to register a fictitious business name or DBA.” ~ Jane Haskin
Website, Hosting, Themes, and Responsiveness
Step 8: Set Up Your Online Business Website
“To get your website up and running, you’ll need to purchase web hosting, which is typically offered by the same companies that provide domain registration. Hosting gives your website a place to live on the Internet…read this guide by Foundr with a detailed explanation of what it takes to set up a website and develop it.” ~ Jane Haskins
Make sure your website theme (which controls both the appearance and functionality) is “responsive.” Responsive means that your content can be viewed and used equally well on phones, tablets, computers, and all devices.
You can choose themes that are primarily for text content and others which are primarily for images, such as pictures. Choose well in terms of your product or services. For art and objects best viewed before a purchasing decision is made, it is important to be able to show lots of beautiful images. For many other kinds of content, you will want a combination of text and images.
I encourage you to go to the SBA site again to learn more details and to get great guidelines for things like creating an online business plan and so much more! There are many more questions to be asked, depending on the particular business you have in mind. You might want to join a mastermind group, like 1 Million Cups, or others to get answers locally. In the meantime, I hope this was helpful and welcome your feedback.
Do It The Write Way! Let My Fingers Do Your Talking!