If you don't need a physical storefront to sell your goods and services, setting up an online business is a great alternative. Compared with a brick-and-mortar store, it can be faster and easier to get up and running with an eCommerce website, and upfront costs will generally be lower. What's more, an online store lets you reach beyond your local area and sell to customers across the country—and even overseas.
As for any business, however, you need to establish a strong foundation for your eCommerce venture. You'll need a business name and plan, a website that will attract customers and make it easy for them to shop and pay, and effective ways to market your online store.
What are the key takeaways from this blog?
In this blog we outline 8 key steps to setting up your online business:
Assess the viability of your idea and think about how it will solve a problem for customers. And the fun part—think of a great name for your business.
Choose a structure for your business, register your business name, and apply for tax ID numbers and any relevant permits or licenses.
Create a detailed business plan—this will be the framework for achieving your business objectives.
Plan the look, feel, and navigation of your website so that it's easy for customers to browse and buy.
The shopping cart on your website is what turns browsers into buyers, so make sure you choose one that offers a great user experience.
You need a payment gateway and merchant account to process your customers' payments and transfer them to your business account.
Market your new online business using social media, email campaigns, and paid advertising (if you have the budget).
Grow your business using techniques such as streamlining checkout, accepting more payment methods, and building customer trust and empathy.
Do you have a passion project you want to monetize? Have you spotted a gap in the market you could fill using your creative or technical skills? Is there something you can offer that would make people’s lives easier?
Whatever your idea for an online business, it pays to assess the viability of your idea. Take the time to do your research and make sure there's real demand for the business you're thinking of setting up. Consider your target audience: will they be prepared to pay for the goods or services you intend to sell? Try and look at your business as a way of solving a problem or offering something unique that customers can't buy from any other business. Think too about whether your proposed business idea offers scope for growth. For example: are your products or services one-off purchases or will they generate repeat business? Is there potential in the future to offer subscriptions?
Then of course, you need to choose a name for your business,1 which needs to be available as a domain name and as a social media name. If your first choice is already taken, try to come up with variations on the name. You should also:
- Search to see which state government website you should use (often it is the Secretary of State's office) to find out if the business name you want is available and allowed in your state.
- Check with the U.S. Patent and Trademark Office that the name you want to use isn't already trademarked.
It's also a good idea to make sure your business and domain name aren't too similar to any trademarks already registered, to avoid any customer confusion or legal issues.
Ideally, the name you land on should be unique and creative, reflect your business's identity and goals, and help you market your proposition. It should be easy to spell and pronounce as well as web friendly. Try to choose a name that your business can grow with to help future-proof your brand. For example, including a specific product in your business name might seem like a great idea at the start, but could make it harder to expand into other product areas as your business grows.
You may think you can jump straight from naming your business to setting up an eCommerce website, but there are some key things you need to get nailed down first. These include structuring your business, registering your business, and developing a business plan.
Choose a business structure3
You need to decide on the business structure that fits your needs. Some examples include sole proprietorship, partnership, or LLC, each with different aspects.
Sole proprietorship
This can be one of the easiest types of business to run: you don't need to register the business with the state or federal government or file a separate business tax return. Instead, your business income and expenses get added to your individual tax return. However, there's no legal separation between the business owner and the business. You could be personally liable for every business expense, debt, or lawsuit; and you may also find it difficult to borrow money or build business credit.
Partnership. You can create a partnership if you intend to own or run the business with one or more other people. There are several types of partnership:
- A general partnership is similar to a sole proprietorship: as well as being simple, it's the default type of partnership if you start a business with someone else. Like a sole proprietorship, it doesn't separate the partners' personal money from the business or provide any liability protection.
- A limited partnership (LP) is owned by a mix of:
- General partners, who take an active role in running the company and are personally liable for the business
- Limited partners, who invest in the business but don't take an active role in running it and aren't personally liable for it
For example, if a friend lends you money to help you start your online business, you would be the general partner, and your friend would be the limited partner.
- With a limited liability partnership (LLP), the owners (or partners) of the business aren't personally liable for the business but can still be involved in running it. An LLP is typically used by a group of professionals, such as attorneys or accountants, as it allows them to share communal costs, such as office space and website hosting, while claiming their share of the business's profits or losses.
Limited liability company (LLC). As the name implies, an LLC can limit the personal liability of the owner or owners (called members). As an independent business entity, an LLC can give you the protection offered by a corporation combined with the flexibility and simplicity of running a business without corporate formalities.
Corporation. Even if you set up a small business, you can create a corporation. A corporation is a separate legal entity that can provide liability protection to the corporation's owners. Corporations are required to have three official positions:
- Owner(s), also called shareholder(s)
- Executives, such as the chief executive officer (CEO), who run the company
- Board of directors, appointed by the shareholders, who oversee the corporation
If you start a corporation on your own, you can take on all three roles and be the shareholder (owner), the CEO that runs the day-to-day business, and the head of the board of directors that runs annual meetings.
Whichever business structure you choose, it's good practice to draft governing documents1 that say how your business will be run. For a simple business structure, you may be able to use free online templates. Otherwise, you can work with a business attorney.
Register your business1
Unless your business is structured as a sole proprietorship, you need to register the name of your business with the state. Each state has its own rules for how to create a business. Generally, the Secretary of State's office is the part of the state government that registers new businesses.
Registering your business prevents other businesses from using the same name in the same state. If you want to protect your business name across the country, you could also consider trademarking it.
Once you've registered your business you can obtain tax identification numbers (so you can do things like open a business bank account) and register for local, state, or federal taxes. Depending on the nature of your business, you may also need to apply for relevant licenses or permits to operate legally. Your local government will be able to advise you.
Before you build your eCommerce website, you should draw up a solid business plan. This will act as the roadmap for your venture and help you secure funding for your business if you need it. To create your business plan, start by mapping out your business idea. This gives you a framework for developing a vision for your business and thinking about why your business idea has the potential to be successful.
In your plan, describe your products or services, define your target market, set out your marketing strategy, and establish your revenue model. Set the goals for your business, too. You might want to split your goals out into quick wins or short-term objectives, such as launching your website or winning your first customer; and longer-term ambitions, such as when and how you will scale your business or reach a specific revenue target.
Learn more about creating a business plan.
Your eCommerce website is the storefront for your online business that allows you to communicate its personality. For a premium look and feel, and if you have the budget, you may choose to work with a professional website developer. Otherwise, you can do it yourself using a content management platform, such as WordPress, or a website builder offered by a platform like Wix or Shopify.
Content is key, so you need to plan out what people will see and do when they visit your website, and how they'll move between pages or sections. Visitors may not want to buy right away, so give them other reasons to stay on your site. Depending on what you sell, you could consider, for example, publishing blogs or FAQs, or posting 'how to' videos.
Use a clean, simple design. Customers generally spend more time on sites that are user-friendly and easy to navigate. Keep in mind the importance of accessibility, to help make your website inclusive for people with and without disabilities. Ensure too that your website has a responsive design so that users have a great experience on any type of device—computer or laptop, tablet or phone.
Make it easy to buy. Have a clear call to action that makes it easy for website visitors to engage with and buy from you. For example, 'Click to buy' or 'Add to shopping cart' buttons are unambiguous, so visitors won't waste any time wondering how to make a purchase.
Make social sharing easy. Include social media sharing features on your website to encourage visitors and customers to share your content on their own social accounts. People generally like personal recommendations from friends and family they trust, so it's a great way to help spread the word about your online business.
For more hints and tips about building an eCommerce website that works, see the Authorize.net eCommerce guide and Visa's Website optimization guide.
A shopping cart4 is what turns browsers into buyers. It's the place on your eCommerce website where customers select, store, and manage items before making a purchase. Customers can add and remove items, change quantities, and review costs before completing their transaction—just as they can in a physical store.
You can host and manage shopping cart software yourself but, if you're just starting out, you may prefer to take advantage of a SaaS or hosted shopping cart. Both types of cart come with lots of features built in and may include integrated payment processing. SaaS and hosted shopping carts are managed on your behalf, making it easier to start selling online without needing to understand shopping cart technology.
You'll want to make sure the shopping cart you choose offers customers a great experience, including transparency about the cost of shipping. If the cart is too complicated, or it's too difficult to work out shipping costs upfront, there's always the risk that customers will get frustrated and abandon their purchases.
Put simply, a payment gateway lets you accept payments from your website shoppers. Look for a payment gateway provider that offers all the payment types you want your customers to be able to use, such as payment cards, eChecks, and digital wallets.
The gateway processes the incoming payments and moves the money from the customers' accounts into a special type of bank account called a merchant account, where it's held until the customer payment is complete. At that point, the merchant account transfers the money into your business bank account.
You can apply for a merchant account with an acquiring bank (also called an acquirer) or with the provider of your payment gateway. For example, Authorize.net offers an All-in-One plan that includes a merchant account bundled with our payment gateway—so you have everything you need to start accepting payments.
Once you've thoroughly tested your eCommerce website and ironed out any potential issues, you'll be ready to launch your new online business. To encourage people to visit your business website, you'll need to put some effort into marketing it. Depending on the nature of your business, you could consider some of the following techniques:
- Social media marketing. Build brand awareness on social media platforms to help drive traffic to your website.
- Email marketing. Use personalized and targeted email campaigns to tell your audience about your new website.
- Content marketing. Create and share blog posts, videos, podcasts, and other relevant content on your website to attract and engage potential customers.
- Paid advertising. If you can afford it, invest in targeted ads on social media and other online platforms to reach a wider audience more quickly.
Learn more about small business marketing tools.
Once your business is up and running, you'll need to keep making the effort to attract new customers—read about six ways to drive more sales to your website.
Building loyalty with your customers can encourage them to keep coming back. Streamlining checkout for returning customers and using fraud detection and prevention tools can help increase their trust in your online business. And we shared some tips to help your customers feel valued by embracing empathy as a business strategy.
Expanding and refining your payment options is another way to reach more customers. For example, accepting payment by eCheck or introducing digital invoicing can help you win new business. And if you sell goods or services that people need or want regularly, you could consider launching subscriptions. To offer these and other advanced payment options, you need a fully featured payment gateway like Authorize.net that offers lots of tools and features to support your business as it grows and scales.
Accept payments quickly and securely
Choosing the right payment gateway solution provider is one of the most important decisions you’ll make when you launch your online business. Find out more about Authorize.net's All-in-One plan to help you get set up with a merchant account and a payment gateway, so you can start accepting payments fast and securely.
1 Visa: Getting started with business formation
2 This article provides general information related to creating and running a business. The content of this article is for informational purposes only and not for the purpose of providing legal or tax advice.
3 Practical Business Skills: Creating a Business
4 Authorize.net: eCommerce guide
