With minimal start-up costs and a potential customer base of millions, setting up an online business has never been more popular. Here are the key steps to follow when setting up your online business.
The number of online businesses has skyrocketed in recent years. Easy to set up with few costs, online businesses can suit anyone looking to become their own boss. From simple eBay shops and information sites to a full-scale online dating agency, there’s an online business for everyone. And many traditional businesses can be set up and run online.
The great news is that online businesses are easily scalable – you can start small to test out a business idea, work on it part time or as hobby before deciding to take the leap and commit yourself to a full time role.
So if you’re ready to join the swelling ranks of the UK’s online entrepreneurs, here’s how to get started.
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Which business model is best for your online startup?
There are lots of different ways to make money online but the most popular business models are:
E-commerce – Like a traditional store, an e-commerce website lets you sell a product or service directly to customer. Physical products are then either delivered to customers or digital products can be downloaded from your site. The benefits are lower overheads compared to opening a shop, and a potentially larger audience.
Advertising – As with traditional media such as newspapers, advertisers pay to place their advertisements on your website. Typically your website will freely provide information or entertainment with the aim being to attract as many visitors as possible so you can charge advertisers more to reach a higher number of potential customers.
Subscription – Often used by websites providing information, entertainment or a specific service. Users are charged a subscription fee – monthly or annual – to access all or part of the content or service. Examples of online subscription businesses include Netflix, eHarmony, Weight Watchers and The Times newspaper.
Brokerage – A broker website is like a virtual middleman or marketplace, and it earns revenue from bringing buyers and sellers together, with fees earned for each transaction it facilitates. Brokerages can either be B2B (Business to Business), B2C (Business to Consumer) or C2C (Consumer to Consumer). Well known online brokers include eBay, Amazon Marketplace and Gumtree, and new businesses can use these brokerage platforms to more easily sell to customers.
Which business model or combination of models is right for your online start-up will depend on the nature of your business.
Steps for setting up your online business:
Define your business plan – The first step in setting up your online company is to decide on a business idea and create a business plan. Successful businesses start by identifying a customer need, rather than focusing on a product. Do some research online to find out what people are searching for and how many other businesses already fulfil that need. Check potential competitor websites and assess how they sell and their pricing structure. Offering unique products or services will help make your business stand out from all the rest online. Having a target audience firmly in your sights will help get your online business up and running quickly.
Register your business domain name – Visit the website of a domain registration company and test out some of the names to see if they’re available. Keep your domain name short and catchy so people can easily remember it and type it into a web browser. Choose a name related to your business, as search engines such as Google will more easily find it.
Get web hosting – An internet hosting company stores your business website on its computer servers and makes it available on the web for others to see it. Free services are available, but if you’re serious about running an online business it’s best to pay for web hosting that offers all the features you need now and as your business grows.
Create your website – Now it’s time to create an attractive, functional website. You can do this yourself, buy an off-the-shelf solution or hire a website designer to create one for you. When designing your website, concentrate on what’s important. For online stores, for example, a streamlined buying process is vital, with up-to-date stock information and fast delivery.
Online stores will also need a shopping cart function and a secure payment facility. You also need a way to collect payments. PayPal is popular but most shoppers will want to pay via credit card. For this, you’ll need to set up a merchant account with your business bank. Alternatively, most small online businesses prefer to use a payment gateway provider to handle credit card transactions in exchange for a fee.
Comply with online regulation – If you’re selling goods online, your business website must include your address and contact details, description of your goods or services and prices including VAT. It should also provide information about delivery, exchange and refund policy, privacy policy and terms and conditions.
Register your business – By regularly selling goods and services online for profit, you’re deemed a trader – and therefore must register your online business with HM Revenue and Customs. You can choose to register as a sole trader or set up a limited company.
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Find out how to get a start up loan for your business from Start Up Loans.
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