Launching an online business has never been easier. You don’t need big upfront funding, and serious tech skills aren’t required. With the flexibility to set your own schedule and call the shots, this is a real chance to be your own boss.
With just a little clever strategy, you can reach a huge audience right from the start. Whether you’re after a gentle side income or dreaming of a worldwide e-commerce empire, the possibilities are endless.
With that, here’s our guide to getting your online business off the ground.
Why start an online business?
Building an online business is a great chance to do something rewarding — in more ways than one. To start with the obvious, the entry barrier is often very low. Online ventures tend to come with minimal start-up costs, compared to a bricks-and-mortar business, saving money on rent, utilities, and other associated start-up expenses. It’s a way to get a foot in the business door without reaching deep into your wallet.
For those who do already have a physical shop, going online offers a great way to increase revenue and expand, reaching new avenues and wider audiences.
You have the flexibility. As the customer base grows, you can expand operations without the constraints of physical space. You have the power to map your online business to fit exactly what you need. Whether you’re starting small with a niche product or dreaming big with a diverse range, you can up the size and complexity as you go along.
You needn’t be a tech wizard. With so many user-friendly platforms and handy tools out there, it’s possible to set up shop with only limited tech skills. Good website builders provide templates that make it utterly easy to launch a professional-looking website in minutes — then manage stock and update pages daily. If you’d prefer instant access to customers, you might try the existing marketplaces of Etsy, eBay, and others.
And there’s never been a better time to start. In fact, the UK now boasts the world’s third largest e-commerce market in the world after China and the US. Online sales account for more than a third of the total retail market in the UK, in spite of what’s going on with the economy. Online sales even increased by 36% last year. By 2025, the total domestic revenue from e-commerce is predicted to be worth £230 billion. So, if you’ve got something to share with the world, now may be the time to make your mark.
Finally, did we mention you can do it all from home in your pyjamas?
Come up with that business idea
So you’ve decided to start an online business. Exciting! The first step is to define your business idea. It’s about turning that spark of inspiration into a clear, actionable concept. There are several key things to think about — to guide your thought process and to help shape this vision into something tangible and viable.
First, consider the scale and commitment of the business venture. Are you looking to start a side-gig to complement your lifestyle and income, or are you aiming for a full-time enterprise that’ll become a primary focus?
Think about the core of your business: the product or service you want to offer. This is where your passion meets market demand. Is there a specific product or service you are passionate about or have expertise in? Define the niche.
Pinpoint a specific market segment and, instead of trying to serve everyone, focus on a particular group with shared interests. Tailor your products or services to meet their preferences. This approach helps your business stand out and builds stronger connections with loyal customers. Identify your passions and market gaps to find your niche effectively.
How well does the business idea align with your skills and experience? Will you need additional training or partnerships? A business idea that fits your strengths and areas of expertise is more likely to take off.
There are four primary business models in e-commerce lingo. These are:
Business-to-Business (B2B): When a business sells products or services to other businesses. When it comes to wholesale, a B2B might act as intermediary in a supply chain, purchasing goods in bulk from manufacturers and selling them to retailers or other businesses.
Business-to-Consumer (B2C): Where a business sells directly to consumers. This is the biggest e-commerce business model there is — whenever we make an online purchase as an individual customer, we’re engaged in the B2C model.
Consumer-to-Consumer (C2C): When consumers sell goods or services to each other through an intermediary platform. Casual and occasional selling on eBay or Facebook Marketplace would fall into this category.
Consumer-to-Business (C2B): When consumers provide services to businesses. Typically refers to freelancers selling to businesses. For example, getting paid to upload photography to Shutterstock.
Decide: What type of entrepreneur are you?
Think about what you love and what you’re good at to find a business model that fits. Understanding the dynamics can help you position your business and work out your opportunities. Whether you decide to go wholesale and manage stock yourself, or to “dropship” orders straight from supplier to customer, the choice should reflect your strengths and market positioning.
Think about your Value Delivery Method. That’s a posh way of asking how you’ll meet the needs of consumers. This choice goes beyond logistics; it shapes the entire approach to bringing value. Each type of business has its unique set of challenges and opportunities.
Let’s explore the options:
➤ Wholesale (B2B Sales, Bulk Distributor)
In online wholesale, you work between manufacturers and retail businesses, offering products in large quantities at lower prices. The key to success is developing strong relationships with reliable suppliers and understanding the market demands of your customers. You’ll need a grasp of inventory management as you’ll be handling and shipping products to various locations.
➤ Dropshipping (Order Fulfilment or Inventory-less Retail)
Dropshipping is a choice for those who prefer not to hold onto the stock themselves. Here, when a customer places an order, your role is to have the product shipped directly from the supplier to them. You don’t handle the product directly and, as such, you don’t need the storage space. Dropshipping is appealing for those looking to enter the e-commerce space without a significant upfront investment in inventory.
➤ Custom Made-to-Order (Personalised, Customisable Products)
Are you interested in offering products customised to your customer’s specifications? This could include personalised gifts, custom clothing, or made-to-order furniture. A subcategory of this is Print on Demand (POD), where you sell personalise-able items like t-shirts or mugs, made bespoke for each order.
➤ Handmade (Artisan, Craft, Bespoke)
Are you a skilled artist or craftsperson? If you enjoy creating products by hand, emphasising craftsmanship and uniqueness, Handmade is the category for you. Your products could range from jewellery and clothing to handmade furniture and art. Perhaps you can even personalise each one to order.
➤ Used Items (Vintage, Preloved, Refurbished)
If you have a passion for sustainability and giving new life to preloved items, consider selling vintage clothing, refurbished electronics, or antique furniture.
➤ Reseller (Arbitrage, Retailer, Stockist)
As a reseller, you’ll purchase products from suppliers or wholesalers and sell them to customers. If you’re interested in buying products at a lower price in one market and selling them at a higher price in another, consider arbitrage.
➤ Private Label (White Label, Brand Owner, Exclusive Branding)
If branding products manufactured by others as your own sounds appealing, then private labelling is an option. You may be able to modify these products to make them unique.
➤ Affiliate Marketing (Referral Selling, Commission-Based Selling)
Do you have a knack for promoting products? In affiliate marketing, you’ll earn a commission for each sale made through your referral, often using digital platforms.
➤ Subscription Services (Box Services, Recurring Revenue Model)
If you’re interested in offering products or services on a subscription basis, providing recurring deliveries or access, consider this model. It can range from monthly beauty boxes to streaming services.
➤ Digital Products (E-Goods, Virtual Products, Downloadable Content)
If you’re inclined towards digital products, like eBooks, software, digital art, or online courses, this category might be for you. This could fall into any business model category including C2B.
Conduct market research
Once you have your business idea in place, it’s time to dig into a little market research. That means looking at trends — spots where you think you might succeed — and any challenges you might face. This research will form the basis of your business plan as you move forward, helping you to shape your product or service to meet what customers want.
Identify who your customers are. Understand their needs, preferences, and spending habits, and make sure that what you’re offering aligns with their expectations.
Think about:
- The age bracket of your ideal customers
- The size of your target market
- Their location
- Their purchasing power (typical budget)
- Your competition — and how unique the solution is that you’re offering
Does your product or service solve a specific problem or make life easier for potential customers? Online surveys can be a helpful tool when gathering this data. Carefully research the competition. Get a sense of your rivals — how they’re doing, what they’re doing, and what you could do differently.
Write the business plan
After settling on your business idea, the next big step is making a detailed business plan. Come up with a short summary covering your business idea, mission, and goals. You’ll find resources from various organisations to help you get started, such as the Office for National Statistics and Think With Google Research Tools.
Work out a strong plan for marketing and selling, proving how you’ll get into the market and make money. Keep it realistic. Aim for goals that are challenging, but doable. Define your brand, target market, and unique position.
Get the funding
There are a lot of options when it comes to money matters. First and foremost, the government offers a Start Up Loan between £500 to £25,000, charged at a fixed interest rate of 6% per year. Crowdfunding is also an option. Clearly outline your needs to attract investors or funders.
Register your business
Register your business according to the structure you’ve chosen. Whether as a sole trader, partnership, or limited company, comply with UK legal requirements and keep detailed financial records.
Buy the domain name
A domain name is your digital address. Choose something memorable and aligned with your brand. Pair your name with clever extensions like .guru, .design, or .ai to attract the right audience.
Secure your domain with privacy protection and an SSL Certificate to build trust with your customers. For more, see How to Buy a Domain Name.
Choose your online platform
Decide where to sell your products: website builder tools, e-commerce CMS platforms, or online marketplaces. Website builders like 123 Reg provide intuitive drag-and-drop interfaces and templates for easy setup.
Start taking payments
Starting your online business means setting up a way to take payments — not just debit or credit cards, but also digital wallets, coupons, and others. When picking a payment gateway, you’ll need to think about both fees and security.
A merchant account is a special bank account that lets your business accept credit and debit card payments. To get one, apply with a bank or a payment processor. They’ll check your business, like how much you sell and what you offer, to decide if they can work with you. Once you have it, this account holds money from card sales before it goes to your business account. This is important for the trustworthiness of your business.
123 Reg’s Website Builder features PayPal integration as standard. With a full Website Builder Online Store, you can sell anywhere in the world with a full e-commerce platform, accepting credit cards, debit cards, PayPal, Apple Pay or Google Pay. There’s full Stock Control for managing inventory and you can even add flexible shipping rates so that shipping rates from major carriers are automatically included in your pricing.
Manage your accounts
Start by opening a separate business bank account to keep personal and business cash apart, making it easier to track. The UK government offers a scheme called Small Business Rates Relief — you may be eligible if your small business only occupies one property.
There’s a whole host of free accounting apps out there. These tools make it easier to keep track of spending, handle invoices, and get ready for tax returns. Especially for small businesses, they save a lot of time and effort that would otherwise go into handling money matters. That means you can focus more on growing the business rather than on the paperwork.
Accounting apps for small business include QuickBooks, Zoho Books, Quickfile, FreeAgent, Wave Accounting, GnuCash, and VT Cashbook. Many of these are free, or mostly free with limitations. Zoho Books is free up to the first 1,000 invoices a year, for example. Hopefully, that’ll be enough to kick off your new business.
Build your online presence
With your domain name chosen and your website now published, it’s time to get more people talking about the brand.
Set up your social media channels. Platforms like Facebook and Instagram are great for showing off your products or services. Out of 57 million social media users in the UK, Facebook leads with 49 million, followed by Instagram with 37.7 million. Meta now integrates both through Meta Business Suite, letting you manage posts, ads, and even products in one place.
Engage your audience. Today, a business’s strength isn’t just in what it sells but in how it connects. Consumers are more likely to buy from brands that actively engage with them online — 80% of consumers prefer personalised experiences.
If you can, use video content to connect. YouTube is a powerful platform for small businesses, whether through product demos, tutorials, behind-the-scenes videos, or Shorts.
Start blogging. Posting a regular blog has the potential to generate 94% more links to your website. Tell your own story. It’s a way to engage your audience and build a community around your brand. This engagement will serve both to build brand loyalty and boost visibility online, as quality content can significantly improve search engine rankings. For more, see our article – Blogging A-Z: Your Glossary Guide For Success
Collect customer reviews. Make them visible. Positive reviews can really enhance your business’s credibility and appeal. 98% of people read online reviews for local businesses, with 87% of consumers using Google to evaluate local businesses in 2022. Encourage satisfied customers to leave feedback, either on your own website, social feeds, or third-party review sites. Reviews can sway potential customers’ decisions and improve your online reputation.
Partnering with individuals who align with your brand can expose your business to a wider audience. For example, a food brand could collaborate with a respected chef, or a sportswear business with a well-known athlete or fitness trainer.
Optimise for search engines (SEO). Use relevant keywords and create quality content that meets your audience’s needs — without overdoing it. Good SEO can drive traffic, improve visibility, and establish your brand as a reputable player in your industry. For a free tool, try Google Keyword Planner.
See also: Local SEO in 10 – How to Get My Business Found Online
Wrapping up (and shipping off)
Starting an online business is exciting and rewarding. Find a niche you’re good at, know your audience, and plan how to reach them. Set realistic goals, balance it with other work if it’s a side project, and keep an eye on finances.
Website builder tools make it easy to get started without heavy IT skills. Add a business email to match your domain, stay productive with Microsoft 365, and use free tools to build your brand and engage your audience. With the right approach, turning your idea into a business has never been easier.
