5-step tutorial on how to start an online business on a budget
This web page intends to support every individual entrepreneur and small business owner on how to start a an online business on a budget. It provides clear information on how to implement a strong business model, and build a stunning website. You will learn how to understand the behavior of online customers and create an interaction between you and your customers through your website.
Step 1. Choose a business type
There are several business types online. In each field, you can start a successful business. Below is a list of some online business types: Online Store, Affiliate Marketing, Re-selling, Drop-Shipping, Web-Design, Freelancing, Business Coaching, Blogging, and so on. I wrote a whole article about Online Business Types, You can check it out here.
It is recommended to pick a business type which aligns with your passion and interests. Every business has its struggles and obstacles. Therefore, when you choose an online niche matching your enthusiasm and love, it is easier for you to overcome any obstacle that you may encounter during the implementation process. Therefore, you will be less likely to quit as it is the case for many online entrepreneurs.
Step 2. Write a business plan
Defining your online business is the first step to start, implement and grow a successful online business.
2.1. How to write a business plan for an online business
A business plan is a written document that displays how a new business is going to achieve its goals. It showcases a written plan from the marketing, operating and financial perspectives. A business plan includes a thorough description of the business (its products and services), how it will stand out compared to its competitors and most importantly, how the company will achieve its objectives.
A well-presented business attracts investors to put money in your business. In the case when you don't have enough money to start your business and count on bank loans, for example; your business plan is the document that is going to demonstrate the profitability of your business, thus, convince the bank to loan you money for your start-up.
A formal business plan has eight significant elements:
2.1.1. Executive Summary
This section of your business plan shows essential information about your business. It is a summary of the other aspects of your project, therefore make it short but compelling; a bad executive summary will discourage potential investors from reading further.
A well-written executive highlights the mission and goals of your business, including a short description of your products.
An executive summary sums up your business; this is why it is advised to write it last, after gathering all important information from the other sections.
2.1.2. The business overview
A business overview provides detailed explanations about the purpose of your business, its goals, the properties, and the location. Similarly, it describes its targeted customers and also, how you plan to distinguish your business from others.
Use this section to tell your story (your inspiration) and connect with your readers.
2.1.3. Market analysis
In this section, you will need to conduct data and statistics studies of the market. The result of the studies will reveal whether your product/service is in demand in your target audience. At the same time, research your targeted customers' behaviors and income to make sure that what you are selling is affordable.
You can also add existing customers' testimonies of your products in this section.
2.1.4. Competitive analysis
Establish an explicit comparison between your business and your competitors. Examine their strength and weaknesses and how you can use to keep your business on the top.
Now that you have picked and defined your business type, it is time to do some markets research. You need to understand your business competition. It is imperative to know what other online entrepreneurs have achieved in your category. There are two types of competitors, direct competitors, and indirect competitors.
Direct online competitors are businesses that provide online products or services similar to your products and services. Indirect online competitors are online businesses that offer online products or services similar but slightly different to what you are providing or intends to provide. However, you share the same customer group.
It is recommended to focus on your direct competitors without forgetting to shadow your indirect competitors.
a. Learn from your online competitors
Visit your competitor's websites frequently. Follow them on social media, and read their news articles and posts. Get to know what are the products and services your competitors are currently offering, their prices and their values. Read customers' comments to detect what customers like from your competitors and what they don't like.
b. Learn from your market research
Write a list of your customer's needs that are not provided by your competitors and fill the gaps. Detect customer frustration and tailor you (future) products, services or website contents to satisfy the customers.
2.1.5. Management and organization plan
Use this plan to show your business legal structure, the ownership (in a partnership or a sole proprietor), your team members and each member's job responsibility.
Additionally, outline each member's qualifications and how their domain of expertise will help you reach your goals.
Moreover, investors are highly impressed by a qualified management team.
2.1.6. Marketing plan
This section of the plan includes marketing and sales strategies. Please explain how you plan to lure your customers from existing competitors and convince them to buy your products.
In your marketing plan, provide details of your promotional (coupons, giveaways, sales) and advertising strategies (social media, publicity) to attract your clients.
2.1.7. Request for Funding
Here is the section where you mention how much money you need and how you are going to use it. Also, include a timeline to complete your projects and start generating money; it can be a year or longer.
These steps give your potential investors a clear insight of what to expect.
2.1.8. Financial plan
Use this final section of your business plan to input your anticipated income. This projection of your revenue will be based on your market research and revenue growth.
A financial plan is a section that will determine if your business will fail or succeed. For example, if your anticipated income is less than all your expenses, you will then need to reconsider your business model.
2.2. Do entrepreneurs Definitely need a business plan?
The answer to that question is NO. However, entrepreneurs with a well-written business plan have more chance to succeed than those who don't.
2.2.1. what is the importance of a business plan?
1. Raising fund for your business. Your investors or your bank need to be informed about the return of their investments. They expect your plan to cover all main sections, assess the business' profitability before deciding whether or not they want to invest.
2. Clarity in your decisions. A well-constructed business plan brings a clear vision of the process from starting up your business to achieving your objectives. Furthermore, you will gain more entrepreneurial skills, and you will learn about your industry. These skills will help you to foresee possible risks and make better decisions to avoid them.
3. Find talent. A business plan is a document that will convince your partners, your team members and other professional (accountant, attorneys, consultants) to align themselves behind your business ideas.
You will not be able to secure the most qualified workers if they do not trust in your business plan. Your business needs to detail the purpose of your business and its potential growth.
4. Determine the viability of your business. This aspect of the business plan will save you trouble once you have realized that your business will likely fail. Thereupon, you will decide on a new venture or adjust your business without losing time and money.
5. Expand your business. Your business plan will help you to see the goals you have already accomplished, what needs to be revised and decide on the business's new directions.
6. Track your progress. The business plan will keep you focused; it allows you to follow the progress of your business step by step.
2.2.2. Tips to writing a good business plan
Writing a compelling business plan takes time and energy to elaborate, but it is essential to a successful business. Here are a few tips for writing a winning business plan:
1. Define your goals. A good business plan show a clear vision of your business, your capital and investments sources and how you plan to generate profit.
2. Get insight from experts. Before following through with your plan, present it to your trusted partners, your accountants, attorneys or your business consultant.
You can also consult online tools like Liveplan, SBA's, Enloop to help you set up an outstanding business plan.
3. Set a specific action plan. Detail what needs to be done and assign your team members to a precise task.
4. Make smart and attainable financial expectations. Don't just put any numbers on your business plan only to attract investors and find yourself unable to return on their investments.
5. Last but not list, embellish your document. Once you have laid out all your content, check your spelling and grammar before presenting it to potential investors or partners.
A business plan is a must-have tool any start-up business need to have before starting its operations as it helps you to determine the viability of your business, whether it will be profitable or not.
Many businesses fail in their startup phase for lack of a solid business plan. Therefore every business (new ones especially) need one.
In summary, a business plan provides your business with a structured business model, its methods and how to reach your goals. It also gives you a rough idea on the market trends and opportunities. Additionally, it will allow you to track your business's progress to realize your financial projections.
Step 3. Understand your online customers
Now that you have established a clear view of your business, you need to understand the behavior of customers who purchase products and services in your business category. You need to have a clear picture of their lifestyle, their budget, their needs. In fact, you need to put yourself in your customer's shoes.
Every product or service that you provide or every web page that you build have to respond to a specific customer need. You can even walk the extra mile to predict your future customers' needs, and develop products and services from there.
From the understanding of your customer's needs and financial status, develop unique products, services or website contents.
Step 4. Network with online entrepreneurs
Networking, in general, is the process of connecting with individuals or groups from your field of interest and exchange information and services.
Business Networking can be as simple as participating in a conversion about a particular subject of your interest, sharing your ideas and services and, get the same in return.
Many people use networking to find job opportunities, fresh talents, or expand their business. Networking can happen online via social media sites such as LinkedIn, Facebook, Pinterest and more, or, through social events.
For example, you can land the job of your dream through networking by participating in career development events organized by your targeted companies. Also, being active and insightful on their social media pages will be an advantage for your hiring.
In the business world, Networking is a social activity that enables entrepreneurs to meet with each other and their potential customers to share information, form new partnerships and create more business opportunities.
The primary goal of Business networking is to create secure connections between businesses and their clients.
Professional or Business Networking is a necessity to grow your business. Through networking, you will get information about your field of industry, latest technologies, new talents, and ideas on how to tackle a particular block to your business.
As a business owner, you get to learn new perspectives from other people's experiences. You also get to share your opinions and knowledge to strengthen business connections.
As a person, networking enables you to make new relationships, gain self-confidence or even learn new hobbies.
4.1. Types of Business Networking
There are mainly three types of Business networking:
1. Strong contact networks. These are small organizations whose purpose is to gather members from various business backgrounds or specialties. They are referred to as small organizations in the way that they mostly limit their membership to one person per business.
The benefit of this type of network is that it is less competitive. Members of these groups recommend each other's businesses whenever they hear of new opportunities.
2. Informal or casual contact networks. Informal networks have more members compared to the first type. They welcome many people from the same industries, and they are easier to join. The benefit of is this group resides in the fact that you will get to meet more business owners from your community.
3. Online networks. Online network are a more recent type of networking. Online systems are great for busy people and introverts. With more people focused on their device's screen looking for something new, online network is a better place to use your marketing strategies, build your brand awareness and relationships.
4.2. Benefits of networking for entrepreneurs
Nowadays, networking is a crucial component to the success of your business, even though many entrepreneurs are still reluctant to the idea of sharing information and opinions with their peers. What are the benefits of Networking?
4.2.1. Sharing ideas
Networking provides you with the ability to share knowledge with other businesspeople. It is always smarter to offer your help first, and it's guaranteed to reciprocate.
Start by sharing your ideas and experience on a particular subject if it matches your area of expertise. In return, you could ask questions about the hardships in your business; chances are there are people in your group that have experienced the same problems and will be happy to advise you.
4.2.2. More opportunities
Networking groups or events are an invaluable source of opportunities. Most business associates partnerships form through networking. Also, networking enables you to meet your potentials clients and even increase the number of referrals.
Again, you can propose your products or services as a solution to someone's problem.
4.2.3. Increase visibility and good reputation
It doesn't end in regularly attending the events or meetings; being active is as important. Communicate with your clients or other fellow entrepreneurs, offer useful information, and listen to their insights about your business.
The result of being present and offering your support will help you build a reputation as a cultivated and reliable person.
Besides, your visibility will allow you to get noticed and motivate people from your community to recommend your services.
4.2.4. Increase confidence
By participation in events and meeting, new people will turn you into a confident person.
Being confident will transform you into an outspoken person; also it will open your eyes to fresh ideas and give you insurance as you apply them to grow your business.
Moreover, networking presents you with the ability to talk with positive and like-minded people. Associating with those people will be a source of motivation during your business' bad days; who knows you may even meet new friends.
4.2.5. Broaden your connections
In our generation, whom you know is a vital component to progress in your field /business.
Networking ensures you a reliable resource of appropriate connections. It enables you to meet with prestigious people from your industry or to new associates.
For example, it is tax time, and you often have a tough time resolving all the calculations. Through networking, it is easy to find a highly recommended tax expert to assist you.
Additionally, more connections equal to more referrals, hence more sales.
4.2.6. New marketing strategies
In business, it is imperative to keep up with the market change, latest trends and even change in customers' behavior.
Your goal as a business is to satisfy your customers and expand your business. Thus regularly attending business events to meet with customers and other business associates will help you stay current and work on a marketing strategy based both on the market and your customer's needs.
4.3. Tips for networking
1. Take every opportunity to meet people: Networking doesn't necessarily need to happen during events or meetings. You can make connections at a party for example. In this case, be careful not to bore people with your business, start with a more casual conversation to see if they interested. Also, remember to take time and listen to what the other person has to say. Who knows you may even develop new friendships.
2. Follow up and find ways to support others: Keep in touch with the persons you met either by sending an Email or by connecting with them on social media.
3. Always carry your business cards: You don't need to be a very successful company owner or employee to have your business card. It is a more formal way to introduce yourself and your business rather than writing your information on a piece of paper.
4. Choose which type of business networking and join their community: According to your business vision and goals, determine the kind of network you want to join. You can be part of a physical or an online community.
5. Ask for introduction and referrals: Many people shy away from this option, but it is a quick way to get noticed and meet more customers.
6. Meet people from different industries: You may start seeing things in anew and benefit perspective, and specifically find new ideas for your next product.
Briefly, the growth of your business relies on making new connections and meeting more people; after all, the networking role is to help each other move forward.
For this purpose, it is good to step out of your comfort zone and start meeting new people. Try to find a community of like-minded persons, try to attend events regularly and keep in touch to maintain your relationships.
The Wealthy Affiliate platform:
Now that you have read the first three steps on how to start a an online business on a budget, If you are serious about starting and growing a successful online business, you need to join a community of online entrepreneurs. Interact with them, and learn from people who launched and own successful online businesses. Below is my Number One Online Entrepreneur community recommendation:
The Wealthy Affiliate Platform is a growing community of entrepreneurs. It was launched in 2005 by Kyle and Carlson. The Wealthy Affiliate platform has helped many individual entrepreneurs, offering classes and webinars on how to start an online business on a budget, from scratch. Many entrepreneurs with little knowledge and a small budget, have started small online businesses and turned them into strong passive income sources. These are the advantages of joining this amazing community:
Start the Online Entrepreneurship Certification for free and learn all the basics.
Build a Website
Host your websites and manage up to 50 domain within the same secured platform.
Get the opportunity to Network with 500.000+ online business owners around the world.
Step 5. Build a website
A website is an essential piece of building a successful online business. I have written a whole page dedicated on how to create a website from scratch, and you can check it out here.
Conclusion: Time and Dedication
Starting an online business is a dream for many people. However, it is time-consuming, especially in the early stage of your online business. Starting an online business requires tremendous efforts and dedication. On the other side, those who persevere will enjoy the fruits of a passive income, and many of the successful ones with travel around the world, working from anywhere, and share valuable time with their loved ones!
It was my pleasure to share with you the five steps tutorial on how to start a an online business on a budget. It is time to create your online business account and build your business website for free.