The nature of work is changing as the new technologies become pervasive. The 9 to 5 job is still a career choice for most, however there is a greater move towards independent work. Taking back control of your time and doing what you love while still being able to live your life while you are still young, is undoubtedly attractive. It is now easier than ever before to create your own lifestyle by starting an online business. However, as a first time entrepreneur, your first step is to understand what may scare you as you go through this process.
Almost 12 years ago I started my entrepreneurial journey. 10 years ago I established an online presence for Value Stock Guide. I have learned a few things about what makes online businesses work. In this article I tell you how to start an online business, the mechanics, and later I will write more about the specific aspects of running a business that you will encounter on your journey. I also mention the products and services that have helped me along the way.
What is an Online Business?
If you sell a product or service online, you have an online business. This can be physical products on your own website or a shopping platform like Shopify. It could be a digital product like an ebook, either on your own website or on Amazon Kindle marketplace, or Gumroad or many other similar platforms. Or you could offer a service that you deliver online to your clients (such as Value Stock Guide Premium). Newspapers behind a paywall are also an example of this model.
Then there are businesses that do not sell anything of their own. They may market someone else’s products or services as an affiliate. Affiliate marketing, or referral marketing, for a commission is nothing new and many businesses have utilized this as their primary business model. Think sites like Wirecutter or Nerdwallet.
Other websites provide content in exchange for eyeballs on the advertisements they run. Heavy content sites such as Business Insider, Buzzfeed, etc use this model. They may also add in affiliate marketing as an additional source of revenue. Did you know that even Microsoft earns referral commissions by recommending products/services on the msn.com site?
Regardless of the model you choose, there are basics you need to take care of when you decide to start an online business.
Phase 1: Steps to Starting an Online Business
- Decide on your business niche
- Register your company and domain names
- Select your platform
- Get web hosting
- Build your website
Phase 2: Steps to Growing Your Online Business
The Pirate Model – Acquisition, Activation, Retention, Revenue, and Referral
- Generate traffic
- Generate and Nurture Your Leads
- Make offers and convert leads
- Marketing funnel – process and tools
- Build your team and refine your marketing strategy
Let’s briefly go through each step and look at the tools and services available to help you on your online business journey.
Phase 1: Start an Online Business
1. Decide on your business niche
In most cases you know what you want to do. You have a certain skill or a passion that you think can help many. In my case, this is value investing. You may be a great chef, or a doctor, or just someone with a passion for baking. No matter what you do, there maybe a market that will reward you. You just need to find the market.
Google has made this process much simpler. Since majority of the internet users use Google to search for things they need, you only need to figure out how many people are searching for products or services you are able to provide. You could sign up for a Google Ads account and use their Keyword planner tool to estimate the search volume for your keywords. Alternatively, you can sign up for a comprehensive search engine marketing tool like Semrush (it can do much more than just helping you select your niche, as you will see later in the article). The keyword data in Semrush is more helpful as it shows you the keywords that the Google keyword planner tool may not.
You want to target a market niche that has significant amount of search audience across many keywords your customers may be using. You definitely want the monthly search volume to be in 100s of thousands or even millions. Anything less than a 1000 can be too hard to make a successful business out of, unless you are a leading authority and can charge a premium price.
2. Register your company and domain names
3. Select your platform
This will depend on your business model.
If you are building an online store, you can build your own website using shopping cart software available to you like Magento. You could alternatively use a platform such as Shopify that gives you all the infrastructure you need to build your store, including payment processing. WordPress users can opt for the WooCommerce storefront.
If you are building a training course, you can use course platforms like Teachable.com. They handle everything from hosting your courses, to enrolling students, processing fee payments, creating and grading quizzes, etc.
WordPress is a great option for many different types of websites. I use WordPress to run Value Stock Guide and have connected it to a membership plugin, a forum plugin and Paypal business account. You can build a content heavy web site or an affiliate marketing website. WordPress is one of the most popular CMS’ on the planet today and has tremendous support and technology available to help you do what you want.
4. Get Web Hosting
Unless you are using a cloud based platform like Shopify or Teachable, you need to have your own webhost. For WordPress based websites, Kinsta offers a very fast managed WordPress hosting solution that is based on Google Cloud. If you would rather have your own dedicated servers, I recommend going with LiquidWeb.
5. Build your website
I can speak to building WordPress based sites. If you are a complete beginner, this may take some time and you might want to get some help. There are services on the internet that can help set up your site for you. I haven’t used these services so have no recommendation to offer.
However, if you are comfortable getting a little technical, you can do this yourself.
I use Thrive Plugins to customize many aspects of my website. They offer a number of well designed themes so you can pick the form and function of your new wordpress site. Their membership also offers page builders, lead capture forms, a/b testing ability for various components of your site, etc at a much more affordable price than what it would cost you to put it all together from different vendors. And they are always improving and adding new features.
If you are building sites on Shopify, they also have different themes and plugins for you to choose from.
Ultimately you choose how hands-on you want to be with your site. If you want to do it yourself, it is very possible and not very difficult. If you would rather outsource, you can always find someone to take care of it for you.
Phase 2: Grow Your Online Business
Once you have your business presence established, it is now just a matter of finding customers interested in your products or services, and selling them what they need.
This, as you can imagine, tends to be the hardest part.
A great framework to think this through is the Pirate Metrics (AARRR) formulated by Dave McClure.
Essentially, your business needs to take the customer through the following phases
Acquisition -> Activation -> Retention -> Revenue -> Referral
In simple words, you need to get traffic, get some of them excited about your business, keep them coming back by nurturing them, sell them the product or service they need, and delight them so they tell their friends.
As you may notice, this is a funnel. Not everyone who comes to your website (Acquisition) goes on to sign up to your mailing list or app, keeps returning to your website, buys and tells other. As a customers progress through the funnel, some drop out at every stage. Your job as a business owner is to have marketing and engagement processes well tuned to a) maximize the potential customers that come to your website, and, 2) maximize the potential customers that go through all the stages of your funnel.
We take a look at some of the key parts of this funnel and how to optimize it.
1. Generate traffic (Acquisition)
There are many ways to get traffic to your website. You could always spend money and advertise. However, for most startups, this is not possible. I have tried advertising in the past a few times and generally it takes a few months for the advertising for it to become profitable. This can be very expensive. If you are a well funded startup with deep pockets backing you, feel free to choose this channel. It is the fastest way to get traffic. Just know that there is a significant capital investment required.
There are many other “growth hacks” you can use. If these work out, they can be very good.
The most sustainable way to build traffic to your website is via search engine optimization. This is cheap (almost free) but it takes longer to take effect. However, the traffic you receive is very targeted and does not cost you anything more to maintain.
To use SEO, you need to discover keywords people are searching for in your niche, and then create content for those keywords. You may also want to do competitive research and see what keywords your competitor websites are targeting. Finally, you need to increase your authority in the search engines, so your content can rank on the first page. This is done via attracting links from other relevant and authoritative websites. You can do all this by using proper SEO tools. We met one such tool earlier, Semrush.
2. Generate and Nurture Your Leads (Activation and Retention)
Activation involves getting people excited about your business and take some action.
Normally the action you want them to take is to subscribe to your business in some way, so you can keep in touch with them over time. This can be via email, or app notifications, or social media. Traditionally, email has delivered one of the highest ROIs. Some say as much as $38 for every $1 spent.
I have used Aweber to communicate with my audience ever since I started Value Stock Guide (read my Aweber review). They offer pretty much every feature available in an email service. In my mind though, they outdo every other email service with their top-notch customer service. My regular newsletter, while free, keeps my audience coming back to the website, and over time as their needs require my products or services, I am top of the mind.
3. Make offers and convert leads (Revenue, Referrals)
This requires a lot of testing. Your offers are unique to your business. You can get ideas from what others are doing, but ultimately wat works for you will come from trial and error.
You can systematize the trial and error process by doing A/B tests on your offer pages.
I use Thrive membership (WordPress) to build offer pages, create variations and conduct A/B tests to see which variation converts to my goal better. It tells me the confidence level of the improvement so I can trust the statistical validity of the results. It also includes a testimonials system to improve the Referrals.
4. Marketing funnel – process and tools
I mentioned Semrush, Aweber and Thrive membership above for building various parts of the marketing funnel. I think it is worth mentioning that ClickFunnels can help you build the entire marketing funnel with one platform – and it is in the cloud, so you do not even need to host your own website. However, you will still have to deliver the traffic to your funnel. ClickFunnels can also integrate with your payment processor and has many revenue enhancers such as upsells and downsells. I have used ClickFunnels on other projects and this is an option if you prefer something self contained and specially designed to optimize conversions.
5. Build your team and refine your marketing strategy
Once you grow to a certain size, it is time to hire your first employee. In most cases, the first employee will help you with your marketing or sales activity. Perhaps even content creation.
A SEO tool like Semrush can grow with you. You can add team members, you can add paid marketing channels such as Search Engine Marketing on Google or Bing.
Finally, as a growing small business, you should outsource your payroll to a payroll service such as Paychex. You still want to keep things simple and let the professionals handle your payroll, benefit administration and filing payroll taxes. Some day you will have a larger team and bigger offices and it may become worthwhile to bring payroll in-house.