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Starting a business that operates exclusively online can be an appealing way to earn a part-time or full-time income. It comes with the freedom and flexibility to work from anywhere you choose.

If you have a business idea for selling products or services online, below are considerations to keep in mind and the steps to take to get it up and running. First, here are some answers to common questions we often hear from potential online business owners.

Is It Easy to Start an Online Business?

In today’s digital world, anyone with an entrepreneurial spirit, regardless of their professional background, can start an online business and scale it over time. All you need is an idea for products or services that fulfill a need of consumers or companies.

If you’re selling a physical product, you’ll need to create a plan for manufacturing or sourcing and have a viable sales model and marketing strategies to attract potential customers.

If you’re creating a digital product, like an online course, you’ll have to develop the product and determine which platform to use for distributing it. Common platforms for digital products are Kajabi and Teachable.

If you’re selling services, you’ll need a website and other digital assets to help you sell your offerings, such as visuals that show previous examples of your work and skill set.

Whatever niche you choose, if you’re relying on running your business and selling solely online, you’ll need effective marketing strategies (including social media marketing) and a robust digital footprint to succeed in the long term.

Do You Need to Write a Business Plan?

A business plan is a document that provides an overview of your online business idea, objectives, and the steps necessary to ensure that the business thrives. You can use it as a strategic tool to help you stay focused on what you need to accomplish to meet your business’s short-term and long-term goals.

No two business plans are alike, but they generally contain an executive summary, company description, target market (who are your potential customers?), marketing strategies, and financial plans.

Remember that potential investors and lenders (if you apply for business loans) will likely want to review your business plan. So make sure your plan demonstrates the business’s potential for growth and success and includes detailed financial plans showing how much capital you need to run a successful business in the long term.

Depending on your business model, you may not need to write a business plan. Still, when starting any type of business, it’s always best to prepare a roadmap that details your startup costs and all the steps you need to take before, during, and after its launch.

Can You Start an Online Business on a Budget?

Yes, you can start many online businesses with fairly small upfront costs. These costs typically include purchasing a domain name, a website builder, and content creation for your site. If you sell physical products, you’ll need to buy inventory, consider fulfillment costs, and more.

If you start small, such as by launching only one product to begin and then scaling up with more product launches as revenue starts rolling in, then it is feasible to start an online business on a small budget.

Do You Have to Register a Business if It’s Online?

If your business is in Oregon, then if and how you need to register your business depends on the legal business structure you choose.

The most common legal structures for small businesses are a sole proprietorship, a partnership, a limited liability company (LLC), and a corporation. Each provides a different level of liability protection and tax and financial benefits. Small business owners should consult an accountant and an attorney before choosing their legal structure.

Partnerships and sole proprietorships often use the business owner’s own name. If you want to operate under a different name, you must register an Assumed Business Name with the state. Corporations and LLCs are required to register with the state. You can file the form on the Oregon Secretary of State website or mail it to the State’s Corporation Division with the filing fee.

If you decide to use an assumed business name or register as a corporation or an LLC, your business name must be different from all other names already filed with the Oregon Secretary of State. You can do a quick business name search here. It’s also a good idea to conduct a trademark search at the federal and state levels.

You can find additional information on how to register your business in Oregon here.

Types of Online Businesses

The type of online business you choose may depend on your professional background, skills, or even personal hobbies and interests. However, all online business models are either service-based or product-based, with the latter being physical products you can touch or digital products such as an online course.

Online businesses can range from a part-time freelance gig to a full-time hustle with hefty profits. And for many entrepreneurs, it can start as a part-time gig and evolve into a successful business that you work on full time.

Whether you will be selling products or services, below are some basic guidelines to keep in mind.

How to Start an Online Physical Product Business

When it comes to products, as long as there’s a demand for them, you can sell those items online. But before investing in inventory, you’ll want to determine the product’s viability, target market, competitive landscape, possible profit margins, and much more.

Selling physical products

Once you’ve set your sights on a specific product niche, you’ll need to build your online store and select an ecommerce platform that provides features for shopping cart software, payment processing, security, SSL (Secure Sockets Layer), and more. Popular ecommerce shopping platforms for small businesses include Shopify, Wix, Squarespace, and others.

If you’re just getting started with selling one product, you can consider selling on another platform that supports sales without having to pay overhead expenses. With high-traffic online marketplaces such as Amazon, Walmart, eBay, and Etsy, you pay a fee per sale but also gain access to their existing customer bases. Many of these shopping sites also offer merchants pay-per-click advertising and other marketing services to help drive customers to your product pages.

Drop-shipping physical products

If storing inventory and shipping orders is too much to handle on your own, drop-shipping could be a better solution. Drop-shipping is an online fulfillment method for when a customer orders a product online. You forward the order to your manufacturer, wholesaler, or another retailer, who then ships the product directly to the customer.

Not only does drop-shipping save you the time and hassle of having to store inventory and ship each order on your own, but it is also a low-risk way to see how well your products sell without having to purchase a large amount of inventory upfront. This is why drop-shipping is an attractive option for many ecommerce small business owners.

Affiliate marketing

Starting an affiliate marketing business is another way to have an online business selling products, but without all the overhead expenses that come with manufacturing and selling your own branded or private label products.

To be an affiliate marketer, you would select other brands’ products, sign up for their affiliate programs, promote those products to your own audiences through your social media channels, and then receive a commission for each sale generated through your referral links.

You can promote affiliate products by creating blog posts with keywords that people search for and sharing your blogs on social media. You can also promote affiliate products through email marketing if you’ve built up a subscriber list of potential customers.

A big advantage of affiliate marketing is that it comes with a low startup cost. However, to operate a successful affiliate marketing business, you’ll still need a domain name, web hosting, email marketing software, and other marketing services and tools to effectively reach and expand your audience.

How to Start an Online Digital Product Business

Online courses, ebooks, and music all fall under the category of digital products.

Selling digital products

Selling digital products online makes an attractive business model because you can create these products once and sell them repeatedly. You never have to replenish inventory, store products in a warehouse, or handle the hassles and costs that come with shipping physical products.

Digital products are also easy to distribute, as customers can receive the product quickly and electronically with just a couple of clicks. 

Digital products can include software, media, data, and templates and can come in the form of PDF, MP3, video, or plug-in files that people can download or stream online. Some examples of trending digital products that you can sell online include:

  • Educational digital products: Online courses or ebooks that teach topics of interest to consumers or business professionals.
  • Digital product licenses: Stock photos, video footage, music, sound effects, and other assets that you create and upload for others to use for their own creative pursuits.
  • Digital templates and tools: Document templates that others can use to create resumes, business plans, and more, or graphic design templates for brochures, invitations, and other things.
  • Digital services: This could be a personal trainer who creates video workouts or a marketer who sells customer lead generation lists to businesses within a specific industry.

Before you start a business online selling digital products, you’ll need to have specific skills and expertise to produce the unique content you’re selling—or invest in training to learn those skills. This is why selling digital products typically works best for creatives, educators, freelancers, and bloggers who can offer products based on their expertise in a specific area.

Where to sell digital products

You can sell digital products directly to customers from your own online store using an ecommerce platform such as Shopify. You can promote your digital products and drive traffic to your website through social media posts with direct links back to your online store.

Another option is to create a profile on an existing marketplace that is already well-established within your niche. However, many of these marketplaces take a commission from each sale—some up to a whopping 50%. So as you build loyalty and trust, it’s best to sell to your customers directly, especially as they become repeat buyers. 

How to Start an Online Service Business

Many services provided for consumers or businesses can be provided remotely and marketed online. When selling a service, you can cut out the inventory and fulfillment costs that come with selling physical products.

Starting an online business that sells a service can be a fast, easy, and fantastic way to earn a living. The only downside with a service-based business is that you are selling your time. That means your earning potential is limited by the hours you can commit each day to providing those professional services.

Selling online services 

To start a successful online business, you’ll want to offer a service based on your skills, strengths, and expertise. Your service should also fulfill a specific need in the market. Some examples of popular online services include:

  • Consulting: Advise businesses and individuals on various aspects they need guidance on. This includes social media consultants, small business consultants, and SEO consultants who help other entrepreneurs and small business owners.
  • Web design: Create a website’s layout and visual design. If you’re familiar with HTML, CSS, or JavaScript, you can launch a full-service business that builds attractive, user-friendly websites for small businesses.
  • Online blogging: Write consistent, high-quality blogs on a niche topic that informs, educates, or entertains. You can build an audience that follows you and consumes your content on an ongoing basis. To make money from blogging, you can sell products through affiliate marketing links placed in your content or sell ad space and sponsored posts once you’ve built up a large following.
  • Virtual assistance: Provide administrative support, like data entry, making travel arrangements, or scheduling appointments. You can do all of this remotely and online for busy professionals.

Where to sell your online services

Whether you’re a marketing consultant, career coach, copywriter, web designer, SEO specialist, virtual assistant, app developer, or tech support provider—or you offer any other type of service that can be done online—there are several platforms where you can market yourself to potential clients and search for work within your area of expertise. Such sites include Upwork, Fiverr, 99Designs, Freelancer.com, LinkedIn, and more.

To attract customers, it’s a good idea to have your own website to which you can direct potential clients, showcasing your work samples, fee structure, contact information, and client testimonials. Platforms like Squarespace, WordPress, and Wix are great web hosting options for a professional portfolio and are affordable, too. 

5 Tips for Starting an Online Business

Below are five additional tips for turning your online business ideas into a profitable, successful business.

Tip #1: Identify your target market

Who would want to buy what you’re selling, and where and how can you reach these customers? Having a clear understanding of your target audience, including their demographics, wants, needs, struggles, purchasing behavior, and more, is essential for generating sales.

Tip #2: Solve a problem

All businesses solve a problem, and the bigger the problem, the more people are willing to pay. For instance, healthcare and legal services solve serious problems, which is why doctors and lawyers make such a good living. What problem will your business fix? And how much would others be willing to pay for the solution it provides?

Tip #3: Assess your competition

Perform a competitive analysis to help define your business’s branding, messaging, and strategies.

This helps you see what competitors in your same niche are doing so you can do it better. Read their customer reviews to find the pain points so you can make your products superior and provide greater value. Give customers a reason to purchase your goods over your competitors’; even better, give them a reason to pay more.

Tip #4: Pick your payment method

It’s not a business if you’re not collecting payments, right? If you are selling products online, you can use Google Pay, Apple Pay, PayPal, Shopify Payments (if using Shopify for your ecommerce site), or other online payment options. For a service business, consider using Bill, PayPal, Stripe, and others. Determine a payment schedule based on whether you invoice clients daily, weekly, or monthly.

Tip #5: Make the most of your marketing

Of course, marketing is a must to attract customers. You can do it through social media, direct outreach, paid advertising, influencer marketing, and many other channels. Be sure to pick the marketing tactics that make the most sense for your business and your budget.

Ready to Start Your Online Business?

Anyone can launch an online business. But to make the startup process go smoothly and for it to become profitable, it’s essential that you do your research, plan ahead, and make the best decisions before launch. For more tips on how to start a business in Oregon, click here.

The Oregon SBDC Network is here to help you start and grow your business. Find your closest SBDC to access the resources you need to help with starting your online business by visiting OregonSBDC.org.

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