by Table of Contents
The coronavirus pandemic has propelled a massive shift in the way we do businesses. Not only did it accelerate the need for entrepreneurs to embrace the online world, but most importantly, it also changed global trends, consumer mindset, buying behaviours and purchasing habits. Being able to adapt to the new paradigm is key for most businesses’ survival.
Darwin’s Evolutionary Theory also applies to businesses: Survival of the fittest.
In the Philippines, we’ve seen a huge demand for online retailers and food delivery businesses to cater to our needs. The Philippines also topped the list of countries where people spend the most time online, and we’re expecting businesses to leverage on this fantastic opportunity. The e-commerce landscape in the country is still on the nascent stage and the perfect time to have digital presence is NOW.
Why shift online?
It’s not merely a question of Why, but it’s a question for necessity. “Necessity is the mother of invention.”
Gone were the days where you’d expect to see large crowds of people in malls and retail establishments, and gone were the days were you’d see families lining up for 30 minutes just to enter overcrowded buffets and restaurants.
While it’s possible that we’d go back to the way we do things before, it’s still very important for entrepreneurs to think of alternatives just in case the situation becomes permanent.
Advantages of shifting online
- Reduced startup costs, maintenance and overhead
Starting a business online is less capital intensive compared to establishing traditional brick and mortar stores where you’d have to pay for rent, staff, renovation, utilities, etc. With online businesses, you can start even if you have no money!
Check out our post on How to Start a Business with No Money: A Simple Guide.
- It runs 24/7, 7 days a week
The online world doesn’t sleep. Compared to physical stores, there are no opening and closing times that would limit the number of customers per day.
- Unlimited income potential
Sky is the limit with online businesses. Depending on your niche, it is proven to be highly scaleable and there are thousands, if not millions of online tools and softwares out there that would help you grow your business for a reduced cost.
- Automation is possible
With the advent of artificial intelligence, bots, tools, cloud-based technologies and softwares you could automate a lot of your integral business functions from supply chain management, to procurement, to automated fulfillment and marketing, etc. Automation and scaleability go hand-in-hand and with these, it’s even possible to grow your business earnings exponentially!
- Wide reach of customers
With a traditional brick and mortar store, if let’s say your store is located in Manila, all your customers will be limited to those who live in the metro. With an online store though, you can reach Visayas, Mindanao and even people abroad! There are absolutely no limits as to its reach.
Disadvantages of shifting online
- Exposure to fraudsters
Both traditional and online businesses face a risk of dealing with customers with fraudulent payment information, fake names and fake addresses. This might sound like a trivial problem but for small businesses, losing a sale to such malicious transaction could be quite costly.
- Risk of being hacked
There are thousands of hackers particularly targeting small to medium sized businesses. Heck, even corporations who spend millions of dollars on security still face a risk of being hacked. You risk your password being exposed or your payment service provider being compromised and that could mean that you’d potentially lose all your earnings. Some hackers target vital customer and owner information that could be used for illegal transactions.
- Delayed deliveries
If you’re working with third party couriers, no matter how reliable they are, there’s always a risk that there’ll be delays in delivery especially when faced with situations out of your control- like weather disturbances, traffic, mismatched customer delivery information, etc.
- Requires a co-founder/staff/team with expertise in computers, IT or software engineering
It’s not a requirement per se for entrepreneurs to have a background or expertise in computer engineering or IT to be able to succeed in their online business ventures. For starters and beginners, there are a plethora of easy-to-use e-commerce websites like Shopify, or content management systems like WordPress if you want to start a blog.
However, if you’ve reached a level where you were able to scale and grow your business, it would require a team or a co-founder who is knowledgeable in the back-end side of things to reduce the risk of website downtimes, hacking, etc. The more traffic you get, the more maintenance you’d need.
Step-by-step guide on Starting an Online Business
1. Brainstorm a business idea
Brainstorming a business idea is one of the most important yet one of the most overlooked steps in starting a business. You don’t want to just start something without actually thinking through if it’s it a good idea or not.
But how will you know if it’s a good idea? What does “GOOD” actually mean in business terms?
Regardless of your niche, your target demographic, your goal and financial targets, a GOOD business idea will satisfy at least one (if not all) of the points discussed below:
- It should be feasible
Feasibility refers to the in-depth analysis of all the factors that would be essential for a business to succeed. It takes into consideration all the possible constraints like budget, technology, deadlines, etc. to be able to know if a project is even worth taking or not. If a project isn’t feasible, then your business is doomed in the first place (unless a constraint has been improved on).
To put it simply, ask yourself what your starting capital is and if it’s enough to cover your costs. What are your deadlines? Will you be able execute all those tasks alone or do you need a team of experts to help you? Do you have a capital to pay for the salaries of your team? etc.
- A good business idea should be scaleable
The main difference between a hobby and a business is its ability to scale.
Scaleability simply refers to a business’ ability for expansion. Will it be able to handle an increase in demand? Will your capital be enough to satisfy the demand?
Of course, if you’re just starting out, it would most likely be a one-man show where you are responsible for a lot of functions like product preparations, to marketing, some business owners even do the deliveries themselves. But when faced with an increase in sales orders, this one-man show would find it difficult to respond and fulfil the market demand. Such case is called being a “hobbyist”. If you’re starting a business, however, it should be able to run and expand on its own, with proper systems in place.
- A good business idea should solve a problem
If you’re solving a problem pain for a lot of people, that just means that there’s a need. If there is a need, there is a demand. You already have a lot of potential customers waiting to be tapped. It’s easier to persuade people if you’re offering a solution to their problems. They’re more likely to watch your sales pitches and ads online, and they’re more likely to purchase.
2. Find a niche
A lot of first time entrepreneurs make a huge mistake of offering too many products that aren’t even related with each other. Having no clear focus as to what your business stands for, what it is about, or what its purpose is definitely creates confusion with your customers. You can’t be selling sports equipment then switch to beauty products in an instant since they are targeting different demographics. Your business should observe COHERENCE and CONSISTENCY to easily establish brand awareness.
If you don’t have a specific niche in mind, customer brand loyalty will be difficult to achieve.
How do you find a niche?
Finding a niche doesn’t have to very difficult. First off, list down all the products or services that you are interested in selling. These might be products or services you’re passionate about or just pretty much anything that piqued your interests. Write them all down then categorize them according to the specifications of each product- how it works and who you are going to sell it to.
After you’re done placing them down in different categories, assess them according to the 3 most important characteristics of a business idea- feasibility, scaleability and whether or not the product or service solves a particular problem. Cross out which items don’t satisfy any of the three.
Then, narrow the list down according profitability. Assign a ballpark profit margin to each item and prioritize those products or services that would give you the highest profit margin. Of course, if you’re starting out a business, your goal should be to maximize your returns so it’s just make sense that you’d have to choose a business idea with that would give you the highest profit margin.
Lastly, since you’re competing in the online world, one of the most important things to do when finding a niche is to find a keyword or a set of keywords related to your chosen product or service that would help you rank high in google search. Organic searches from Google, Yahoo and even Bing can save you tons in customer acquisition costs in the long-term.
You can use free tools like Google Keyword Planner, Keywordtool, and Ubersuggest to help you find the best keywords related to your niche. Pick out the keywords with a high search volume (this indicates a high demand for your product or service) and low competition (this indicates that there aren’t a lot of businesses selling the exact same products).
3. Conduct a market research
A market research is an in-depth assessment of your customers. This is crucial to the success of your online business as this would determine the proper strategies that would work towards your chosen demographic.
- Define your target demographic
Classify the population according to age, gender, religion, marital status, education and income. This would help you target your customers more accurately especially when using facebook ads, google ads, etc. to reach them.
- Identify your customer’s psychographics
Depending on the classifications above, you can deduce on their spending habits, their lifestyle, hobbies, likes, dislikes, preferences etc. For example, if your target demographic are millennials aged 25-34 from Manila, one can deduce that they are educated, tech-savvy, currently working, probably from a middle class background, have a disposable income allotted for comfort foods, spends 8-10 hours online, etc.
Once you’ve identified your target demographics and psychographics, you can conduct a simple survey to check how your potential customers would respond to your chosen business idea. This can be done via easy online survey forms like SurveyMonkey and Google Forms. Just give them a link and have them answer it. You can ask them the maximum amount they’d pay for your product or service, or whether or not they liked the business idea. You can also ask them for points of improvement or if they have any other suggestions for your business.
4. Competitor analysis
In almost every industry that you can think of, you will always have a competitor- unless you’ve invented a product or revolutionised the way people do certain things. That’s a totally different beast however.
But is choosing a niche with absolutely NO COMPETITOR always the best option?
NO. The fact that there are successful businesses competing in a certain niche just means that there is definitely a demand for that category. It’s less risky because they’ve proven that the road they’ve taken is not a dead end. If there is a demand, there’ll always be an opportunity that can be tapped. The trick for any business however is to choose a niche with LOW COMPETITION.
By conducting a competitive analysis, you’ll be able to make unique strategies for business that would allow you to STAND OUT despite the cut-throat competition in the market.
Here’s a simple guideline:
- Identify and list down all online businesses that sell the same products and services as yours.
- Check their pricing points and pricing strategies.
- Define your competitors’ target demographic and online buying habits.
- Analyse their marketing strategy and advertisement tactics (social media accounts, SEO strategies, blogs, etc)
- List down their strengths and weaknesses.
After having researched on your competitors, you will be able to see some similarities and differences. From there, you will be able decide which of your strategies require a much needed change, and you’ll be able to improve on your competitor’s weaknesses and areas that need improvement. Always remember, DIFFERENTIATION is key to survival.
It’s important to ask yourself as an entrepreneur:
- How is my online business different from theirs?
- How can I add value for my customers?
- What do i offer that my competitors do not?
- How can i make my website better?
- How can I improve my social media presence?
5. Optimize your business operations
Some of the most essential business operations are supply chain management, logistics, payment and delivery. These systems are the gears that would make your business run seamlessly.
Optimising your business operations ensures that the systems in place are working efficiently and effectively to maximise your returns despite the budget and time constraints.
SUPPLY CHAIN MANAGEMENT
Supply chain management refers to the seamless flow of goods from raw materials down to manufacturing, to processing the finished products to logistics and customer delivery.
As an online entrepreneur, inventory management is definitely crucial as it’ll determine the length of time between a customer order and fulfilment. Add into account the waiting time between courier arrival in your warehouse to delivery to a customer’s address.
The #1 rule in online businesses is that a customer almost always expects a FAST DELIVERY. Waiting times could make or break your online business.
In order to optimise these operations, check out these important questions:
- Will you manufacture the products yourself? If yes, how long does the manufacturing process take?
- If you are sourcing your inventory from suppliers or manufacturers, how do you ensure that they have enough inventory to fulfil your orders?
- If working with a manufacturer, how long does it take for them to deliver those products to your warehouse?
- How do you check and verify the quality of the products from the manufacturer?
PAYMENT PROCESSING
The availability of payment gateways can also greatly affect your customer’s purchasing decisions. The lesser your payment methods are, the higher the chances that your customer will abandon their “cart” and just leave your website.
In the Philippines’ case, majority of the population still relies on CASH ON DELIVERY as a preferred payment method. This is due to the fact that roughly only 7% of the population has credit cards.
Check out our list of The Best Payment Methods in the Philippines for Merchants and Sellers.
DELIVERY
Finding a legitimate delivery partner is also as important as finding a supplier.
You should choose a courier that delivers fast for a reduced cost. Of course there is always a trade off, the faster the delivery time, the more expensive the delivery fees are. The slower the delivery time, the less costly the delivery fees are. In my opinion, it’s better to provide variety of delivery options for your customers, especially if they’ll also handle the delivery charges.
Offering FREE deliveries to your customers is one way to attract customers. The downside is that it might reduce your profit margin as you’ll have to shoulder the costs.
Check out our post of 8 Best Courier Services in The Philippines 2020.
6. Make a marketing plan
if you’re just starting out in the online landscape, getting your FIRST ever customer is perhaps the most challenging hurdle that you can experience. Compared to a traditional brick and mortar store, you can rely on foot traffic and the location of your business to get more customers. But with the online world, where are your customers going to come from?
It’s not just enough that you created a website, ordered inventories, and expect for random visitors to just come in. It just doesn’t work that way. Most entrepreneurs who were just starting out had this dream-shattering experience of not getting any visitors for 6 MONTHS! That’s right. 6 MONTHS! This isn’t to scare you in any way; but our main goal is to teach you the proper marketing strategies to help you get your customers! The right, and the least costly way!
CHOOSE A BRAND NAME
Your brand name is the identity of your business. This will be the first thing that your customers will see or hear about before seeing your products. The catchier and the shorter your brand name is, the easier it will be for your customers to remember your business. Choose a UNIQUE brand name!
Check out our Tutorial on How to Choose A Unique Brand Name for your Business.
As we’ve said in that post, always check for your chosen brand name’s domain availability. Go to Godaddy.com and type in your chosen brand or website name. You’ll see if it’s taken or not.
And we can’t stress this highly enough, it’s important to check if the brand name you chose is copyrighted or trademarked. Simple google search the brand name and check for trademarks and restrictions. Being cautious would save you headache from trademark lawsuits and copyright infringements.
CHOOSE A MARKETING CHANNEL
In a traditional business, marketing channels would include location and foot traffic.
In the online world, on the other hand, you would have to rely on the following marketing channels to make customer acquisition a lot easier and more efficient.
Here is the list of marketing channels for your online business:
- Social Media marketing
Social media is everything when it comes to online businesses. It is the utilisation of social media platforms like Facebook, Instagram, Youtube, Pinterest, Twitter and etc. to increase digital presence and to promote your products and services. Creating a social media account for your business is probably one of the least costly ways of getting your brand out there as it is free and these platforms already have millions of users.
Your goal is to not only increase the number of followers, fans or subscribers, but also to increase social media engagements (likes, shares, comments). A social media page with a higher engagement rate will also have a higher conversion rate (from viewing to sale).
Uploading interesting content like photos and videos can help capture the attention of your target demographic.
- PPC or Pay Per Click
PPC or Pay Per Click is a form of advertising where you, as an advertiser, would have to pay a stipulated amount for every click on your ad. These ads could be placed on search engines like Google, yahoo, youtube, or on different publishing platforms like blogs or websites.
If you did your keyword research when finding out your niche, you would be able to see if your niche has a high competition or low competition. The higher the competition for those keywords related to your business, the higher the fee that you’d have to pay for PPC
- Blogging
Writing content related to your products and services is one of the most effective ways to build authority and good reputation in the niche. This is particularly helpful especially if you’re just starting out and nobody has ever heard of your brand.
Sharing extensive knowledge about a certain topic or about a problem pain the customer faces while sharing how your product could solve those problems would sure help you establish good rapport and trust with your customers. While posting interesting images and videos on social media can help you gain more followers, they just aren’t enough to keep them coming back. To keep them engaged, write articles about your niche, write reviews, or interesting stories and share them on your social media platforms.
Blogging using low competition keywords related to your business and niche would also help you rank organically on Google search.
- Email Marketing
Email marketing can help you easily update your customers about a new product offering and it can easily increase conversions and sales. It is a one-on-one approach that seems personalised to the receiver of the email and is one of the best ways to retain your relationship with your customers.
But you’ve probably wondered how to get email addresses of your customers. Well, it’s fairly easy if you’ve created a blog or a website. There are several ways like creating a newsletter pop-up that would encourage them to sign-up. Or you could give them discounts and special offers upon sign-up. Or just simply ask for the customer’s email upon their order.
- SEO (Search Engine Optimization)
SEO or search engine optimization is one way to increase traffic and sales by strategising on how to gain organice searches from search engine sites like Google. If you have a website or a blog, use low competition keywords to help you rank higher.
- Influencer Marketing
Reaching out to social media influencers is a surefire way of getting your products or services in front of thousands if not millions of audiences. Depending on their engagement rate and number of followers, these influencers sometimes charge a promotion fee, or sometimes you could just send freebies to them.
It’s important to choose an influencer that is aligned with the values and goals of your brand. An influencer could potentially make or break your brand too. Look for influencers that make wholesome, PG content, or influencers with the same target demographics as you.
7. Financial Planning
Now that you have sort of an idea about the different operations and strategies needed to implement to run your online business, the next step is to plan the financials.
Do you have the proper financial resources to fuel your business? If you did your feasibility studies, checked in with the suppliers, and calculated all costs in including marketing expenses, you would’ve at least gotten an estimate about how much capital you need to start off.
A business’ goal is to generate profit. An in order to check on the ROI or the RETURN OF INVESTMENT, it’s always a must to keep track of your sales, expenses and income. If you aren’t keeping track of the inflow and outflow of your money, you wouldn’t know if you’re actually earning anything. You’re not a business. You’re just a charity.
Another important part of financial planning is calculating sales projections. For a certain period of time, given the inventory that you have, how much sales do you think you’re going to earn? If you compared the prediction vs the actual sales, this will determine the health of the business. If it’s on a downward trend, it means that your business is losing money. If it’s on an upward trend, it means that it’s poised for future growth.
At some point in your business, you would need more capital to cater to the increase in demand. It’s a good problem to have because that means that your business is expanding. One source of capital to look into is a LOAN. Most entrepreneurs are risk-averse and would prefer to not get a loan from a bank; to avoid default, it’s best to check into the interest rates and compare it with your business’ sales projections.
8. Get permits and licenses
It’s a common mistake among Filipinos that registrations are not needed for online businesses. To minimise the risk of being sued for tax-evasion, it’s important to get the proper permits and licenses from government offices. Your business would gain more legitimacy from your customers if it is fully registered.
- Go to your Local Government Unit (LGU) and get a mayor’s permit to operate a business. It’s also best to get a clearance from your respective Barangays.
- Get your business registered at the Department of Trade and Industry (DTI). You can register directly from their website.
- Make sure that you have an SSS or PhilHealth and register as a self-employed person.
- Go to the Bureau of Internal Revenue (BIR) to register your business. Get your Tax Identification Number or (TIN).
- If your online business is a partnership or a corporation, get your registration at the Securities and Exchange Commission (SEC).
9. Set-up your website
The difference between Wantrepreneurs and Entrepreneurs is execution.
Regardless of your stellar and well-researched business plans, if you can’t execute your business ideas into a reality, then you’re not an entrepreneur per se, but a “wantrepreneur” (or someone who just wants to become one but really isn’t). Execution is what differentiates between those who become successful vs the dreamers.
Even If you’re only just starting out and have no prior business experience, it’s perfectly okay to make mistakes along the way. The most important thing is that you put yourself out there and TRIED.
So now that you have your niche, your target market, your financial projections, operational strategies and marketing tactics, it’s time to make the face of the business that is representative of all the aspects that you took into consideration- the LOGO.
MAKE A LOGO
The logo is basically the “face” of your business. It should be memorable while being aesthetically pleasing to the eyes. The font of your logo should be legible and easy to read, and the colors that comprise the logo should represent the values of your business.
You can hire a professional graphic artist to design your logo, or you can make it yourself! If you’re on a budget though there are several websites that will help you easily make logos in just minutes!
MAKE YOUR WEBSITE
Of course, a website is at the forefront of an online business. Without it, how else are you going to be able to sell your products or services to your customers? There are other alternatives like Shopee, Lazada and Zalora or even Facebook Marketplace, but if you’re building a brand, a website that you can 100% control would allow you to expand and grow without the constraints those platforms would subject you to.
If you don’t have a technical co-founder or have no coding skills, or basically a beginner in starting an online business, you can still easily create a website of your own via cloud based e-commerce platforms like Shopify and WordPress.
SHOPIFY
Shopify is an e-commerce platform where you can build your own online store in just minutes. It’s easy to use and no matter what your niche is, there are plenty of tools to help you grow your business. You can also choose from thousands of their free and premium themes and all of them are mobile friendly.
For pricing, they offer packages from $13 (approx. 650 pesos) a month for basic shopify, $54 (approx 2700 pesos) for their shopify plan, and $107 (approx. 5400 pesos) for their advanced shopify plan.
WORDPRESS & WOOCOMMERCE
WordPress and Woocommerce is another option for you if you want to build your own online store. WordPress is a content management system where you can create your own website and Woocommerce is a fully customisable built in platform in WordPress that would help you create a full-on professional E-commerce store in just minutes!
Similarly with Shopify, there are thousands of themes and tools you can utilise for your own needs regardless of your niche, and there are various payment plans that you can choose from.
Before you can integrate Woocommerce though, you would need a host (or a server that your website would be in). It’s important to choose reputable web hosting providers as this would affect your site speed, downtimes, performance, etc.
Some of the most reputable web hosting providers are:
10. Launch your online business
You’ve got everything set-up, from your incredibly stunning website, to your social media platforms, all your inventory are ready to go, and of course the last thing you’d need to do is to launch your online business! It’s not as straightforward and as easy as you might think though. Some entrepreneurs make the mistake of just launching the website and then waiting for the visitors to just come in out of nowhere… only for them to end up with with… no visitors at all on their launch date!
Similarly with a traditional brick and mortar store, you’d need buzz to get the community excited about this new and upcoming business!
So how do you make your launching a success?
Make a pre-launching strategy.
A pre-launching strategy would ensure that there’s enough buildup and demand just in time for your launch date. If you’re off to a good start, this would definitely create a momentum.
- Reach out to social media influencers to create HYPE! This could be weeks before the launch date. An announcement of something to come would create curiosity amongst your potential customers.
- Set up your social media pages weeks before your launch.
- Make a sign-up form in your website or social media pages and build an email list.
- Email your subscribers about your launch date.
- Make pub mats and teasers about the products or services that you’re about to offer.
- Announce special discounts before your launch.
- Host a special event in your community.
- Give freebies to your followers on social media.
Once you’ve launched your online business, congratulations! You’re officially an entrepreneur. You’ve taken a massive step towards your goals.
It just doesn’t stop there. Keep track of your progress, don’t stop learning and always listen to your customers!
Do you have any questions about starting an online business? Feel free to post your questions or leave a comment below. Thank you!
