When you're starting an online business, or any business for that matter, your success or failure will frequently depend on how much planning and forethought you put into the business before you ever step out your door or connect to the internet. Here are the steps you should take to make sure you get yourself off on the right foot.
The first thing that you'll need to consider before you begin starting an online business is what, exactly, will you be doing? What kind of business are you interested in developing, growing and running? One of the best things about starting an online business is that, with a little creativity, you can truly make money doing what you love - no matter what it is!
Once you have a good idea what your niche is going to be, you will need to define what kind of work you're going to be doing. Will you make money from your website by building an information rich site that brings in visitors every day? What about writing daily blog entries on a topic that requires constant updates? Will you buy and list items for sale on eBay or start your own eCommerce store? Will you be investing in FOREX funds or participating in day trading to grow your money with the stock market?
By defining how your business will make money, you will be able to formulate a good organizational structure and plan for success in the next step.
When I was first starting an online business, I knew I had no desire to buy or rent an office building, have a large staff, my own warehouse or any complicated publicly traded stocks. I also wanted to create a structure that would make me money without needing daily or even weekly attention from me. This is so that I can commit at least 6 months out of every year to traveling. Finally, I didn't want to take out any small business loans during start-up. This was because I have horrible credit. I might take one out at some point for expansion, but I wanted the business to be self-sufficient before it took on any debit.
So, the challenge of my business planning was to create a self-sufficient structure while keeping it as automated and small as possible while still making a good profit.
Your choices in starting an online business may be different - you might dream of having a large business that has stock options and flagpoles in the front of your building. I'm just giving your my example so you can see how my personal goals informed my structure, which then informed my planning and choices.
So here are the structure choices I made based on my stated goals:
Sole Proprietorship - This was the cheapest and easiest choice. Since I wasn't starting an online business doing anything that was likely to get me sued and which didn't have outside employees it wasn't a huge risk to take.
Drop-shipping where necessary - I could save a bunch of money if I rented a warehouse and hired folks to do picking/shipping of my products for me. I've know this since starting an online business. However, I chose to do exclusively drop-shipping when I deal with hard goods because it's something I can do all by myself without needing to hire anyone. When I want to be more hands-off with it, I can easily hire someone to process orders for me or set up integrated/automated order processing, depending on which is cheaper.
Website building instead of Blogging - I used to blog professionally. In fact, my one of my first work at home jobs was blogging. It requires output each and every day or lots of thinking ahead in order to get established and grow. I prefer working in cycles of several highly-productive days followed by several non-productive days. Because I want to be able to spend up to 6 months away from the day-to-day of building a business, I know that starting an online business dependent on daily blogging was out. Building static websites is a better use of my talents and energies, plus it allows me to indulge my capricious moods. If I don't add new pages for 6 months, no one minds so long as the existing information is good.
Move away from service-oriented to information-oriented within 1 year - I got started by building websites and doing SEO for other folks. However, there is only so much of this that you can do before you run out of time or become just a manager of others. Instead of spending 20 hrs building a simple website, I can create a digital product that teaches folks how to build a simple websites once and sell that many times to folks. Less overall time for me, and longer earnings potential. Better for clients too because it's cheaper to buy my eBook or video download or whatever than to hire me. However, when I was starting an online business service-oriented work paid the bills and allowed me to learn as I earned. Not for the long-term though.
Outsourcing Employees - Learning how to outsource work was one of the hardest learning curves for me. You can probably tell that I'm a bit of a control freak. I knew that starting an online business would eventually require me to leverage the work of other and I have absolutely no desire to live the lifestyle of a 'boss'. However, I LOVE Odesk for outsourcing. Their system allows you to outsource and track the work of folks who you hire to work with you with ease and comfort (and control for my fellow control freaks - yay for minute-by-minute screen capture of billed hours).
Planning how growth will happen when you're starting an online business is a constant trial and error enterprise. Here's my recomendations from my experience:
Start with a plan of what YOU will do to grow the business each month/week/day. I plan in 3-month segments, I've found that in the online world things change so fast that plans which are longer than that quickly become obsolete. Your first growth plan should just focus on what, exactly, you will do to grow the business. Don't make any of these reliant on specific results (ie: when I get $100/day income then I'll move to step #4). Rather, plan only the things you know you can control (ie: I will write 200 words per day on my eBook for the first month and 500 per day for the second month because I'll be better at it by then). Your growth estimates will come later.
Track everything. How long does it take you to write a new webpage/blog entry/tweet/press release/etc.? What kind of traffic/sales/clicks/etc. does each endevor you complete produce?
Once you have some data, develop a concept of 'stages of development' which will be triggered by certain growth indicators (traffic or revenue for example). These shouldn't be time-bound goals, rather reaching them at any point will trigger new actions from you (ie: paid advertisements, hiring an assistant, etc).
From there, just experiment. I take time to plan daily and weekly, constantly revising my 3-month plans based on my 3-month goals each time. That's because I love it - you might plan less than that, just make sure it's a plan that works for you.
When you're starting an online business, you may or may not decide to plan an exit strategy. The wisdom of professional business strategists is mixed on whether you should or should not plan your exit from the beginning. I think it's a matter of what you want from life.
I have an exit strategy for my part of our business.
My husband doesn't want one, he wants to do this forever.
For me, I know that my passions and desires change frequently. There will be a day in the not-to-far future when I will want to spend the majority of my time doing something other than building, growing and managing a business. I used to think that this meant that I shouldn't be starting an online business - I clearly wasn't passionate enough about it if I could see a future when I would be doing something else.
Eventually I forgave myself for being me and realized that I should and could throw myself fully into do what I want right now. However, there are things I can do from the beginning that will make it easier to step out of this role at some point in the future.
My pre-exit strategy is something like this:
At this point, my involvement will be minimal and I can focus my time and energy on developing other business enterprises or whatever I'm passionate about at that point. If I decide at any point that I would prefer to sell of part of the business, having incorporated at the beginning and having an established investment portfolio will allow me to continue getting income even without the active business.
Whatever your exit strategy, or lack of one, you owe it to yourself to think about it even if you're just starting an online business and you haven't registered so much as a domain name yet.
If you weren't already doing it, write this all down. It's a pretty basic business plan structure, but it will help you understand what you're doing and where you're going with it all. Writing it down, in my opinion, helps make it all a little bit more real. Don't worry about using any sort of formal business planning structure unless you're needing to apply for a grant or something, just get it down on paper.