How to start an online business in 11 steps

Got your sights set on starting an online business in Australia? We want to help you give it the best chance at success, by covering the steps you need to take to get it off the ground. Read on to discover how to launch an online business, the right way.

What is an online business?

Before we get into how to start a business online, let’s first clarify what an online business actually is so there are no grey areas. An online (or eCommerce) business is a business that sells products and/or services over the internet, instead of at a physical store. Customers digitally browse the stock on a smart device like a phone, laptop, or tablet, place their order and wait for their purchase to be delivered or pick up in-store. Put simply, it’s business, done digitally.

Importance of online business

Online shopping is a growing industry. According to ibis, its market size in Australia has grown 18.1% per year on average between 2018 and 2023, bringing its estimated value to $56.2 billion in 2023. 90.4 per cent of global internet users also visit online retail stores, according to Savvy’s 2022 Online Shopping Behaviour Report, so it’s safe to say online business is essential.

Building an online business

Starting an online business is generally simpler and cheaper than starting a brick-and-mortar one, because it’s rooted online and you don’t have much (if any) real estate to worry about. However, it requires just as much research, consideration, and planning, and should be approached with the same amount of gravity.

Step 1: Choose your niche

To start your online business journey, you need to pick a niche, or in other words, a focus area. Not everyone will buy what you’re selling and that’s ok. What matters is honing in on a specific target audience that you can cater towards. Here’s how you can do that.

Identify your passion

The best place to start when picking a niche is looking at your own interests. It will make running a business a lot more fun when you’re selling something that actually excites you. So look at what you like, in different aspects of your life, and start brainstorming some business ideas.

Analyse market demand

Once you have a few solid business ideas, the next important step is working out if there is actually a market demand for the product or service i.e. if people will actually buy it. There are many ways you can analyse market demand, by doing online research and conducting surveys, focus groups, and interviews with your target audience. These market research activities can help you come to a conclusion on whether or not your online business idea is viable and worth pursuing.

Analyse your competition

When you’ve finalised your online business idea, it’s time to take a look at your competitors. Understanding the brands you’ll be up against will help you define your unique selling point (what you offer that they don’t) and set your brand apart. This market research activity will also help you gain insight into what strategies work and inspire your own unique approach.

Step 2: Create a business plan

Every business needs a plan, and the same goes for an online business. Creating a business plan will help you formalise your idea and set the foundations for your operations. Let’s go through some key sections you should include in your business blueprint.

Define your business goals

Start off with your goals. Why does your online business exist? What do you want it to achieve? Where would you like it to be in the future? When you know what you’re aiming for, it will be easier to pave a path that will get you there. Creating goals will also ensure that any business decision you make aligns with your goals, keeping you on track.

Determine your target audience

Your business plan is where you define your target audience. This is the group you’ll be aiming all your marketing efforts (and dollars) towards, so it pays to be clear on who they are. You can break down your target audience by demographics including gender, age, location, income, and career, or psychographics such as values, beliefs, interests, and opinions.

Business.gov.au explains that by understanding your target audience you can promote your product or service more effectively to the right customer group: that by knowing your market, you’ll know where they are, which media channels they use, their buying habits, and how to tailor your marketing to motivate them to make a purchase.

Develop a marketing strategy

From here, you’ll need to craft a marketing strategy that’s tied to your online business goals. It should be a detailed plan of your promotional efforts across a wide range of channels and platforms, including objectives, budget, content creation, and key performance indicators. Your marketing strategy is something you should revisit and continue weaving emerging trends and proven strategies into, to ensure it keeps producing powerful results.

Step 3: Choose your business structure

Once you’ve got your business plan down pat, you’ll need to pick a business structure (or in other words how your business will be set up.)

In Australia, you can pick from the following structures when starting a business:

• Sole trader: The simplest and cheapest to set up, you are the sole manager of your business with complete control over your operations. Although you ‘trade’ on your own, you can still hire employees if you want to.
• Company: More complex, a company is a legal entity that’s separate from you. If you opt for a company structure, you’ll need to register it as such with the relevant regulatory bodies.
• Partnership: A partnership is when two or more individuals carry out business activities together with the view of making money.
• Trust: This structure involves a trustee (an individual or company) carrying out business for the benefit of beneficiaries. The trustee is responsible for business operations

When deciding on a business structure, be sure to consider each option carefully and choose the one that best suits your business needs.

Step 4: Register your online business

Before you begin trading, you’ll need to register your online business with the government to make things official.

Choose a business name

Unless you’re trading under your personal name, you’ll need to pick and register a name for your business. When choosing a business name, make sure it’s memorable, simple, and easy to pronounce and spell – you want people to remember it after all!

It’s also worth checking if the name is available on a domain, so you won’t have any troubles when setting up your website down the track. You can check if your proposed business name (and domain) is up for grabs here.

Register with the government

Next on the agenda is getting an ABN, or an Australian Business Number. This is a unique 11-digit number that identifies your business to the government, other businesses,  and the public. Check out our guide to everything ABN  to learn more about this essential registration and why it’s so important.

When you’re ready to register your online business, visit the Australian Business Registration website and follow the prompts. If you’re registering a business name and applying for an ABN, you can do this simultaneously to save you time. Depending on your online business, you may need to apply for goods and services tax (GST), pay as you go (PAYG) withholding tax, and fringe benefits tax (FBT). Do you research or speak to an accountant to work out what you need.

Obtain necessary licenses or permits

Depending on your online business, you may need certain licences or permits to operate it. The Australian Business Licence and Information Service is a quick and easy way to work out what documentation you may require based on your business type, industry, and location.

Step 5: Build your online presence

Having an online business means you need to build and maintain an online presence, including a website and social media profiles.

Design and build a website

Depending on your skills, budget,  and time, you can build a website yourself through a website builder or outsource someone to do it for you. Either way, the key is to make sure it emulates your brand and is easy to navigate, so customers have a good experience when using it. It’s also essential to give it a test run before launch day to iron out any kinks that could dissatisfy customers.

Create social media profiles

According to Statista, roughly 82.2 per cent of the Australian population were active social media users as of February 2022, so it pays to be on social media. Having a social media presence can be beneficial for businesses in numerous ways, allowing them to reach a large audience, increase brand awareness, engage with customers, and advertise effectively.

Depending on your online business, it may not make sense to be on every social media network. Once you’ve worked out which ones make sense for you – Facebook, Instagram, TikTok, Twitter, LinkedIn, YouTube – go ahead and make profiles, ensuring your brand is consistent across the board. Now, you’re ready to connect with your future community and enact social media marketing when the time is right.

Step 6: Choose your eCommerce platform

As we mentioned earlier, a digital shopfront is essential for an online business, so it’s time to pick an eCommerce platform (website) where you can list and sell your items.

Overview of popular eCommerce platforms

There are many eCommerce platforms out there to choose from. Here’s a rundown of some popular ones, to give you an idea of your options:

• Squarespace
• BigCommerce
• WooCommerce
• Wix
• Adobe Commerce (formerly Magento)
• PrestaShop
• Open Cart

Step 7: Pick your payment gateway

Once you’ve landed on an eCommerce platform to host your online business, you’ll need to pick a payment gateway that allows your customers to pay for their items.

About payment gateways

A payment gateway is a service that works much like an EFTPOS machine, just online. A payment gateway will give your website a card processing facility, enabling your business to accept credit and debit card payments from customers securely and conveniently over the web.

Managing merchant fees

Bear in mind it will likely cost you some money to accept payments online, the same way it costs money to accept payments in store with EFTPOS. How much will depend on your merchant provider. Be sure to look into what your merchant fees may be, so you have an idea of what you’ll be expected to fork out when you make a sale.

Tyro’s payment gateway

Our eCommerce payment solution is designed to make accepting payments online fast, simple, and secure. It can be conveniently connected to your website using eCommerce platform plugins or by using our API library.

Tyro eCommerce can accept many kinds of payments, including Visa, Mastercard®, American Express, and JCB. It also gives you more ways to get paid including electronic invoicing, Virtual Terminal, card-on-file information, and recurring payments (subscriptions). You’ll also enjoy real-time reporting from the Tyro eCommerce Portal, Tyro App and Tyro Portal, which allows you to stay informed of payments as they happen, no matter where you are.

Tyro products

Tyro eCommerce can be used as a standalone payment solution, or tied in with Tyro EFTPOS if you have a physical store alongside your online business. Team them together and you can get one single settlement, into your business bank account, just when you need it.

Tyro also offers the Tyro Bank Account, designed to complement Tyro EFTPOS and eCommerce solutions, which offers same day settlement 7 days a week, at a time of your choosing (between 8pm to 5am).

Discover more about Tyro eCommerce.

Step 8: Source and list your products

Ok, so you’ve decided on an eCommerce platform and worked out your payment situation. Now it’s time to source and list your products for people to get their hands on.

Determine product sourcing options

There are a number of ways you can source and sell products on your online store, with the main options being:

• Making your own – This involves producing your physical or digital items from scratch and offering up original, one-of-a-kind items
• Finding a dropshipper – Dropshipping involves engaging with a third party and getting them to package up products and send them directly to your customers. This means you never actually have to hold any stock
• Working with a wholesaler – A wholesaler can provide your business with a range of products to buy and sell in your online store

Choose a reliable supplier

If you opt for a supplier, make sure they’re reliable by doing your research. It’s also important to make sure they align with your business and offer the high-quality service you’re after.

List your products on your eCommerce platform

Once you’ve got your products sorted, you can add them to your product catalog. To make them pop, be sure to provide high-definition visuals featuring the product from different angles, as well as detailed product descriptions – highlighting benefits as well as features – so customers know exactly what they’re getting and how it can help them.

Step 9: Market and promote your online business

If you open an online business but don’t promote it, you can’t expect people to buy from it. So make sure to put your business out there, via the following avenues.

Optimise your site for SEO

SEO, or search engine optimisation, is the practice of orienting your website to rank higher on a search engine results page so that you receive more traffic. You can optimise your website for SEO by integrating keywords (that’s language customers might use when searching for related products) into all of the pages. You can do the same for the headlines and descriptions that appear in search engine results and link to your website.

Social media marketing

It’s time to put those social media profiles you created to work. Social media marketing is an easy way to promote your products/services, build community with your target audience, and drive traffic to your business. Be sure to integrate a mix of organic and paid campaigns to reach and resonate with your audience.

Paid ads

If you have the funds, allocate an ad budget on social media networks and in search engine results (tailored to your target audience) so your brand pops up in front of the right people. This can help you reach customers where they are and build a customer base.

Offer promotions and discounts

Another way to draw people into your online business is by offering specials. The exact specials you offer will depend on your business, but doing something that gets your customers some dollars off can go a long way when it comes to generating sales.

Step 10: Offer excellent customer service

Once your online business is up and running, it’s imperative that you nurture your customers and show them that you care. Especially when, according to a Salesfore report, 91 per cent of customers say they’re more likely to make another purchase after a great service experience.

Here are some ways to ensure your customer service is up to scratch:

Respond promptly to customer inquiries

A survey conducted by Statisa in 2022 revealed that 46 percent of participants were prepared to wait three days for a response from a brand they contacted, and that 10 percent would find it acceptable to wait up to two weeks.

So don’t leave your customer waiting. Respond to their inquiry as soon as possible, so they can get the answers they need quickly.

Resolve customer issues efficiently

Solving customer issues and complaints is an important part of running an online business, and for good reason. As indeed explains, resolving customer issues efficiently can increase customer satisfaction, build customer loyalty, improve customer service, and help you understand customer needs. So be sure to make it a priority to resolve any customer issues completely and efficiently if they arise.

Continuously improve customer experience

Customer experience is the overall sentiment of every interaction they have with your business. According to Accenture, positive customer experience is a way of standing out from competitors. As more brands compete for public attention and more options are readily available, it provides a way to put your product and brand at the forefront.

This said, it pays to assess and improve your customer experience on a regular basis and always put your customers first.

Step 11: Analyse and optimise your online business

Last but not least, it’s important to take a look at how your online business is performing and make improvements where things could be better.

Track website and sales data

Inspecting your website and sales data will give you an idea of how many people are visiting your eCommerce store and how many people are actually buying from it. It will also give you insight into where your customers are coming from and what they like to buy.

This information can help you work out what is and isn’t working when it comes to your online business, allowing you to switch up your strategies and ideally boost that bottom line.

Analyse customer behaviour

Another area you can analyse is customer behavior. This refers to an individual’s buying habits, including social trends, frequency patterns, and background factors influencing their decision to buy something.

Hubspot says studying customer behaviour can help you understand your target audience better and create more enticing products or strategies for them, which is always a good thing.

Make data-driven improvements

According to a Deloitte survey on analytics, 49% of respondents say that analytics helps them make better decisions, 16% say that it better enables key strategic initiatives, and 10% say it helps them improve relationships with both customers and business partners.

So don’t let data go to waste, as it can give you invaluable insights that can improve your online business in a multitude of ways.

Wrap-up

So that’s how to start an online business in Australia. As you can tell, taking a planned approach to launching an online business will give you the best chance of a smooth launch and successful future.

Taking the plunge

Now that you know what you need to do to get your online business off the ground, you can start your entrepreneurial journey with confidence. Be sure to follow these steps and you’ll be on your way to making your first sale as an online business owner.

How Tyro can help

As your partner in business, we can help you set up a payments solution for your online store (and physical one if you have one).

Want to get your payments situation sorted? Get in touch!

^{Mastercard is a registered trademark of Mastercard International Incorporated.}