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Are you an entrepreneur wanting to find the next big idea to make money online? Selling handmade crafts? Tutoring? Social media influencing? Dropshipping? There’s no end to the opportunities if you choose to start an online business.
But how do you get started? From finding the right website builder and marketing to new customers to understanding the regulatory requirements, this is your guide to starting an online business – from initial idea to becoming a thriving startup.
Keep reading for the steps to starting an online business, plus some ideas of what’s trending for 2023.
Almost anything can be an online business, but they usually fall into one of two key sectors:
An ecommerce business is a shop that operates solely online – whereas retail businesses have a physical store you can go into.
Meanwhile many in-person service businesses can translate as online businesses (think tutoring, baking, or even fitness).
What is the best online business to start? Of course ‘best’ is a subjective term. The best business for you will be personal and based on your skills and interests.
Are you looking to do something you’re passionate about and have existing skills in? Or do you want to train in something completely new? Some trades can be higher earners than others too, so it’s worth weighing up what’s important to you.
If you’re looking to sell a product, it’s worth noting that ecommerce is growing in popularity. The UK’s ecommerce market accounted for 27 per cent of all global retail sales in 2022, according to the latest report from Tami (Total Addressable Market Intelligence). And this is expected to increase to 29 per cent by 2026.
Wondering how to start an ecommerce business? Our guide to setting up an online shop covers it all from start to finish.
Here are just a few products and services you could offer as you create a website business:
Whatever you choose, it’s important to test your idea – consider doing focus groups, surveys, or a 'fake door' test to gauge interest. A 'fake door' experiment is a way to test demand for something before it exists, for example creating a pretend ad or notification and seeing how many people click it.
Product research and competitor analysis will also help you understand what direction to take your business in.
While money isn't everything, it's important to take it into consideration when planning your business venture.
This is the average turnover for some key trades that could operate as online businesses, according to Simply Business quote data. Although it’s important to remember that turnover doesn’t mean profit.
Average annual turnover in 2022
Consultant (business and management)
Based on average turnover in 2022 using Simply Business quote data. Data sourced on 10 July 2023.
Starting an online business can have its pros and cons:
Selling online advantages
Selling online disadvantages
Lower start-up costs
Reach more potential customers
Reliant on technology
Analyse and track customer behaviour (and remarket to them)
Unreliable couriers and shipping times
Earn money day and night
Easy for customers to shop around for a better price
Your business website is your shop window to what you do. This is important no matter what you do, but particularly if your business is based online.
Here are a few things you’ll need to think about:
Our guide to creating a business website covers everything you need to know.
While not as exciting as creating products and new ideas, it’s important to stay on top of your business admin:
Next you’ll need to register as self-employed with HMRC so you can start paying tax on your income. Bear in mind that if you’re running your online business alongside employment then you’ll need to be aware of specific side hustle tax implications here.
You should also check any business licences you might need (for example if you’re selling alcohol) and whether you need permission to run your business from home.
Legislation you need to know about for selling online:
If one of your products causes injury to a customer or damages their property then you could be held responsible. Product liability insurance can cover your business if something does go wrong.
A tailored business insurance policy from Simply Business can bring this all together for you, so you only pay for the cover you need.
One of the hardest things about running a business is finding new customers.
But what marketing tools should you be using for your business? And can you start a business without marketing at all?
Marketing is how you’ll reach more people and grow your business so you’ll need to use at least some forms of marketing for your new business. As an online business, digital marketing is going to be a good place to start.
So, make sure you set up social media accounts for your business – and find out how to use social media advertising to your advantage.
One of the most attractive elements of operating solely online is there are no business rates or other costs related to having a physical space.
As we’ve mentioned already, some businesses like accounting and consulting services can generate higher turnover than businesses like cake baking and fitness.
Project management is the fastest-growing trade right now, according to Simply Business research. This client facing role could be operated largely online, although you might also have in-person meetings.
While all businesses will require some investment to get started, some can be relatively low cost and low effort to maintain. For example, if you have a highly popular YouTube channel then videos can continue earning revenue over time. These types of businesses are known as passive income streams and can often be run as a side hustle.
Are you thinking of starting your own online business? Let us know how you’re getting on in the comments.
Catriona Smith is a content and marketing professional with 12 years’ experience across the financial services, higher education, and insurance sectors. She’s also a trained NCTJ Gold Standard journalist. As a Senior Copywriter at Simply Business, Catriona has in-depth knowledge of small business concerns and specialises in tax, marketing, and business operations. Catriona lives in the seaside city of Brighton where she’s also a freelance yoga teacher.
We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer
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