Online businesses are so attractive these days. Code up a little app, wear flip flops to work, and play ping pong all day long. Right? Nah… Not really.
I’ve spent a little over a decade running online businesses and helping early founders with their startups. I often get asked common questions on where to start with a new online business or idea. So here are a few pieces of “real” advice for anyone considering a new online business.
1. Analyze Your Bandwidth
The first step is to see if you actually have time to do this. Many people love the idea of starting an online business, but very few have the time required to execute it. Somewhere along the lines people get this imaginary vision of how it will work…
Here’s what they think will happen:
- Come up with the idea.
- Hire a firm in India for 1k to build it.
- Watch the money roll in.
This kind of thought process makes it easy to assume you could do this as a side-hustle with a couple hours per month… which is completely wrong. Unless you’ve got lots of cash to blow and you’re exceptional at managing things/people, this approach will get you in trouble and cost you more time [and money] than you can afford.
General rule of thumb – Allocate at least 1 hour per day to work on your new business. There will be plenty of things to do early on, so plan on putting actual time aside.
2. Put a Basic Business Model Together
One of the most common mistakes I see beginning online business operators make is the lack of a business model. To be clear, this is not a business plan. A business model is the high level plan of the business. It’s a super condensed version of a business plan. It should be something you can explain in 60 seconds. It should also be something that comes before you do anything else!
Whether you’re building a new app or launching an online store, you should be able to sum up how your business plans to operate and drive revenue.
Here are some simple things to consider:
– Our business will provide __________ (product or service).
– Our business will sell this product/service to _____________ (target demographic).
– Our business will make money by ______________ (revenue model).
– The general expenses for operating our business will include ________, _________ and _________.
These are the basic building blocks for any business.
So please, louise, think those through before you start buying domains and hiring contractors. Once you have this in place you can start on some financial models, which is a topic for another day.
3. Research Your Space
Before you leave your day job and jump in head first, do a little research in your space. What does that mean, exactly?
- Google everything related to your specific the specific product or service you have in mind. And do that for 5 days, not 5 minutes on your lunch break. See if you can dig up some general benchmark numbers around market size, total addressable market (TAM), etc.
- Make a list of the major leaders and competitors in your space. Study them by viewing their website, their social profiles, etc., to see how they market and operate online.
- Profile your target demographic so you know who you’ll be selling to and why. This doesn’t have to be exhaustive, but you should have a good idea of your target audience and buyer(s).
By doing research you’re giving yourself a head start, because most people are too naive and lazy to conduct proper due diligence.
You’re also validating your new business – i.e. proving that it’s a smart and worthy investment. You’ll find lots of useful information as you research, some of which may excite or deter you. Either way, doing some research can only help.
4. Find A Mentor or Role Model
The beauty of the internet [and online businesses] is that most people share what they’ve learned. There are tons of successful entrepreneurs and thought leaders sharing their experiences and tactics for business every single day. So go find the people that have already done some variation of your business and follow them. Read their blogs, listen to their podcasts, buy their books, etc. They’re literally offering you free advice, which is super valuable.
However, be cautious of who you follow – specifically the folks that make things seem quick and easy. I call them easypreneurs. People who say things like “anyone can do this” or “10 Tips To Make 10k in 10 Minutes.” These so-called entrepreneurs and thought leaders are toxic. They constantly promote how easy it is to make quick cash online, usually in the form of direct response marketing. While these tactics may seem easy on the surface, they’re certainly not. And more importantly, they don’t yield long term success.
So please, stop listening to anyone who preaches that things are easy. There are tons of online companies in every industry fighting for business every second of the day. It’s not like it was 10-15 years ago when the internet was still new and most people hadn’t adopted. Everyone is online now and everyone knows the basics. So in that sense it’s actually harder than ever to start an online business today. You might be better off becoming a farmer if you really want the easy way out (although farming is extremely hard, too!).
Follow people who promote that hard work pays off.
People like Gary Vaynerchuck, Jason Fried or Noah Kagan. These guys have done the dance and they speak the brutally honest truth. They can guide you into the right mental state. Ignore anyone who says it’ll be easy, because it won’t be.
5. Get to Revenue ASAP
Many aspiring entrepreneurs think it’s cool to raise money and hire people before they’ve actually created real revenue. That’s equivalent to a person bragging to their friends about how they just racked up 50k in credit card debt to use on their new lifestyle.
Real businesses create real revenue. Period.
Don’t even consider raising money unless it’s the only option you have. And if that’s the case early on, you better be ready to grind… because the second you take an investor’s check is the second the clock starts ticking. Your business is no longer completely yours. Now you have to answer to people and meet expectations, among a plethora of other demands.
So instead of trying to raise money, put the work in yourself and make some money [yourself] early on. Then you’ll be able to grow on your terms and scale the business organically. You’ll also appreciate that money so much more than taking an investor’s check.
6. Plan to Work HARD
Starting a business is a lot of work, whether your online or offline. It takes time and endurance to build something meaningful. The payoff can be great, but that’s years down the road. The early days involve long hours and loads of frustration as you tackle early challenges like product market fit. So forget the easy, comfortable pace you’re accustomed to at your day job or home life. Get rid of those thoughts and get ready to hustle. Think of it like you’re the last place team in your favorite sports league, because that’s what it’s really like. You’re the new kid on the block who needs to prove themselves. You have to run faster, jump higher, and work harder than everyone else in the league.
This my last piece of advice because it’s the most important and least respected. If it was easy to start an online business everyone would do it. You know what everyone does? Everyone looks for a job. The people who start businesses have to provide those jobs. So again, get serious and rational about the amount of work that’s ahead of you. It’s the harder route.
It’s going to be hard and it’s going to take time. Realize that early and remind yourself often.
There are loads of other tips and advice I could share, but these should get anyone started. This won’t necessarily make you successful, but it will prepare you. Now get out there and do it!