How to Start an Online Business

January 28, 2018

For the longest time I stood on the side wondering how I can get an online business up and running? Where do I start? What do I do? How do I hire the right people to help me? How much will I have to pay? It all seemed so complex, until one day I decided to dive right in and find out for myself. 

Since then I read hundreds of articles & books, went to seminars & events, spent time around people who made it, and started slowly building my first app. Today, 3 years and 5 apps later, I can safely say that starting an online business is not as hard as it seems. 

This is a short guide that I wish I had access to when I was first starting. In it, I highlight the basic steps in areas of Product Development, Business, Marketing, and Legal. 

Before starting, I would like to highlight 2 very important points:

1. Steps are not set in stone and might vary (mainly in order) depending on your particular situation.

2. Feedback is the most important part of starting any business. During each and every step, make sure you are collecting feedback from as many people as you can. This will save you a lot of time and money along the way.

Product Development

The most important area and definitely the one you should be spending most of your time on during the early stages. It doesn’t matter how much time and money you spend on building the perfect business plan, financial forecast, or marketing campaign, if you don’t have a good product or service, every thing you do will go to waste.

1. Define the problem you are trying to solve.

2. Who are you trying to solve it for (who are your potential customers)?

3. What’s your solution?

4. Market research

Are there any players in the market? What are they doing right? What are they doing wrong? Who are their customers? Are their customers happy with the current solution? A good way to identify customers' unfulfilled needs is by going on your competitions' forums and scanning for unresolved complaints.

5. Identify your Value Hypothesis and Growth Hypothesis

Value Hypothesis is your assumption about why your product is valuable to potential customers. Growth Hypothesis is your assumption about how your business will grow.

As an example, below are the value and growth hypotheses of my first startup, Restotle:

Value Hypothesis 1: Restaurant owners are looking for an easy way to act on customer data.

Value Hypothesis 2: Customers are always looking for faster service.

Growth Hypothesis: As sales increase for restaurants using Restotle, and more and more customers get used to ordering through the platform, more restaurants would want to join.

6. What is the fastest, most economical way to test the market and your hypotheses? 

Do you really need a mobile app to test your idea? If yes, should you develop for both iOS and Android? Maybe all you need is a Facebook/Instagram page to advertise your idea and measure engagement? Remember that the goal is to get into the market and find out if there is a need for your product as economically and quickly as possible. 

7. Design and Develop a minimum viable product (MVP) to test the market.

An MVP is your product stripped down to the bare minimum. When creating an MVP, focus on developing the single feature your competitors lack and users are desperately looking for. I have seen many entrepreneurs make the mistake of spending too much time and money on building feature-loaded products that no one wants to use (I’m guilty of that too). Before going all in, make sure you test the market.

8. Get your MVP in the hands of potential customers, collect feedback, and iterate. QUICKLY.

The goal during this stage is to get to a point where your product is accepted by the market (also known as product-market fit).

Business

It’s important to spend some time developing a business plan and financial forecasts, especially if you’re going to be asking for money from investors. At the end of the day, the goal from starting any business is to make money, and you should have a clear idea about how you want to do that. The steps below should get you started.

1. How much money do you need start?

2. Where are you going to get the money to start from? Will you use your own savings or look for investors?

3. How will you make money?

In the world of online business, there are multiple ways to make money (also known as business models)

1. Sell your product/service for a one-time initial payment (0.99$ on the App Store for example)

2. Sell your product for a recurring subscription fee.

3. Freemium - users use the basic version of your product for free, but pay for extra features.

4. Ads - Generally speaking, I don’t recommend ads unless they add direct value to users of your product. For example, Snapchat’s “Discover” area is an ad area, but it adds value to Snapchat users.

Marketing

Marketing does not start after building your product. Marketing starts at the very beginning.

1. Prepare and deliver a 1-2 minute pitch.

Know your pitch by heart and start introducing people to your idea and spreading the word. The pitch will evolve over time as you learn more about the industry and get in touch with potential customers and investors. 

Do not get discouraged when you get rejected; this is normal and will happen often. Your goal is not to make everyone fall in love with your product. Your goal is to spread the word and find early adopters. This point is very important; I will type it again. Your goal is not to make everyone fall in love with your product, your goal is to spread the word and find early adopters. Let it sink in.

2. Create a brand

This includes choosing a name, logo, color palette, and a “personality" for your product.

3. Online presence

It’s 2018. Everyone is on social media. You need to be there as well. I believe the best time to start thinking about social media is when you know your business enough to keep creating content related to it.

Legal

1. When do you need to register your company?

Depending on your business and where you live, you might need to register your company before starting any kind of activity, even testing. This is particularly true for businesses with import/export activities.The good news, however, is that in most cases you can start testing your market without any registration.

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