An online business is one that operates primarily on the internet to offer products, services, or digital goods. Online businesses range from ecommerce stores to digital agencies, from subscription services to content platforms. Unlike traditional brick-and-mortar businesses, online businesses typically require lower startup costs, offer location flexibility, and can reach a global audience. Often, it’s possible to automate many processes of online businesses, which means they can scale faster and more efficiently than brick-and-mortar businesses.

Ecommerce and digital services are booming, with the global ecommerce market estimated to reach nearly $8 trillion by 2027—driven by trends in remote work, digital content consumption, and online shopping. Niches such as sustainable products, online education, and subscription-based models have taken off, and there are many more underserved markets that entrepreneurs can step into. Whether you’re looking to monetize a passion or explore a business model that can grow easily, below is a guide to getting started with an online business. We’ll cover registering your business, developing marketing strategies, meeting compliance needs, and more.

What’s in this article?

• How to choose the right online business idea
  
• What are the steps to starting an online business?
  
• How to register your online business
  
• How to build an online presence
  
• How to set up your ecommerce platform
  
• How to develop a marketing strategy for your online business
  
• How to convert visitors into customers
  
• How to provide excellent customer service online
  
• How to scale your online business
  
• Common challenges when starting an online business and how to overcome them
  
• How to stay compliant with online business regulations
  

How to choose the right online business idea

Here’s what to consider when choosing a business idea to pursue.

• Skills and interests: Identify your passions and your skills; they might include creativity, organization, technical knowledge, or something else. Working with your strengths makes it more likely you’ll stay committed to your business, especially during difficult periods.

• Market research: What’s trending? Is there demand for the kind of business you’re considering? Check out competitors and see how you can do something different or better. Think about your target audience, as well. Who are they, and what are their needs? Your business should be a solution to a problem or a service for which people are actively searching.

• Opportunity for growth: Is this business idea something that can grow over time? Digital products, subscription services, and online courses are examples of models that can expand without requiring major increases in resources.

• Startup costs: Evaluate the startup costs and logistics. Some online businesses require minimal investment, while others need more upfront resources for software or inventory. Weigh the potential profit against what you’ll need to spend.

What are the steps to starting an online business?

Put your plan into action. Here’s a step-by-step look at starting your online business.

• Develop a business plan: Start by mapping out your business idea. Outline your products or services, target market, marketing strategy, and revenue model. A solid plan will act as your roadmap and help you secure funding if needed.

• Set goals: Break down your objectives into short-term and long-term goals. Short-term goals might include launching your website or securing your first customer, while long-term goals could involve scaling the business or hitting a revenue target.

• Choose the right structure: Decide on the business structure that fits your needs. This might be a sole proprietorship, LLC, or corporation. Each type of structure has different legal and tax implications, so consider consulting a professional to make the best choice.

• Register your business: Register your business with the appropriate government agencies and obtain any required licenses or permits. The specifics will depend on your location and industry.

• Create a website: Choose a platform that suits your business’s needs (e.g., Shopify for ecommerce, WordPress for blogs). Make sure your site is user-friendly, mobile-optimized, and showcases your products or services effectively.

• Establish a social media presence: Build your brand on social media platforms to reach your audience, grow a community, and drive traffic to your website.

• Develop a marketing plan: Use SEO, email marketing, and social media advertising to attract customers. You’ll need to test a variety of strategies to see what works best for your business.

• Launch your business: Once your website and marketing plans are ready, launch your business and start driving traffic to your site.

How to register your online business

Registering your business is one of the first steps you need to take before you start selling products or services. Here’s what the registration process entails.

Choose a business name

Pick a name that reflects what your business is about; ideally, it will be catchy and easy to remember. Make sure the name isn’t already taken by another business by looking it up in your state’s business registry. Also, check the US Patent and Trademark Office (USPTO) for any trademarks that could cause issues later.

File for an Employer Identification Number (EIN)

An EIN allows you to keep your personal and business taxes separate. With it, you can hire employees and set up a business bank account. To get an EIN, fill out the online form on the IRS website with your business information; you’ll receive it immediately once you’re done.

Register for taxes and permits

Depending on your business type, you might need to register for federal, state, or local taxes. In most cases, you’ll use your EIN to register with your state for tax purposes. Certain businesses, such as those in the food or health industries, need extra permits to operate legally. Check with your local government to find out which, if any, you need.

How to build an online presence

Your online presence is very important for your business. Make sure your website is easy to use, looks professional, and works on mobile devices. People shouldn’t have to search for a long time to find basic information, so make sure contact details, product pages, and the site menu are clear and accessible. Here are some other important considerations when creating your online presence.

• Choose a strong domain name: Pick a domain name that clearly connects to your business and is easy to spell. It should be unique enough that people remember it.

• Pick the right platform: Depending on what you’re selling, you’ll want to choose a platform that fits your needs. For example, Shopify works well for ecommerce, WordPress is very flexible, and Wix is beginner-friendly.

• Pick a reliable hosting service: Your hosting provider keeps your website online. Look for a reliable option with good customer support, such as Bluehost or SiteGround, to avoid site slowdowns and crashes.

• Boost your SEO: Search engine optimization helps people find your website. On-page SEO means using the right keywords in your content, titles, and tags. Off-page SEO involves getting backlinks (i.e., other sites linking to yours) to increase your site’s credibility.

• Do keyword research: Take time to research the keywords your target audience is searching for and use them thoughtfully throughout your content. Generally, the more relevant your content is to users’ searches, the higher you’ll rank on Google.

How to set up your ecommerce platform

Selling products, services, or subscriptions online requires a strong ecommerce setup with payment capabilities, inventory management, and a fulfillment strategy. Here’s how to put all of this in place.

• Choose the right ecommerce solution: Different ecommerce platforms have different features. Shopify is user-friendly and an all-in-one solution (i.e., a platform that offers multiple tools to help your business). WooCommerce integrates with WordPress for additional customization, and BigCommerce is useful if you’re planning to scale your business quickly. Choose a platform based on your business size, goals, and comfort level with technology.

• Set up payment methods: Including multiple payment options makes it easier for customers to buy your products. Most ecommerce platforms make it simple to integrate basic payment methods, such as credit cards and digital wallets, so you can give customers an effortless checkout experience.

• Manage inventory: You need to closely monitor your inventory when running an ecommerce operation. Tools such as Shopify Inventory, Zoho, or TradeGecko help you track stock levels, avoid over-ordering, and manage product variations.

• Assess fulfillment options: You can either pack and ship orders yourself or fulfill orders using a third-party logistics (3PL) service such as ShipBob or Fulfillment by Amazon (FBA). Self-fulfillment gives you more control but can be time-consuming, while 3PL services handle everything for you and allow you to focus on growing your business.

How to develop a marketing strategy for your online business

Driving traffic to your business’s website requires a mix of well-executed organic SEO efforts and targeted paid strategies. Combining SEO, content marketing, paid ads, social engagement, and thoughtful partnerships can help your business reach the right audience and continue to grow. Here’s what you need to know about developing an effective marketing strategy.

Content marketing and SEO

You need to create high-value content to drive organic traffic to your site, while building authority in your business’s niche. Develop blog posts, videos, or infographics that address your audience’s needs and concerns. Focus on both on-page and off-page SEO to improve your search rankings: use well-researched keywords throughout your site, optimize metadata, and regularly update your content to stay relevant.

Social media marketing

Social media allows you to connect with your audience. Each platform has a unique audience and style, so you will need to tailor your approach accordingly. Facebook and Instagram are ideal for visual content, while LinkedIn is more suited for B2B and networking. Use these platforms to create a community around your brand by facilitating meaningful interactions, organizing giveaways, and sharing valuable content. When done well, social media campaigns can expand your reach substantially and drive consistent traffic to your site.

Email marketing

Like social media, an email list lets you directly communicate with your audience, so it’s worth building one from the beginning. Use lead magnets, which are free products or services—such as guides, classes or exclusive discounts—offered in exchange for sign-ups. From there, you can segment your email list to send more personalized emails. Keep the content relevant, whether you’re pursuing leads, advertising promotions, or providing business updates. You can A/B test subject lines and content to boost engagement and conversion rates.

Paid advertising

Invest in pay-per-click (PPC) ads, such as Google Ads, Bing Ads, or Facebook Ads, for immediate visibility. Target specific audiences with tailored ads and refine your campaigns using performance metrics such as CTR (click-through rate) and conversion tracking. Use retargeting ads to bring back visitors who’ve interacted with your site but haven’t purchased anything.

Collaborations and partnerships

You can grow your business’s exposure, build your credibility, and expand your network by partnering with influencers and affiliates who align with your brand. Choose influencers with engaged audiences and develop affiliate programs that offer solid commissions to incentivize promotion. Partner with complementary businesses for cross-promotion.

How to convert visitors into customers

Create an environment where visitors are more likely to convert into paying customers by improving user experience, crafting strong calls to action (CTAs), testing regularly, and showcasing trust-building testimonials. Here’s what each of these methods entails.

User experience (UX)

A smooth, intuitive website experience helps keep visitors coming back. Ensure your site is easy to use, loads quickly, and works across all devices. Clunky layouts or long load times lead to high bounce rates; don’t give users a reason to leave before they have a chance to explore.

Effective CTAs

Your CTAs should be clear, action-oriented, and strategically placed throughout your site. Phrases such as “get started,” “sign up now,” or “shop the sale” grab attention and guide the user to take the next step.

A/B testing and conversion rate optimization (CRO)

CRO comes from testing what works best for your audience. Run A/B tests on website elements such as CTAs, headlines, page layouts, or color schemes to see what improves conversions. Small tweaks can make a big difference in driving more sales.

Customer reviews and testimonials

Positive reviews and testimonials build trust with potential customers. Showcase them prominently on your site—people want to see that others had a good experience before committing. Social proof, a situation in which people are influenced by the actions of others, can be the nudge people need to go from browsing to buying.

How to provide excellent customer service online

Providing excellent customer service online means giving customers easy ways to reach you, handling returns and other issues smoothly, and finding ways to keep customers loyal. Happy customers are more likely to make repeat purchases and recommend your business to others. Follow these tips to create a great customer service experience.

• Make contacting the business easy: Give people a few ways to reach you, such as live chat for immediate help, email support for less urgent queries, and phone support for more complex issues. Live chat is useful for quick responses, while email allows you to provide more in-depth answers.

• Be transparent about your return and refund policies: Make sure your policies are easy to find on your site and they are straightforward. If issues arise, handling returns quickly and fairly can help you maintain trust with customers.

• Put effort into building loyalty: Provide perks such as discounts for repeat purchases, early access to new products, or personalized offers. Follow up with customers after a purchase or have loyalty programs that keep them coming back.

How to scale your online business

Here are some tips to grow your online business effectively.

Identify gaps and opportunities

Learn about your customers, including their concerns, before you grow your business. Analyze data to spot unmet needs or potential upgrades that resonate with your existing audience. Consider bundling products or creating tiered service packages to capture different customer segments and increase your average order value.

Automate with purpose

Automation can help you intelligently grow your business, not just save time. For marketing, software products such as HubSpot or Klaviyo include behavioral targeting, which entails sending personalized messages based on customer actions. Inventory management tools, such as TradeGecko or ERP systems, can help you handle supply chain challenges as you grow. Build an infrastructure that can expand and adapt without sacrificing quality or customer experience.

Test before you expand

Entering new markets requires rigorous market research. If possible, run test campaigns or limited product launches in new regions first. Products such as Google Market Finder can help with insights into international markets. You’ll need to translate content and tailor messaging, pricing, and product features to be appropriate for each country’s culture.

Hire for the next phase

Don’t hire only to fill immediate job openings. Think ahead about what roles you’ll need as the business grows. Hire people with specialized skills who can handle complexities—whether it’s legal professionals for compliance in new markets, data analysts for deeper customer insights, or operations experts for supply chain management. Build a leadership team that understands the difficulties of growing a business and can preemptively solve problems.

Common challenges when starting an online business and how to overcome them

Starting an online business comes with its share of challenges, but proactively addressing technical issues, staying competitive through changes, and maintaining a work-life balance can help you achieve long-term success. Here are some difficulties you can expect to face while running an online business.

Website downtime and glitches

Technical problems can be detrimental to your business, especially if your site goes down during an important sales period. To minimize the risk of disruption to your site, invest in reliable web hosting and regularly test the site’s performance. Use technology such as UptimeRobot to monitor site outages and quickly address issues. If you’re not tech-savvy, consider hiring a web developer or using a managed hosting service that handles backend maintenance and security.

Market competition

The online marketplace is saturated with businesses, making competition fierce. To differentiate your business, focus on your unique value proposition. What can you offer that others can’t? Whether it’s a superior customer experience, exclusive products, or an innovative solution to a customer problem, invest in what makes your brand distinct. Also, use niche marketing (i.e., target specific audiences with tailored messaging) for higher conversion rates.

Work-life balance

Starting an online business can feel all-consuming, but neglecting self-care leads to burnout. Set boundaries from the start: establish your work hours, take regular breaks, and schedule time for personal activities. Time management platforms such as Trello or Asana can help you keep tasks organized and prevent overload. If you can, outsource tasks that aren’t your core strength to free up mental bandwidth.

How to stay compliant with online business regulations

There are several laws and regulations that govern online businesses. Here are some examples.

Data privacy laws

If you collect customer data, you need to comply with laws such as the General Data Protection Regulation (GDPR) for EU customers and California Consumer Privacy Act (CCPA) for California residents. This includes gaining explicit consent before collecting personal data, outlining clear privacy policies, and allowing users to access or delete their data upon request. Use compliance tools such as Termly or OneTrust to ensure you’re following all regulations, and regularly review and update your data privacy practices as laws evolve.

Ecommerce laws and consumer protection

Rules regarding ecommerce vary by location; they range from sales tax collection laws to consumer protection laws, which mandate transparency on returns, shipping costs, and warranties. Make sure to display terms of service, refund policies, and any additional fees clearly. If you’re selling internationally, familiarize yourself with local ecommerce laws in the countries you plan to do business in or use platforms such as Avalara for automated tax compliance across different jurisdictions.

Intellectual property (IP) protection

IP includes your logo, website content, product designs, business name, and more. Registering trademarks, copyrights, and patents where applicable protects your assets from being copied or misused. For added security, consider using services such as LegalZoom to file trademarks or patents, and monitor competitors for potential infringements. Include terms of use on your website to further prevent unauthorized use of your content.

Staying compliant with online business regulations means safeguarding customer data, adhering to regional ecommerce laws, and protecting your IP. Keep up-to-date in these areas to ensure your business is operating legally, both locally and globally.