This quick guide on how to start an online business will equip you with the basics, whether you’re looking to start the next big startup or simply need to supplement your income with a side hustle.
Not only can an online business be a lucrative way to earn an income, it can also be one of the easiest ways to earn money from home.
It’s important to remember that an online business, despite not having a traditional brick-and-mortar shopfront or office, still needs to tick some legal and operational boxes to be considered legitimate.
The type of business
Deciding on the type of online business is the first step to creating an online business, and is known as the ‘what’ part of starting a business. There are a number of options with varying cost factors to consider. It helps to consider a few factors such as whether you will sell goods or services, provide your own products or become a reseller.
Feasibility study and business plan
The ‘who’ part of the business entails your customer base. For instance, is there a market for the goods or services that you’re hoping to sell? Are there regional restrictions, even if you’re based online? A feasibility study and business plan should include market research.
Finance options and investment opportunities
If your business requires upfront funding, it’s important to know the funding options available to you. Getting credit for a business startup may not be easy, but financial institutions and banks often share the risk of the funding with other institutions. Micro businesses and those that require minimal funding are often self-funded.
You may also approach investors. If the amount is small enough, a family member or friend might just help out. For larger startups, investors might be interested in fronting the cash if they get a stake in the business.
There are many different ways to fund your business, with pros and cons for each, so it’s important to research and consider these carefully.
Taxes and company registration
There are four major business structures in the UK, which include:
- Sole proprietorship
- Limited liability partnership
- Limited company
The business structure influences your obligations and liability as a business owner. It also affects the tax structure of the business. Resolving the entity type and registration, before the business starts trading, will ensure the business starts off the right way, as changing from one entity type to another later on can be costly.
Setting up shop
Before you’re able to sell your products, it’s important to decide whether you’re going to set up your own website that has e-commerce capabilities, or whether you’re going to start an online store through an existing platform such as Amazon or Etsy.
Marketing and social media
Setting up your online business is only the start. You’ll also need to generate traffic to your website to start selling. Marketing companies can assist with search engine optimization and how to best leverage social media to create leads.
If you’re selling products that need to be stored and you simply don’t have the space, warehousing costs can be expensive. An alternative solution is fulfilment through a dropshipping company. These take care of the warehousing and the delivery of products on your behalf. This works well if you’re selling products from another vendor.
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A great place to start is MyWalletHero’s list of the top business credit card offers.
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