What You Need to Know Before Starting an Online Business

Brooke Chaplan

June 20, 2016

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From stay-at-home moms to entrepreneurs with plenty of capital, you hear a lot about starting an online business and the right ways to go about it. While some people may make it sound as easy as setting up an Etsy shop, there are actually a number of steps you need to take before you start your business on the web.

Understand Regulations and Tax Laws
It is important to have a thorough understanding of the legalities surrounding starting your online business. This includes knowing what your federal and state tax obligations are as well as any local taxes, finding out whether you need to create a separate business entity and file any forms associated with it, and looking into zoning laws.

Understand Marketing
Many people start an online business because they have a great idea or want to make money doing something they are passionate about. However, great ideas and passion alone do not make for a successful business, and many entrepreneurs are surprised that they spend half or even more of their time marketing. You cannot be over-prepared for this part of your business. It might even be worthwhile to work on an online MBA in marketing either in preparation for, or in conjunction with running your business.

Understand the Online World
Even if you have owned a business before, if your experience is largely with brick-and-mortar businesses you should keep in mind that an online business is new territory. From securing customer information, to failing to understand how you build a loyal customer base, there are many aspects of an online business that differ. One of the biggest misconceptions many people may have is how long it takes to build a following. When you see a blogger or another online personality who has managed to brand and monetize themselves and their site effectively, you are looking at hours and years of behind-the-scenes work. Find out ways to improve analytics and how to build up a relationship with shoppers.

Understand Content
There is a lot of talk about giving away content that has value to followers, whether clients or customers. Online business people need to strike a balance between building a base with freebies, and spending too much time giving too much away. Find a balance between useful information you can offer, and overloading your site with too much stuff.

Online businesses have many advantages. They can be very profitable with little overhead, and they can allow you to work from anywhere. However, entrepreneurs should not be misled by the apparent ease in setting up an online business. While it may not always require the capital of a brick-and-mortar business, it is just important to do your homework ahead of time.