How to Start a Small Online Business: 9 Steps (2023)

Want to start a successful online business?

You’re in the right place. Because today, you’ll learn how to start an online business from home. 

Ready to learn more? Read on!

Step 1: What are online businesses?

Step 2: Choose a business model 

Step 3: Find an online business idea

Step 4: Do market research and define your target market

Step 5: Set up your business legally

Step 6: Create a strong brand identity

Step 7: Market your business

Step 8: Grow your business

Bonus: How to productively grow your business

What are online businesses?

An online business is a small business that you operate fully online. You can start an ecommerce store and sell physical products or a service-based business and sell services. 

Or, you can sell other people’s products or services (also known as affiliate marketing). You can even sell digital downloads like online courses.  

But why should you start an online business? Let’s find out.

The benefits of an online business 

You’re not alone with your dream of starting an online business. Online businesses are more popular than ever. In fact, Statista estimates that by 2027, half of the workforce will be self-employed. 

The beauty of an online business is that it doesn’t cost much to get started and you can scale much faster than a brick-and-mortar business. And because you ultimately just need your laptop and an internet connection, you have the freedom to work from anywhere and be your own boss. 

What’s more, you can start an online business that truly works for YOU so that you get to have a bigger impact in the world.

Why I started my own online business 

Those were the reasons I started my own online business. 

In my mid-20s, I found myself in the corporate world, leading a team at an ads tech startup and overseeing a budget worth millions. 

While I had “made it,” I didn’t feel fulfilled. 

I desperately wanted to find a way out. But the thought of giving up my secure paycheck? I’m MASSIVELY risk-averse, so you can guess how uncomfortable that felt to me. 

Things took a turn for the worse when my family had to deal with several life-threatening emergencies. (My dad had an emergency heart surgery, my mom was diagnosed with cancer, and my sister almost lost her eyesight.)

And suddenly, I had found my “why” for starting a business. I wanted to have the freedom to spend as much time as I wanted with my family without having to depend on vacation days. 

And boy, am I glad I took that leap. Today, I run a multiple 7-figure online business and have helped thousands of people start their own online businesses. 

In the same way, my students start their businesses because they want more freedom, income or fulfillment. Here’s how four of my students took their dreams and made them a reality: 

These success stories aren’t rare. Starting a new business is not easy, but it is doable. 

The first step you need to take is to get clear on your business model. Here’s how. 

How to choose the right business model

Look:

You might think that starting a business requires you to have unique online business ideas. You know, the “next” Amazon or Facebook. 

Not true. You can start a small business online with a far simpler business idea. And this business will allow you to quit your 9-5 in months instead of years. 

In fact, while 50% of businesses fail within the first five years, you can significantly minimize your risk with the right business model.

First, you need to figure out what to sell online. Let’s take a look at some of the best online business ideas out there. Then, we’ll look at how you  can find YOUR business niche and idea.

#1: Ecommerce website

If you run an online store, you sell products online. Or you run a dropshipping business and act as the middleman. 

And sure, online shopping is more popular than ever. 

But the problem with product-based online businesses is that you often need to spend a lot of time finding products to sell online. And this model comes with high startup costs (you need an inventory). 

Plus, it takes time to get enough customers to make your online store profitable. If you factor in things like shipping and taxes, profit margins aren’t that high for ecommerce companies. 

Let’s say your product costs $50 and your profit margin is $20. Your ecommerce website needs to generate 50 sales to get to $1,000. And that’s JUST to make $1,000. If you factor in costs like paid ads (to market your business), you need really big volumes to make your business profitable. 

Oh, and dropshipping? They have something of a scammy reputation. 

Pros of an ecommerce business 

An online store can be a scalable business for more seasoned entrepreneurs. (Read: You’ve built a business before.) 

Cons of an ecommerce business 

An ecommerce site is a difficult online business idea for new entrepreneurs if you plan on replacing your salary with your business profits. You need *huge* volumes to make an ecommerce business work. An online store also requires a lot of upkeep (shipping, returns, and so on). 

#2: Affiliate marketing

Affiliate marketing is another option. With this business idea, you refer people to other businesses and get a commission on your referrals.

Sounds great, right? An easy way to earn money online. 

Not so fast! To make affiliate marketing sustainable (you only get a few percentages of each sale), you’ll need a lot of traffic. And that takes time to build. 

Pros of an affiliate business 

“Passive income” when it works. 

Cons of an affiliate business

Really hard to build up the traffic you need. Not a great business idea if you’re looking to replace your 9-5 salary.

#3: Blogging

Next up? Blogging. As a blogger, you usually make money from ads, sponsored content, or affiliate deals. You build traffic to your blog and blog posts. 

But as with affiliates, you’ll need a lot of traffic before you ever see even the slightest profit, even with profitable blogging niches. Both blogging and affiliates are business models that can take years to build.

Pros of a blog 

“Passive income” and easy to manage when it works.

Cons of a blog

It takes years to build up the traffic. If you want to quit your 9-5, this isn’t the business idea for you.

#4: Freelancing

Freelancing, selling a service, is a way better option. Why? Because you can get started right away by selling a skill you already have. For example, graphic design, writing, or admin.

But there’s one problem: As a freelancer, you sell your time. You’re like an employee, but with a lot of different bosses. Still, it can be a good place to start if you want to start earning money from your business as fast as possible.

Pros of a freelancing business

This business model can help you quit your 9-5 fast. 

Cons of a freelancing business

Freelancing is an independent form of employment. If you want to start a business online, you need a different business idea.

#5: Coaching and consulting

I’m a huge fan of coaching and consulting. It’s how I got started and was able to quit my job within months.

You can get started right away with a skill you already have. And because coaches and consultants have a higher perceived value than freelancers, you can get paid more on an hourly basis. A new freelancer might charge $50/hour for their time, while a coach or a consultant can ask for $100 or more.

Plus, because your rates are high (we’re talking four figures for one package), you only need a few clients to become profitable. 

Pros of a coaching business

A profitable business idea that works for new entrepreneurs. You can relatively quickly replace your 9-5 salary. 

Cons of a coaching business

You do need to have a skill that you sell as a coach/consultant. (However, if you’re in a 9-5, you probably already have skills people are willing to pay for.)

#6: Digital courses

Products and services have one problem: They both require you to spend money and time on sourcing prodcuts. Digital products are quite different.

Digital courses are a great way to scale your coaching business. Again, you’re selling something you already know, but you’re doing it in a more hands-off, automated way. And if you do this as a continuation of your coaching offer, you know you have a target audience who is happy to pay higher prices for your self-study courses. 

However, to sell digital courses, you need an audience, which can take time to build.

Pros of a course business

A profitable and scalable business. 

Cons of a course business

It takes time to build up the traffic you need for selling courses.

Profit = your revenue minus the time and money you put in.

Which is the best online business to start? 

The easiest and most profitable business to start for new entrepreneurs is a service-based business, such as a coaching, consulting, or freelance business, so I recommend you start there. 

If you start at a price like $1,500 for a 3-month coaching package, you can quickly replace your salary. (This price point is reserved for your first few clients. Once you have some testimonials, you can increase it.) 

You need far less website traffic and/or investments than if you go for one of the other business models. 

Want to learn more? Watch this quick video:

A few words about business plans…

Before we look at how to find your business niche, let’s answer one burning question: 

Do you need a business plan? 

My answer? No. 

A business plan is necessary when you’re applying for grants or funding. But if you’re starting a coaching business from home, you don’t need to spend time on a business plan… And probably shouldn’t.

You see, there are better things you can do with your time to move your business forward (such as finding a niche and getting your first clients). 

That said, if you feel like you want to create a business plan to get your business strategy on paper, take a look at my quick guide on how to write a simple business plan. 

Now, let’s look at what it takes to find an online business idea. 

How to find your niche and business idea

Think you need special skills to get started as a coach or consultant? 

Think again. 

Instead of learning a new skill (which could take you years), you can start with the skills you already have. 

Just like I did, when I first started my digital advertising business. 

Need a few examples? 

Some online business ideas my clients have come up with are:

• Relationship coaching
• Career coaching
• Marketing and sales consulting
• Mindset coaching
• Health coaching
• Copywriting 
• Brand consulting   
• Spiritual coaching 
• Video coaching
• Stress/productivity coaching

How to find your niche

How did I come up with my online business ideas when I started my business? I looked at a few things:

What skills had I learned in my 9-5? 

And what did people frequently ask me about? 

You can use this to figure out your own skills and what you want to sell online.

Make a list of all the skills you’ve learned in your career.

Then, look at things you get questions about all the time.

Maybe it’s your nutrition, your amazing singing voice, or your public speaking skills.

And finally, look at your hobbies and interests. What skills have you learned on the side?

Then, think about people who might want this, AKA your target audience. What’s your niche business? Relationship coaching for men? Career coaching for executives? Brand consulting for creative businesses?

That’s how you find your niche.

And if you want more online business ideas for inspiration, you can find 121 of them here.

Don’t start a business based on your ‘passion’

I recommend you get started in a niche you know instead of something you’re passionate about. 

Why? Because if you go for something you’re passionate about but don’t have experience in, it’ll take you a long time to get to a point where your clients will trust you with their business.

If you start a business in a niche you have experience in, you’ll be able to build your business much faster.

And that’s how you come up with business ideas. 

To recap:

• Use a skill you already have.
• See if it’s something people want to and can pay for.

Next: 

Let’s use market research to drill down your business ideas into one, profitable offer. 

How to do market research and define your target market

How do you know if your business idea and niche will be profitable? 

By researching your market.

Do market research 

Why is market research so important? 

Well, I can speak from experience. My first online business (Excel consulting) partly failed because of my lack of research. I hadn’t taken the time to figure out who my potential customers were and so I didn’t know how to talk to them or what to offer them.

Market research essentially means that you research your target market to understand what they want. 

People have to be WILLING to pay for what you’re selling. 

Not only that, but your client’s ability to pay is equally important.

If your potential customers don’t have the money to pay for your services, you won’t get far.

Interview your target audience 

But how do you figure out if your target market is able and willing to pay for your coaching or consulting?

Get your ideal clients on the phone and ask them. 

Hold short “interviews” where you chat about why they want your services. Don’t just look for answers like “I want to be healthy.” But look for those underlying, deep desires – “I want to look good in my swimsuit” or “My diabetes is back. I want to be around for my kids.” 

To find people to interview, you can connect with them on online forums and different social media platforms. For example, my students use platforms like Facebook groups and Reddit to find people who are interested in their services.

After you’ve had a few of these calls, you’ll have a much better understanding of who your target audience is and how you can help them. Not only will you feel more confident about your business idea, but you’ll also be able to create a business that truly helps people. 

Now, it’s time to set up your business. 

How to start a small online business

How do you find a great name for your business? What should your business structure look like? 

Let’s take a look at how to start an online business.

Choose your business name

How do you choose a business name? 

The thing is, you shouldn’t spend too much time searching for the “perfect” business name. 

If you’re starting a coaching business, you actually don’t need a creative name.

Instead, you can just use your own name and move on. (If you buy a domain name, you’d buy something like www.janesmith.com. If your name is so common that the domain name is already taken, you can add a word that describes your business. For example: www.janesmith-consulting.com.) 

Still feel like you want a more “creative” business name? Use the Shopify Business Name Generator to find ideas. 

Set up your legal structure

Quick disclaimer:

This article is not meant as legal advice. I actually recommend that you consult a legal expert for tailored legal information that applies to your specific situation. This is just a general overview and doesn’t necessarily apply to your situation. 

Legal structure 

Now that we have that out of the way, what should your legal structure look like? 

This depends on the business you’re building. I recommend that you go with the easiest option because you can change your legal structure later on. 

If you’re starting a business by yourself, a sole proprietorship or a limited liability company or LLC can be good options. (The main difference is how much liability you take on as a small business owner). You can read more about the different business structures here. 

To register your business, take a look at this SBA guide. 

Business license

Something I get questions about now and again is:

“Do you need a business license to run an online business?”

The answer is no, not for most businesses. You will need a license in some industries (such as law, health, and mental health). 

Taxes

Your taxes are important, too. However, I recommend most new business owners to work with a tax professional and/or use small business accounting software. Unless this is your area of speciality, you’ll get far better results than if you spend hours trying to figure out things like your sales tax rate. 

(Just be careful and choose a great service provider. If there’s one thing you don’t want to get wrong, it’s your accounting.)

Once you have your business set up, it’s time for the *really* exciting part. Developing a brand for your business. 

How to develop a brand identity for your online business

How do you create a stand-out brand? After all, a brand will help you stand out on social media among a sea of other online businesses. 

My five-step branding methodology helps you do just that. 

Answer these questions:

• How are YOU different? How are you/your business different from your competitors? Think: Personality, voice, all those things that make you unique. 
• How is your “secret sauce” different? How do you help your customers get results and how does that differ from your competitors? Alternatively, if you sell products, think about what makes your products special. 
• How are your values and beliefs different? Does your business stand for something? Make it clear. 
• How is your audience different? Do you serve a specific target market? That’s what you’ll want to highlight. 
• How is your product different? Do you offer a better service than others? Do you make things easier for clients? Think about how your product features are different.

Once you’re clear on your brand identity, it’s time to market your business.

And here’s how.

How to market your online business

Hopefully, your answer to the question “Should I start an online business?” is yes. But how do you take your idea and build a real business with real, paying clients? 

Let’s find out. 

Choose a pricing structure

The first thing you need to figure out is your pricing.

One of the reasons I’m such a big fan of starting an online coaching or consulting business is because you can charge higher rates – and a big chunk of that money is profit. A big reason why I love this type of business versus, say, ecommerce businesses. 

As a coach, you only need to sell five packages at $2,000 to earn $10,000. With an ecommerce store (assuming you sell a product that costs $200), you would need to sell 50 products to hit that same revenue. And your profit margins would be considerably lower because you have to pay for your products, shipping, and more.

But what will your pricing look like as a coach?

Example: My first offer

Take me as an example.

When I first started my digital advertising business, I didn’t know how to price my services.

My first client ended up paying me $5,000 for a 6-month package. (I based this price on my salary at the time). 

She was willing to pay this rate because I had already shown her my value by helping her for free. 

But then I hit a wall. People repeatedly said I was too expensive.

And so I had to go back to the drawing board.

Get social proof

What did I realize? In order to scale my business faster, I had to get more social proof.

And that was best done by lowering my prices for the first few clients.

So I went down to $1,500 for a three-month package. As a result, I quickly picked up a few more clients, got testimonials, and went back to my normal rates.

I frequently recommend my clients to start at this price point, $1,500 for a three-month package, for the same reason.

You’ll pick up clients faster and raise your rates. 

Use the most effective marketing strategies

The next step is to promote your business. But how do you choose the right marketing strategy for your business? Choose a strategy that works for YOU. 

Here’s what I mean. 

How I found my target audience online

When I first started my career coaching business, I was working with a copywriter.

I happened to ask her where she got her clients. She said: Facebook because that’s where the small business owners were hanging out at the time. 

That stuck with me. After I joined a Facebook group for entrepreneurs, I quickly realized that I could grow my Facebook ads business with the help of that group.

Fast forwards a few months and I had grown my business to $106,000 tthanks to the relationships I built in those groups. 

Does it mean YOU should market your business in Facebook groups?

Not necessarily. Instead, think about where your clients hang out online and on social media. Use that channel in your marketing. 

Are they on social media sites like LinkedIn? Or Reddit? Instagram? TikTok? 

How my students found their clients

For example, my clients CAnna, a career coach, found her first clients on LinkedIn. 

Emily, a career coach, found her first clients on Linkedin, and later, Pinterest.

Ruby, a relationship coach, got her first client on Reddit.

Use social media marketing in the right way

The reason social media marketing works is because it helps you connect with people. 

Instead of going on social media with the intention to get clients, you’ll want to use these platforms to give value.

And not just facts and figures, but to show yourself as a human. 

Entertain people by telling them stories and share fun content because that’s what people are looking for on social media. 

Also, be consistent. 

Show up for even 30 minutes a day to give value, answer questions, and be helpful to keep yourself top of mind for your clients. 

Want to learn more about building your coaching or consulting business? Read my step-by-step guide on starting a coaching business here. 

Create a business website 

Notice anything specific? 

That’s right. We haven’t looked at building a website just yet.

The reason is simple:

A website is not one of the things you need to start an online business.

I don’t recommend small business owners to set up a professional website before they have a few clients.

Instead, start lean and focus on what will bring in most clients right now.

Once you have your clients you can start thinking about your website, web design, and all that goes with it. 

I made my first $5K after launching my coaching business without a website or even a sales page. And even up until I had made $20K in my business, I used a standard WordPress theme that cost me $150.

So if you haven’t gotten your first clients yet, focus on your sales first.

Then, when you’re ready to focus on your website, don’t go all in on web development. Instead, build a simple site with a WordPress theme. You can read my guide on how to build your own website here.

Set up your email marketing

Do you need an email list? 

Email is a great marketing tool (email generates $42 for every $1 spent). But you shouldn’t use it just yet. Start with figuring out your idea and get your first few clients.

Then focus on email marketing. 

In the long run, you do want to build an email list, though. That’s because with email, you build your own target audience. 

My go-to email list builder for new entrepreneurs is Mailchimp or Active Campaign. 

And remember: You’ll have a much easier time building your list than if you’re starting from scratch because you’ve built all those relationships on social media. 

Other online sales strategies

Now you might be thinking:

“But, Luisa, wait! What do I do with all the other strategies out there? You know, search engine optimization, blog posts, influencer marketing, pay-per-click ads, growing a YouTube channel, Instagram, webinars, sales funnels…”

Look:

Everything has a time and place.

Your FIRST job is to get your first few clients. 

Then you’ll want to use what’s already working to build your business to the stage where you can quit your job.

THAT’s when you can start thinking about other marketing campaigns, such as organic traffic, your blog, your website and so on. 

And that’s how to start an online business.

How to grow a successful online business

The last step? Growing your business with online courses.

Service businesses are great for getting started, but at some point, you’ll hit an income or money wall. You can only offer so much of your time.

Fortunately, courses help you take your coaching program and sell it to more people without having to work more hours.

Here’s how to create and start selling your course.

How I scaled my business to over $1M in 11 months

After my schedule filled up with coaching clients, I knew I had to find a way to grow my business without adding on more hours. I had generated six-figures in four months and decided it was time to turn to courses. In the next seven months, my revenue crossed the seven-figure mark. 

This business growth didn’t happen overnight. I went through a few different course launches that I kept perfecting and improving. From an $8,000 launch to a $100,000 launch to $800,000. 

The best part? After I had created my course, it was an asset I sold over and over again without having to buy more products or pay for inventory. 

As you can see, courses can be a great way to scale your business without having to take on more coaching or consulting work.

Now, let’s look at how you can use this in your business.

What course should you create?

Yet another reason to love coaching! When you’ve worked with even one to two people on a one-on-one basis, you know exactly what type of help they need. So, you turn your coaching program into a course business. 

Take my client Estelle. She was able to turn a highly personalized service, energy healing, and create a course that people love.

And she’s not the only one.

There are tons of niche courses that sell very well.

For example, one of my students sells a course that helps people use herbs to lose weight. 

Other courses out there include courses that teach you how to build and live in tiny homes, brush lettering with watercolor, how to find dream orchestra jobs, astrology, how to learn a language in three months, and how to travel with flight points. And these are just a few examples.

Your online course strategy

You don’t need a lot to start your course business. Contrary to popular belief, you don’t even need a massive email list to get started.

In fact, with even 500 subscribers and normal email list conversion rates (getting 1-3% of your subscribers to turn into paying customers), you can get your first 5-15 course participants.

How to grow your course sales

Once you’ve sold your first course and you know it works, you can take that, the results your course participants have gotten, and turn it into a signature course.

Selling your signature course

To start out, I always recommend my clients to use live webinars to sell their courses.

Why live webinars? Because at this point, you don’t want to sell your course one-by-one. Instead, you want to have a system in place that allows you to sell to more people at once.

And that’s exactly what a webinar helps you do.

How to go evergreen

When you have a tried and tested course you KNOW will sell, it’s time to go evergreen.

What this means is that you sell your course on automation. You could have organic traffic, paid ads or other traffic sources sending traffic to your sales page. 

And these systems will eventually allow you to create an online business with all the flexibility and freedom you want.

How to be productive when growing your online business

Now you know how to start an online business. 

It’s time to put your business strategy into action. 

But what a lot of people ask me is this:

“How do I make time for growing my internet business?”

And I get it. You might have a busy 9-5, a family, and not that much time to build your business.

No problem. You can tailor the strategies above to fit your busy schedule (more on it below).

But my strong advice is that you don’t hand in your notice before you’re ready. 

Double your salary first

You see, a mistake I see a lot of new entrepreneurs make is to quit their day job too fast.

Here’s the thing:

Running an online business from a place of stress and frustration won’t get you anywhere. 

Instead, start your online business from home but don’t hand in your resignation until you’ve doubled your salary. Why? Because you don’t want to take on the wrong clients or make bad decisions out of desperation. 

If you double your salary, you’ll be able to cover online business costs and your taxes.

Schedule your tasks

Wonder how to make your side business and 9-5 work at the same time?

Here’s what I did to work on my online business while working as a team lead at a NYC startup: 

I scheduled everything.

You don’t need hours and hours every day to work on your business.

But you do need to be strategic with your time. That’s what will help you quit your job faster without staying up until 2 am every day.

And that’s what scheduling will help you with. I used my lunch breaks, evenings… And thanks to having pre-scheduled all my tasks, I never had to put any energy on figuring out what task I needed to be working on next.

Adjust your mindset

Finally, a mistake I see too many new online business owners make is to think:

“I have to succeed in this and that amount of time.”

That kind of thinking will only set you up for failure. Because you’ll get discouraged every time you get rejected or “fail.” (Believe me, it will happen! I got 30 no’s in a row when I first started selling my offers, just to name one of my many struggles.) 

So switch your mindset to, “what can I do to make this work for me?” 

See your business as something FUN that you get to enjoy.

That’s how you eventually build an online business. 

How to start an online business and quit your 9-5

That’s it! Now you know how to start an online business.

Want to take what you’ve learned and become a business owner? 

I want to make this as easy as possible for you. That’s why I’m showing you my entire system for how to go from your 9-5 to a successful online business. 

Here’s what you’ll learn:

• My exact system for building a successful business and replacing your salary BEFORE leaving your 9-5.
• The exact content you should share on social media that will make people crave your offer and land your first clients. (And the exact content I used to get my first clients!)
• How to grow your hugely profitable and meaningful business in the most strategic way. 

Get my free Ultimate Guide and learn how to grow a 6-figure coaching business from scratch: