What DO you need to start an online business?
First off let’s talk about what you do need.
A good starter business idea
The first thing you need to start an online business is a solid starting idea.
Be aware that this is not the same thing as a final business idea. As you get started and begin to interact with your market you’ll probably have to change your initial business idea several times. And that’s fine!
However, if you start with a solid starter business idea you’ll more quickly land on your final iteration.
What exactly is a good business idea? This really comes back to the question of how we define a good business.
Simply put, a good business is one that fills the needs and solves the problems of its customers. By solving problems a business creates value. If value is created the market will reward you.
I’ve talked elsewhere about what makes a good business and how value creation is at the heart of this process.
Follow a Process
The second most important thing you need when starting a business is a process to follow.
Starting your first business is a complex and difficult task. Finding a product/market fit is hard enough but doing so while also learning how to build a business is is nearly impossible!
Because of this there are two sensible steps you can take.
First treat your first online business as a bit of a tester: feel free to make mistakes and learn and treat your first online business as a way to build the skill of starting a business.
Second, following tried-and-true process of starting an online business. Instead of wondering what the next is you should follow a course that guides you through the process. There are plenty of online business courses online and I’ve talked elsewhere about the best courses for learning online business. The actual course you choose is not as important as simply having a system in place you can follow along with.
Even if later down the line you find that it was not the best system for you at least you would’ve got momentum and actually got started!
Without some kind of system or process to follow we end up just spinning our wheels and never actually engaging with the process of building a business.
Growth Mindset for Business
Third, it’s important to approach building an online business with a growth mindset. You need to be ready and willing to make mistakes and learn from them.
Building a business, like any complex endeavour, will be frustrating and difficult. Sorry! Online business isn’t easy.
There is no particular way around this and no shortcut. You’re going to need to be mentally resilient in order to deal with the ups and downs and push to the process regardless.
Having a growth mindset is vitally important for any entrepreneur or really anyone involved in building something from nothing.
Having a growth mindset means you believe that you can learn additional skills and always be growing. You’ll be able to roll with the punches.
Having a fixed mindset, however, means that you tend to see intelligence as static and unmoving. Growth is therefore impossible and change is undesirable.
Having a fixed mindset is going to make starting a business infinitely more difficult. Therefore work on yourself before working on your business. If you fail to do this you will hit road blocks that have been imposed by your own psyche and never get anything off the ground.
What do you NOT need to start an online business?
These are the three most important things that you need when starting a business. Having a quality starting idea, a process to put make this idea a reality and a growth mindset will put you in a solid position to have a successful online business.
On the flipside there are few things you do NOT need in order to start an online business. Some of these may be surprising. A lot of these are considered “essential” and act as self imposed roadblocks for many who wish to start their own online business. Do not allow these false reasons to get in the way of you starting a life-changing business.
Starting an online business with no money
You do NOT need a lot of cash or investment to start an online business.
In fact it’s healthier to start an online business with a very limited budget! We want to spend the first stages of development confirming that our idea is sound. We need to make sure that our product matches what the market needs and therefore that we are providing value. This is called market validation or customer development. This stage of our business can be completed for no or low cost.
In fact having too much budget at this stage may even give you false confidence to scale your business before you have confirmed that you are providing true value. Therefore whilst having cash upfront is useful it can lead to a false sense of security and poor business decisions early on.
Once you have proven that your business idea is good and that you are providing value to the market then raising money becomes simple.
You can bootstrap your business by growing it through incoming revenue. If there is money flowing into the business it can be reinvested for growth immediately.
You can also use your proven business model to raise external money via outside investment or a loan.
Again, once you have proven revenue sources it becomes much simpler to acquire capital or cash for growth. Raising money when you have no proven revenue strategy is very difficult because the deal you are offering potential investors is poor! Show them that you’re making money however and the job of raising cash becomes a lot simpler.
Technical skills for online business
Second, you do NOT need to be a coder or a tech wizard to set up an online business.
Harms has written an article on this blog about online business for the tech illiterate.
When most of us think of “online business” we tend to think of San Francisco-based tech start-ups. These companies are indeed full of technological wizard and highly skilled coders.
However these companies are a highly visible minority. The majority of online businesses do not operate at this level and do not require teams of hundreds of coders.
Think of the San Francisco-based / Silicon Valley start-ups as the tip of an iceberg. Yes, it’s highly visible but the majority of the iceberg sits underwater. That is the same with online business: the small minority make headlines based on the cutting edge tech and exciting R&D, whereas the vast majority of online businesses are chugging along making solid, steady cash for their owners quietly in the background.
You are going to have to engage with technology but you will not need to be the next Mark Zuckerberg. If you have a passing familiarity with platforms like WordPress and are handy enough in picking up new tech tools he should be absolutely fine. The majority of the functionality you ever need to go on your online business is now purchasable off-the-shelf.
For example if you want to start an online shop you can now use platforms like Shopify or Squarespace to have an e-commerce store up in a matter of hours. My record with a Shopify store from idea to 1st pound of revenue is two days.
If you are trying to do this even 10 years ago you might have had to hire a team of coders to custom build an e-commerce shopfront for you at great cost even before you’ve made your first sale.
Nowadays, off-the-shelf solutions like Shopify allow even the least technologically savvy person to very quickly learn the skills and deploy the shopfront in a short space of time.
More important that having the tech skills yourself is having access to someone you trust who DOES know about this sort of stuff. This is mainly to stop you from being taken for a rider by freelancers and agencies who might take advantage of your lack of knowledge. If you know someone who knows their shit talk to them first to avoid making expensive mistakes.
Building a lean online business
Third, you do not need to have your business perfected before you go live. In fact I recommend against this!
Some people are natural perfectionists and want everything to be 110% before they launch.
The truth of the matter is ,however, that we do not know how good our products and services are until we launch them into a live marketplace.
It simply does not matter how many iterations of a sales page (for example) we personally go through.
Our opinion is that of a single individual. Our opinion is just that: an opinion.
What we are really interested in is how the market, our customers, respond to a sales page. There is no way for us, an individual, to know this. We can have opinions sure, perhaps even educated opinions. But until we open the doors to real customers we have no idea how the market will respond.
You need to be comfortable with testing your online business. And that means going live.
A lot of us like to remain in stealth mode as long as possible and then launch in one big Hollywood style gala. This is fine for product launches if you are an existing large company who can rely on PR and existing distribution channels. Even then it’s not ideal nowadays and is a bit old fashioned.
For you though, as a new online business, this is totally the wrong way to go about things.
Instead deploy the lean methodology of releasing as soon as possible, seeing how the market reacts, and making changes based upon the markets reactions. Iterate based on feedback so that you are constantly improving.
We simply do not need all of our ducks lined up in a row before we launch. Most of the time this is simply a psychological excuse because we feel we are not ready for the world to see the value that we have produced. Get over yourself and launch!
Summary: What do you need to start an online business?
Wrapping up, we looked at what you need to start an online business as well as what you really DON’T need.
What we do need are:
- a solid starting business idea that provides value to the market.
- a process to follow along so we can practice the skill of starting an online business
- a growth mindset to make us resilient to the challenges we’ll inevitably face.
We’ve also looked at three items that you don’t actually need before you launch launch an online business.
- You do not need large amounts of capital or cash to get going.
- There is no need to be a technological savant coding all of their technology from scratch.
- And you do not need everything to be perfect before you launch.
In fact if you insist on any of these items before starting your online business you will be actively hindering your chances of success. It’s much better to remain scrappy, nimble and flexible and react to what the market is telling you. Having too much cash, technological expertise or perfectionism can get in the way of this required flexibility.
Like with all of our posts of this type the message is the same. Get started. Now.