How to Start an Online Business

Written by Kathryn Marr on July 21, 2020 Blog, Sell Online.

An online business is a great way to expand an existing retail shop, experiment with new products, or supplement existing income. More than two thirds of Americans shop online, and that number continues to increase — there’s no better time to jump on board!

Follow this guide to get started on the right track or click on a link below to jump down to a specific section.

  1. Define your audience
  2. Choose your products
  3. Create your business
  4. Build a store
  5. Ship products and fulfill orders
  6. Market your products 

1. Define your audience

Take the time to go through the process of finding the right audience. It will improve each and every step you take throughout the life of your business and will help you identify your niche to improve future marketing efforts.

If you don’t have a specific product in mind, start with something you care about. Are you passionate about small business owners? Do you love working with kids? Are you a car lover drawn to fellow car enthusiasts?

Once you’ve chosen your audience, identify their problems or needs. Do they need clothes with a better, more comfortable fit? Are they searching for a solution to reduce stress? Are they looking for ways to connect with people who share their interests?

 Here are a few ways you can get to know your audience:

  • Spend time where they spend time — industry forums, social media groups, subreddits.
  • Learn more about them through surveys. 
  • Conduct in-person interviews.

The better you understand their motivation, the better you can serve them.

2. Choose your products

The next step is to decide what, exactly, you want to sell: 

  1. Handcrafted products: These are items you make yourself, like jewelry, clothing, paper goods, wooden decor, and food. This is a great option if you’re crafty, want full control over production, and are looking for lower startup costs. But bear in mind: it can be harder to capitalize on success — it’s more difficult to scale when you personally make each and every product.
  2. Manufactured products: These are items created in-house or by a third party that are stored, sold, and shipped by you, like dinnerware, shoes, makeup, electronics, or auto parts. This is a great option if you can’t physically produce a product yourself or if you want to scale, but it does involve higher startup costs since you’ll have to acquire inventory up front.
  3. Digital products: These are items that are delivered online without a physical format, like eBooks, music, online courses, membership programs, and workout videos. Digital products are scalable and typically have low startup costs and minimal ongoing production costs.
  4. Dropshipping products: These are items that are manufactured, stored, and shipped by a third party, like t-shirts, stickers, and phone cases. This option takes away the hassle of storing inventory and shipping products, but also takes away a lot of control.
  5. Services: These are tasks that are performed for clients without any physical component. Examples include coaching, consulting, graphic design, event planning, hotel bookings, and interior design. You perform these services virtually, or in-person.

Keep in mind that your business doesn’t have to choose one of these five options — some of the most successful online stores break the mold. Rather than manufacturing or handcrafting their own products, Kawaii curates the best cute items from Japan and packs them into themed boxes. 

curated box of products from Kawaii box
Photo © https://www.kawaiibox.com/

Or you might combine multiple types of products. You could produce and sell original paintings and dropship posters that feature your designs. Or, like One Stop Map, sell digital products (vector maps) alongside services (custom map design). The sky’s the limit!

3. Create your business

Once you’ve decided on a product, it’s time to set up your business. 

Take all necessary legal steps

Legal requirements vary based on where your business is located, but here are a few steps to consider:

  • Choose your business structure and register your business. This impacts everything from your legal responsibility and taxes to day-to-day operations.
  • Get tax IDs and understand the tax framework. Typically, the structure you choose impacts how you pay taxes.
  • Obtain any necessary licenses. Some areas require licenses to sell regulated products like firearms, alcohol, or CBD.  

If your business is located in the United States, this guide from the Small Business Association walks you through everything you need to know.

Open a business bank account

While it might seem easy to start with an existing bank account, there are a lots of good reasons to separate your business and personal accounts:

  • Professionalism. Business partners and clients can write checks to your company, not to you personally.
  • Protection. Separating accounts helps protect your personal assets from business liability.
  • Simplicity. Combined accounts makes accounting and taxes much more complex.
  • Extra benefits. A separate business account allows you to set up a credit card, build a credit history for your company, and apply for loans and lines of credit.

When choosing a bank account, pay attention to interest rates, transaction fees, and minimum account balances. You may also want to talk to other business owners and see what they love about their bank.

Set up accounting

Set your books up correctly at the beginning to save time and hassle down the road. Get to know the basics of small business accounting, and consider hiring an accountant to handle your finances as your company grows. 

Decide how you’ll charge for products

Before building your website, determine your pricing strategy. How much do you want to charge for products? How do you want to structure payments? Here are a few options:

For more information about setting up your business, learn what some of our online store owners wish they knew before they got started

4. Build a store

With solid business practices in place, it’s time to build your website. 

Start with your website foundation

Purchase a domain name and hosting

Your first step is buying a domain name — the URL that customers type in to reach your website. Pick something that represents your business and is easy to remember and try to avoid numbers and hard-to-spell words. Here’s a guide that walks you through other important considerations.

Your host is where your website lives — it stores all of your website files and displays them to visitors around the world. Your host has a big impact on your website’s security and speed — a great place to start is the WordPress.com eCommerce hosting plan, which includes everything you need for an online store. For other options and price points, take a look at our full list of recommended hosting solutions.

Install WordPress

WordPress is a free website building platform designed to be accessible for people of all technical experience levels. It includes a highly visual editor that enables you to build pages with no code experience, and is completely customizable. 

Use plugins — add-ons that provide additional functionality — to turn your website into anything that you’d like. That flexibility and ease of use is exactly why it powers 37% of the web.

Most hosting providers offer one-click WordPress installations while others, like WordPress.com, come with WordPress pre-installed. Read the full instructions for installing WordPress on all major hosting providers.

Install WooCommerce

WooCommerce is an eCommerce platform created specifically for WordPress that gives you all the tools you need to sell online: add products, collect payments, set up shipping, create customer accounts, and more. It’s extendable — choose from hundreds of extensions to expand your store functionality — and can scale with you as your business grows. Plus, it’s also completely free to implement.

WooCommerce is a plugin for WordPress. To install it, head to the “Plugins” section of your WordPress dashboard, search for WooCommerce, and click “Install.” A setup wizard will walk you through the process.

the WooCommerce setup wizard in action

Note: the WordPress.com eCommerce plan comes with WooCommerce pre-installed, so you can just jump into creating your site.

Choose a theme

A WordPress theme defines the design and layout of your site. There are thousands of free and paid options — a bit of browsing will lead you to the right fit for your store. Choose something that looks good on devices of all sizes, integrates with WooCommerce, and looks professional. The Storefront theme is one great option that’s both intuitive and flexible. 

Check out a full list of considerations and see some of the options available from WooCommerce

Choose a payment gateway

A payment gateway is what processes credit card payments and transfers the money to your bank account — you may have heard of PayPal or Stripe, two common options. WooCommerce integrates with more than a dozen payment gateways, so the setup process is seamless. When choosing one, ask these questions:

  • What fees do they charge? Are they per payment or per month?
  • How easy do they make the checkout process for customers?
  • Do they keep customers on your site or redirect to their platform?
  • Do they accept international currencies?
  • Do they allow for recurring payments?

Consider the specific needs of your business. If you sell subscriptions, you’ll need a gateway that accepts recurring payments, but if you only need to take one-time payments, that won’t be required. 

One great option is WooCommerce Payments, a completely free tool that enables you to manage payments, refunds, and more right in the same dashboard where you manage the other parts of your store.

Learn more about choosing the right payment gateway.

Set up taxes

Depending on your local regulations, you may need to charge sales tax. While you can define your own tax rates using WooCommerce default settings, an extension like WooCommerce Tax automatically determines the correct sales tax based on the city, state, and country you ship to and is free to set up.

Extend your store

The WooCommerce marketplace has hundreds of free and premium extensions that offer additional functionality for your online store. You can:

Each extension includes detailed documentation and unrivaled support, so you’ll never find yourself wondering what to do next.

Build website content

Create pages

Pages contain the key content of your website — information about you, your store, and your policies. While the exact pages will differ based on your products and mission, there are a few pages that every website needs:

  • A home page summarizing your company and offerings.
  • An about page with information about your business, mission, and history.
  • A contact page to help customers get in touch.
  • An FAQ page with answers to common questions.
  • A privacy policy page for details about how you handle customer data.
the WordPress block editor, showing available blocks on a page

Use the WordPress block editor to add text, images, videos, buttons and more to your pages. See the full documentation for step-by-step details on creating pages.

Create products

Unlike pages, products aren’t created with the block editor. Instead, they contain specific settings for selling online: prices, inventory levels, sizes, categories, etc. You can add products to pages in order to display them to customers on your site.

WooCommerce product page, showing pricing fields

There are several types of products you can set up, though the most common kinds are:

  1. Simple products: straightforward products with no options, like a book.
  2. Variable products: products that have options that customers can choose from, like a T-shirt with multiple sizes and colors

See a full list of product options and learn how to set them up in our documentation

If you sell services rather than physical products, the setup process is very similar. Learn more about selling services with WooCommerce.

5. Ship products and fulfill orders

Once your store is almost ready to go, your next step is to determine how you’re going to manage and ship products. Here are some things to consider:

Inventory management

How do you want to store products? Options include:

  • Self-storage. Store products at your home or place of business. This is great for new or small businesses.
  • Traditional warehousing. Store products in a dedicated space like a warehouse or storage unit. This gives you more space and control, but is more expensive than self-storage.
  • Dropshipping. Store products with a third party, who will also manufacture and ship them to customers. This is an affordable solution, but you lose a lot of control.

Then, take the time to set up an inventory management system that ensures you never sell an item that isn’t in stock. Here are a few tips for improving your inventory management.

Shipping

If you sell physical products, you need to get them to customers safely, quickly, and affordably. You can set fixed prices, offer free shipping, or charge based on factors like weight, size, distance, or delivery speed. You can even automatically pull in live, updated rates from common carriers like USPS, UPS, or Fedex.

To create your ideal shipping setup, follow these three steps:

  1. Get to know shipping methods and fulfillment options.
  2. Decide on a shipping strategy.
  3. Implement your shipping strategy using WooCommerce and any necessary shipping extensions.
great packaging design from Teabento
Image © teabento.com

Spend some time considering your packaging, too. If you sell breakable items, make sure they’re protected during the shipping process. If you sell perishable items, make sure to pack them with dry ice or ship using refrigerated trucks. Packaging is also an opportunity to delight your customers — consider branded boxes, thank you notes, and fun surprises.

6. Market your products

Finally, it’s time to get your products and store in front of potential customers. There lots of marketing methods, and it’ll take some trial and error to find the right combination for your products and target audience. Here are a few common (and effective!) options:

  • Search engine optimization (SEO): Pop up on search engines (think: Google) when someone looks for your products or searches for related words. 
  • Paid search: Pay for visibility on search engines when someone looks for terms related to what you sell. 
  • Content marketing: Create written and visual content that educates your target audience, attracts them to your site, or convinces them to make a purchase. (Blogs are great for this, and WordPress websites are great for publishing blogs!)
  • Social media marketing: Share blog posts, tips, and recommendations with followers on sites like Twitter or Facebook, or pay to reach them.
  • Email marketing: Follow up with existing or potential customers, share discounts and offers, and recover abandoned carts.

Finding the right marketing strategy can take time and experimentation, so don’t get frustrated if you don’t get positive results right away! Focus on reaching your audience with relevant, useful content and you’ll make an impression that will lead to sales.

Start selling online 

As an online store owner, you can do what you love, solve customer problems, and connect with people who love the same things as you. And starting that online store doesn’t have to be complicated — WooCommerce provides all the tools and information you need to launch your store and reach new customers.

Get started with WooCommerce or get to know fellow store owners at a meetup near you.

WooCommerce - the most customizable eCommerce platform for building your online business.

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