Starting a business online generally has a lower capital requirement than a brick-and-mortar business, making it a viable option for cash-strapped entrepreneurs. Offering products and services online allows you to reach a larger target market, and you can carry out transactions around the clock.
However, even though the barriers to entry for doing business online are relatively low, you still need to implement the correct steps to ensure that your new venture is a success. This guide takes a comprehensive look at starting an online business in Kansas City, MO.
Choose a niche for your business
A niche is a unique marketing area with specific customers, products, and requirements. Examples of niches include natural skincare, handmade treats for pets, and print-on-demand apparel.
Choosing a profitable niche can be challenging, and most business owners gravitate towards niches that fall within their field of expertise or interest. However, your niche should also have a target audience with:
- An unsolved problem you can address with your offer
- The ability and willingness to pay for your solution
If the niche you choose doesn’t meet these requirements, consider another marketing segment.
Formulate your offer
As an online business owner, you can offer three types of products:
Physical products are tangible goods, such as clothes, books, or homeware that you can buy from a manufacturer, market on your platform, and ship to your customers.
Demonstrating a physical product’s value is typically easy, and selling them requires straightforward transactions with low follow-up requirements. However, you will need to ship, store, and deliver them physically, which will ramp up your cost per unit.
Digital downloads are intangible assets in electronic form that customers can download to their devices. Examples of digital products include courses and eBooks. Demonstrating the value of a digital good can be challenging, but they don’t require handling and shipping.
If you have a unique capability, consider starting a service-based online business. You can sell logo design, business tax consulting, and web design services online. This type of offer has a relatively low capital requirement, but delivering business services takes time, limiting your income potential.
Determine product viability
After formulating your offer, you need to establish viability. If you are entering an established market, your offer is likely viable, as the target audience is already familiar with the product and its added value. Selling samples is an effective way to gauge your target audience’s commitment before placing a bulk order.
Sustainable demand is a crucial prerequisite of product viability, and you need to avoid trendy products. For example, it might have been possible to generate decent returns with the sale of fidget spinners during early 2017. Still, these products’ popularity was short-lived, and many businesses ended up with unsold inventory.
On the other hand, the long-term demand for products in a growing market will contribute significantly to sustainable business growth. For example, the demand for solar power will continue to increase due to technological improvements and governmental support.
Conduct a market analysis
Online market research is critical to understand your target audience, learn the behaviors of your prospective customers, and identify potential business opportunities.
Understanding your customers’ needs will allow you to formulate an effective marketing strategy that presents your product as a solution to their problems and gain a competitive edge in the market. Use your market insights to provide your customers with a superior customer experience, prevent cart abandonment, and increase retention rates.
Competitor research is crucial to ensure success as a new market entrant. Learn your competitors’ strengths and weaknesses to identify areas where differentiation is necessary.
Select a business structure
Most online business owners operate as sole proprietors or partnerships, as these entities are the easiest to establish and operate. As a sole proprietor or partner, you are personally liable for the business’s obligations. However, these business types are pass-through entities, so you don’t have a corporate tax obligation.
Corporations and limited liability companies (LLCs) are separate entities that can enter into contracts, file lawsuits, and pay taxes. Corporations must file an annual report with the Secretary of State, and LLCs only have to file annual reports in some states.
Open a Business Bank Account
You’ll want to make sure that you go ahead and start a business checking account separate from your personal bank accounts for liability and organizational purposes. If you combine your personal and business finances then it’s much more likely that your personal assets will be at risk if your business is sued or accrues debt. You can open a bank account anywhere, but many online businesses owners prefer online business bank accounts like Nearside’s over brick and mortar banks in order to take advantage of no fees, cashback on debit purchases and other perks. If however, you run a cash business that requires physical bank branches you should likely use a more traditional bank.
Develop your branding
Consistent imagery across all your marketing assets will help establish a recognizable brand identity and customer loyalty. Your brand elements need to appear everywhere the public interacts with your business, including your products, packaging, social media, marketing emails, and website.
You need to develop various brand elements:
- Logo with trademark/service mark
- Slogan and tagline
- Color schemes
- Typography and page layouts
- Graphics, photos, and other imagery
Consider partnering with a professional graphic designer to design your branding elements.
Source high-quality products
Selling high-quality products is critical to ensuring long-term business growth. If you sell digital products, partner with a reputable supplier, such as a dropshipper, wholesaler, or manufacturer. Vet your supplier carefully to avoid late delivery or quality issues.
You can create digital products yourself or hire a content creator to develop your products for you. Make sure that your customers can easily access, buy, and download your digital products.
If you are marketing a service, create an intuitive onboarding process that your clients can follow to hire you. Using online forms is an effective way to determine what your client needs.
Launch your platform
You can run your online business from any platform, including your website, an e-commerce platform, or freelancing marketplace. Platforms such as WooCommerce, BigCommerce, and Shopify offer various built-in features for online stores, including shopping carts, payment processing, and product catalogs.
Upload your offers to your platform with complete product descriptions and high-resolution images, then add all relevant shipping information that customers might need. Make sure that your website or store is compatible with all devices, including desktops, tablets, and mobile devices.
Grow your business
After going online with your platform, you’ll need to grow your business. You can immediately generate traffic to your store or website using targeted advertising campaigns on Google Ads or social media.
Search engine optimization (SEO) is one of the most cost-effective digital marketing strategies to rank high in the search engine results pages and generate organic traffic consistently. You can also partner with influencers or engage in email marketing to advertise your offers.
High-quality products and excellent customer service are integral to sustainable business growth. By going the extra mile for your customers, your online business can flourish and become a rewarding source of income.