5 Steps for Starting an E-Commerce Business
Step 1: Plan for Your Online Business

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Start strong online

Any new business is going to face challenges. What sets successful entrepreneurs apart is the ability to anticipate potential roadblocks and plan ahead to keep their business moving forward. And if you’re beginning to sell online (even if you have an existing brick-and-mortar store), you’ll find that e-commerce is a space with its own challenges — and opportunities.

To set your business up for success, it’s important to ask yourself some key questions before you take your business online:


Are you ready to start your business?

Going into business half-heartedly is a recipe for disaster. Before you begin taking steps to get started, you need to make sure you’re passionate about your own venture. The online market is full of entrepreneurs trying to sell their product, and if you’re not sold on your idea, you can’t expect your customers to be.

In the early stages, do whatever you can to get yourself excited about the business. Perform market research. Find peers who have launched their own businesses. Start thinking about simple branding for your company. Buy a domain name.

These preliminary exercises can help you avoid key mistakes that first-time entrepreneurs make, and they’ll help you realize whether or not you’re fully invested in your idea.

8 signs you’re ready to start a business ►

Top 10 mistakes in starting online business ►


Where will you get your product?

Selling online is completely dependent on getting products to your customers. If you can’t reliably ship your products to customers, you’ll never get your business off the ground.

First, you need to know how you’ll get your product. If you’re selling a new invention, where will you get the raw materials? If you’re supplying an existing product, who will be your distributor?

Once you’ve found your source for supplies, it’s important to start thinking about inventory management. Aside from attracting customers, no part of your business will have a greater impact on your profit than efficiently managing your product. There are two common options for managing your inventory:

  • Warehousing your own inventory: This option is more difficult to manage, but it also has a higher potential for profit. If you’re storing your own inventory, that means you’re responsible for stocking product, shipping it, and re-stocking when supply is low. There are often growing pains involved in this type of inventory management, but learning the basics can help you avoid some of them. You can try solutions such as Solid Commerce or Freestyle Solutions.
  • Drop shipping: If you can’t afford to store your product, you can submit orders to a drop shipper such as SPS Commerce, who will then ship the product to your customer. Since you won’t need to manage your own warehouse, outsourcing your supply chain by drop shipping can be a huge time-saver. However, drop shippers often charge high fees for their services — cutting into your profits — and it means putting customer satisfaction in someone else’s hands.

Nailing down how you’ll keep your online store stocked and learning to avoid inventory mistakes are key factors for success, so it’s important to come up with a solid strategy.

Source products for your site ►

Find vendors for your online store ►

Drop shipping vs. carrying inventory ►


How will you pay for the business?

Initially, this can be one of the biggest stressors for small-business owners. Luckily, thousands of other small-business owners have walked this path before you, so there’s a host of resources available to help you fund your dream. And since online stores typically have less overhead than brick-and-mortar stores, it may be easier than you think to raise the necessary capital.

One of your biggest assets is the U.S. Small Business Administration (SBA). This government agency can help connect you with investors, loans, and grants, and they have small-business mentors available to help walk you through getting your startup off the ground.

When it comes to funding your business, personal savings or investments from friends and family can be great options. These types of funding carry low or little interest and have more flexible payments.
If those types of funding aren’t available, the most common option is taking out a loan. There are many types of loans for small-business owners, and determining which loan is best for you largely depends on your situation.

Finally, there are more competitive types of funding, such as grants, venture capitalists, angel investors and crowdsourcing. Small businesses usually need an incredibly compelling product to take advantage of these sources, so you shouldn’t rely on them as your primary source for funding.

Insights on financing a new business ►

10 ways to finance your e-commerce business ►

5 steps to identify potential investors ►


How should you write your business plan?

The business plan should be the last step of your planning phase. Once you’ve determined what you’re selling, how you’ll organize your business, how you’ll reach customers, and which financial avenues you want to pursue, it’s time to put it all in writing. This plan will be your primary asset for securing loans and investors.

Again, one of your best resources is the SBA — industry professionals from all over the U.S. have worked to develop resources to help you create your business plan, and their best practices are a great place to start.

How to write a business plan ►

Why you need a business plan ►

Once you’ve developed your business plan, it’s time to start building your e-commerce infrastructure.


Step 2: Build ►

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