Starting an online business: 10 important steps to consider
When you start an online business, you need more than just a great idea. Setting up and launching an ecommerce store or other online business involves extensive research, a business plan, strong branding, finance and the technology to make it happen.
In this guide, you'll get an action plan for getting set up — from brainstorming and market research to official registrations.
1. Formulate your business idea
To formulate or refine a business idea, you can work through a series of questions or thought-starters. These can help you determine where your new business could fit in terms of market, consumer segment and branding.
Problems that need solutions — what's something that people struggle with?
Gaps in the market — a product or service that doesn't yet exist, new technologies or products missing from your local market, something that exists in stores but isn’t available online.
Better/faster/cheaper — can you supply an existing product or service differently?
Sell in a new way — can you sell a product directly to consumers or supply by subscription?
Download our free Starting a Business guide here.
2. Ensure your business idea is viable
A viable idea might be the most critical step in setting up an online business. There's no single way to validate your idea. Instead, it's about doing your research, speaking to experts, and analysing the details before you go any further.
To ensure your online business idea is realistic, you may want to start with a 'sense check' to determine whether people will want or need your product or service. You should then conduct market research to identify your target market and get input from a range of people. Talk to experts like business advisers or accountants, chat with family and friends, and contact business support or networking groups in your area.
3. Perform thorough market research
Thorough market research means uncovering as much as possible about your customers and their lives. The more you know about their location, lifestyle, hobbies, habits, interests, family life, work life and income, the better.
Market research can include:
Focus groups and interviews — direct contact with customer groups is an excellent way to gather insight into their lives and their opinions on your product or service.
Surveys — if you have a database or mailing list, a survey or questionnaire can be a valuable way to learn more about consumer preferences and demographics.
4. Understand your competitors
Understand your competitors by discovering as much as possible about their products or services, customers and marketing strategies. This information helps you determine your unique selling point (USP) and position yourself in the ideal niche when you launch.
One benefit to starting an online business is that this kind of information is readily available - it’s much easier to scroll through competitor websites and ecommerce stores than it is to visit brick-and-mortar locations.
Competitors include businesses selling the same or similar products or services, as well as those that solve the same problem or fill the same gap in the market. For example, an online store selling chocolates and other gift products could be a competitor if you sell flowers online.
Gather competitor information
Find out as much as you can about your competitors by looking at their online stores and social media accounts. You can also check out what they’re doing in digital marketing and search engine optimisation. Examine their product lines, pricing, marketing strategy, brand positioning and reputation, too.
Strength and weakness analysis
You can use what you've learned to analyse your competitors' strengths and weaknesses.
Create a table, giving each competitor a mark out of ten for each business area. Be as honest and objective as you can - particularly about strengths and weaknesses in your own business.
While this will never be completely objective, it can help you spot potential market gaps and focus on your USP. For example, if you notice that all your competitors have relatively low scores for service, you could choose to focus on outstanding service as your point of difference.
5. Write your business plan
A business plan gives you a clear, accurate view of your goals and strategy. Writing a business plan is often a good way to gain some clarity — turning vague ideas and assumptions into a structured document. It's also essential if you plan to apply for finance from a bank or investor. Most will want to see a thoughtful, detailed strategy before they sink money into your business.
A business plan should include:
An executive summary
An overview of your business
The market opportunity — including market and competitor research
Your products and services
Goals and timelines
Finance – including financial needs and profitability objectives
6. Develop strong branding
For strong branding, you'll need a name, brand story and values, tone of voice, logo and other visual elements. Essentially, it's shorthand for your business identity, helping potential customers understand who you are. When you’re building an online presence, branding is especially important, as it helps your customers identify your business across social media, ads, and your website or ecommerce store.
It's a good idea to get expert help with your branding.
Name — think memorable, concise and not shared by a similar business.
Social media — check that you can use your name on Facebook, Instagram and other social platforms.
Visual elements — your logo, colour choices and other visual elements communicate messages about your brand.
Tone of voice (TOV) — this is the tone you use on your website and online store and for ads, social posts and other marketing materials.
7. Ensure you're financially prepared
Be prepared by setting financial goals and then seeking and securing appropriate funding. You may need a business loan or support from an investor. Some smaller businesses may be able to start with personal funding and seek external finance later — it depends on your size, scope and financial goals.
8. Invest money in digital marketing
Investing in digital marketing is crucial for any new business — but especially when you sell products or services online.
There are lots of online marketing methods, including:
Paid advertising: targeted ads placed on Google, Facebook, Instagram and other platforms.
Search Engine Optimisation (SEO): keywords and content raise the ranking of your website on Google and other search engines.
Social posts: creating profiles and posts on social media can help you target precisely and build an interested audience.
Blogs: writing articles or blog posts related to your product or industry can position you as a leader in your niche.
Email marketing: As soon as you have an email list to draw on, start sending those emails. You can offer discounts and time-sensitive special offers to encourage conversion.
9. Make it official and put systems in place
Making your business official and putting critical systems in place are the final steps in the setup process. If you're in Australia, you'll need to apply for an Australian Business Number (ABN). New Zealand businesses must register for a New Zealand Business Number (NZBN).
This is also a good time to develop initial systems for your business — how will you manage sales, returns, shipping and other critical workflows?
10. Register your business and domain name
When you register your business with the ATO or New Zealand’s IRD, your company becomes a real entity — finally. The process involves registering your business name and signing up for GST. A domain name gives you an official space online.
To register, you need your ABN, name, contact details, address, payment details and owner details.
FAQs when starting an online business
What is the most profitable ecommerce business to start?
According to research, the most profitable ecommerce sectors in Australia are food and beverages, fashion and accessories, and footwear. In New Zealand, food and personal care products are top sellers, followed by toys and DIY products, then fashion.
Is it a good idea to start an online business?
It's a good idea to start an online business if you have a product or service that fits a space in the market. If your idea isn't viable, it could waste time, money and energy.
How do I sell online for the first time?
To sell online for the first time, you need a product and a consumer market. You also need to be registered as a business owner and have an ecommerce platform.
What online products and services are in demand right now?
The most in-demand online products, according to Forbes, currently include power banks, beanies, scented candles and athleisure. Of course, these change constantly, so do your market research before you start selling.
Find the right software and platforms you need to run your business
The right software and platforms set you up for simplicity and success as you navigate the early stages of running an online business.
Assess a software solution for:
Scalability — can it grow with your business?
Price — subscription-based or one-off cost?
Ease of use — how intuitive and simple is the software for you and your staff?
Implementation — will you need support with setup or installation?
If you’re launching an ecommerce store, consider whether it’ll integrate with your accounting software.
With MYOB, you can integrate with leading ecommerce platforms to keep track of your sales, inventory, income, expenses and more, all on one business management platform. Streamline and automate critical accounting processes and get the insights you need to grow your business.
Ready to bring your online business to life? Get started with MYOB today.
Disclaimer: Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.