How To Set Up A Small Online Business (5-Step Framework)
How to Set Up & Run an Online Business?
“Running an online business sounds complicated.” Don’t worry. I have been there too. Where to start? What to do? It might seem all so confusing and overwhelming especially at the start. So, let me break down what running a small business is all about.
There are 5 core elements to how an online business works. The good news is you don’t need to focus on all 5 of them at once.
As a small business owner, you probably only have yourself to handle the entire business. Or maybe you have a small team. Nevertheless, as a small business, you may not want to bite off more than you can chew. It is indeed important to know about all of these core elements of an online business.
However, you have limited time and resources, so in this article I will suggest what you should prioritize based on which stage you are at in your business development.
5 Step Framework for Any Online Business:
1. Having a Good Product/Service
This is obvious. But it is so obvious, many new business owners skim past it. They start to focus on their business model & marketing strategies. While those are important too, making sure you have a high quality & unique product/service is crucial.
You May Want To Read: The Ultimate List Of Business Ideas For Students
In the end, your product/service is what your entire business is based on. So, do take time to perfect what you are selling and offering.
Take a look at other businesses in your niche. Examine what products/services they are offering. What is one thing that makes your product/service different from theirs?
If there isn’t, you need to ask yourself: What do you not like about your competitor’s business? Then, aim to improve that aspect in your own business.
It is super important to make sure you have a product/service that is not just any other thing anyone can buy from anywhere else. Take your time in developing your product that is truly unique to you and your business.
If you don’t consider your own product/service to be special enough to buy it, no one else will.
2. Lead Generation
Customers are the next essential part of any business. But how do you get these customers for your small business?
Traffic.
A.K.A you need people viewing your business. You need people to look at your products or services. These are called leads. If they decide to purchase from you, they become customers. So, the first step is to generate traffic.
More traffic = More potential customers.
There are a lot of ways to have more eyeballs at your online storefront.
How to Generate Traffic (leads)?
- Pay-per-click campaigns
- Guest posting
- Social media advertising
- Influencer marketing
- Search engine optimization by Blogging
- Other ways to generate traffic to your online store
You May Want To Read: 9 Reasons Why You Should Start a Blog
For a simple small business running on Instagram, you can generate traffic by posting pictures of your products and other relevant content consistently, along with implementing a good instagram strategy.
3. Lead Naturing
In the previous point, I said more traffic = more potential customers. True… but it’s not enough. What?! Yes, more eyeballs are not enough.
In the previous point, I said more traffic = more potential customers. True… but it’s not enough. What?! Yes, more eyeballs are not enough.
Would you rather be in situation 1 or 2? Obviously, you would prefer situation 2. With a much higher conversion rate, you are able to have more sales. Imagine if you start to generate as much traffic as in situation 1. Assuming the same conversion rate, you will be able to get 40 customers!
How to Convert Leads to Customers?
- Effective email sequences
- Active on social media
- Produce engaging relevant content
- Have an optimized Instagram profile/bio (if your storefront is on Instagram)
- Landing page optimization
- Proper display of social proof
- Addressing hesitations people might have when buying your product/service
- Other ways to convert leads to customers
4. Having Efficient Sale Systems
There are 3 parts to this: order collection, payment process & product delivery.
(a) How are you collecting orders?
Are you using a website? They are different ways to build a sales system for your business. If your business is on Instagram and you use DMs to collect orders, you may want to consider making a form or website to make this process more efficient.
(b) What are your payment processes?
What payment options do you offer? How can you make it more efficient & convenient on your side as well as on the buyer’s side?
(c) How will you deliver the product/service?
What kind of packaging can you use? How can you improve delivery quality?
5. Selling More & Customer Retention
There are 2 ways you can sell more to your customers: cross-sell & upsell.
For example, you sell handmade bows & bandanas for pets.
Cross-selling occurs when you sell customers offerings that complement or supplement the purchases they’ve already made.
{definition from: Wordstream}
Eg. When a customer buys a standard bow, you can ask them if they would like to buy a bandana along with the bow.
Upselling occurs when you increase a customer’s value by encouraging them to add on services or purchase a more expensive model.
{definition from: Wordstream}
Eg. When a customer buys a standard bow, you can ask them if they would like to upgrade to buying an add-on of gems to their standard bow.
Customer retention refers to the ability of a company or product to retain its customers over some specified period.
The best people to sell to are your previous customers.
They have already trusted to buy from you before and they clearly have an interest in your brand. The probability of selling to an existing customer is higher than the probability of selling to a new prospect.
So, if you are able to engage your customers even after they have made a purchase from you, they are likely to buy from you again. This will increase your customer retention rate, thus more revenue.
So, treat your customers well!
Customer Retention Strategies by Shopify
That’s a lot right! But as a small business, you don’t need to focus on all 5 parts of this business framework. If you have just launched, you probably only need to focus on the first 2 or 3 parts.
Once you have grown your business, you can start to improve your sale systems and customer retention. But for now, the first three things are what makes up the foundation of your business. So, prioritise your time and effort on those first.