Start a Home Internet Business

A home internet business is one that is conducted out of your home, using a website in order to attract and interact with customers. Starting such a business can be an exciting and relatively low-cost way to make extra money or launch a new career, whether you are providing services online or using a website to market your products or skills. Despite the advantages, starting a home internet business is difficult, and most internet businesses fail. To make yours a success, you will need a clear plan, a polished website, and an effective marketing strategy.

Steps

Planning Your Business

1. Decide what service or product your business will provide. To decide on a product or service, look to your unique abilities, training, or experience. Ask yourself how you can utilize these things to create a product or service that creates value better for customers than your potential competition.
   • For example, if you are a formally trained graphic designer with experience working in web design, an online web-design business could be an attractive choice.
   • Consider if you want a business that can be done exclusively online, like editing or website design, or if you will be starting a business that deals in physical products, like arts or crafts.
   • Consider how much time you are willing to put into your business. Some businesses, such as freelancing as a web designer or selling crafts, are easier to do as part time jobs than others, like day care or consulting.
2. Do market research. Once you've decided on what you would like to offer as a product or service, find out if there is a demand. Look at the number of possible competitors, conduct customer surveys by phone or personal visits, and find out if there is a market need that is not being met.
3. Choose a business that can work online. Not all business models are fully suited for an online or home-based based format. For example, if your business idea involves extensive inventory, staffing, or production/manufacturing, a home-based operation may not be ideal. Here are some ideas for businesses that require little capital and you can run from your home:
   • Accountant or financial planner
   • Affiliate marketing (promote other company’s products on your website)
   • Artist
   • Blogging
   • Consultant
   • Craft maker
   • Editorial and writing services like copywriting, proofreading, indexing, technical writing or ghost writing
   • Gift basket service
   • Graphic designer
   • Internet researcher
   • Jewelry maker
   • Virtual assistant
   • Website developer
4. Learn the costs of starting a business. The costs of starting your business will vary dramatically depending on the specific type of business being offered. For example, if you are running a small, home-based online book store, you will need to fund inventory. If your online business is service-based, however, your costs may be lower and would be limited to the capital you need to provide your service. There are a few general costs that are central to most online businesses.
   • Hosting – Chances are good your business will require a website. Web hosts are the services that keep your website up and running. They usually cost $7-$19 per month, depending on how much technical support they offer and the size of your site.
   • Email Marketing Service – Building an email mailing list is key to advertising your product and making money. Start building your list right away. The typical service costs about $20 per month.
   • Shopping cart – If you are selling products and services that can be bought online, you will want an online shopping cart for your customers to put them in. Some payment processors (which are free to set up, but charge a fee per transaction) offer shopping carts free with their service. Otherwise, they generally cost about $5 per month.
   • Website design – The cost of design will vary depending on whether you use a site that builds business websites for free, build your own site using a service like WordPress (starts at about $70), or hire a designer (usually ranges from $1000-$5000).
   • Costs associated with manufacturing a product or service – For example, if you are running a greeting card business, you would need paper, packaging, and funding either to purchase specialized printers, or to pay for printing services. You would also need design software, or funding to pay a professional design service.
5. Make a a Business Plan business plan. No matter how small your business, it will benefit from a strategic plan that will guide you in achieving your goals. A business plan is your entire business planning process reflected in one document. You can find more details about how to write a plan here, but broadly, you will want to include:
   • Your business concept: The focus here is on describing your business, the market for your business, your products, as well as your organizational structure and management.
   • Market research: Market research is critical, as it describes the nature of the market you are entering into. Namely, it will identify who your major competitors are, what your target market is, and the preferences as needs of your target market. The market analysis helps you to identify precisely what your customers need.
   • A marketing plan: This would describe how you plan on penetrating your market, how you would communicate with customers, as well as how you will distribute your product or service.
   • An operations plan: This would describe your operations on a day to day basis. It would include, for example, the steps involved in the production of your product or service.
   • A financial plan: This would outline how you would finance your business, what your expected costs are, and estimations as to your revenue.

Legally Establishing Your Business

1. Determine the legal structure of your business. This will have implications for how you file taxes and how much you will need to pay. Most small businesses are sole proprietorships which are the easiest to set up and require the least paperwork. If you are considering another legal structure, you may wish to consult a lawyer who specializes in internet law and who can help you pick the structure best for you.
   • Sole proprietorship – A sole proprietorship is owned and run by one person, and there is no legal separation between the individual and the business. As a result, all profits, losses, debts and deeds of the business are your responsibility. This option can be attractive for an online, home-based business due to its ease of formation, and due to the complete control it provides.
   • Partnership – A partnership simply refers to the sharing of ownership between two or more people. Partnerships are formed through the negotiation of an agreement between the partners (assisted by a lawyer usually), and each individual partner is liable for his or her share of profits, losses, or liabilities. This can be attractive if you are choosing to run the business with another person to take advantage of combined skills.
     • Keep in mind that each partner is generally liable for the full debts of the partnership. Partners who pay may have to seek payment from the other partners separately if they do not pay their share of a debt. The amount of liability depends upon the terms of any loans the business takes out.
   • Limited liability company (LLC) – To start an LLC, you must, at a minimum, choose a name and file articles of organization with your state, often for a fee. LLC owners pay taxes on their proportion of profits through their individual income tax returns and have to pay self employment tax, but are protected from personal liability for the decisions and actions of the company.
   • Corporation – An independent legal entity owned by shareholders. To register your corporation you must choose a company name and file articles of incorporation with your state. You will also need to register with the IRS and get a tax ID. Corporations file taxes separately from their owners. This may prove advantageous, allowing owners to take advantage of the corporate tax rate, but it may also lead to double taxation (which refers to your corporation's income being taxed, followed by your income from the corporation being taxed when the company pays a dividend or makes a distribution). You should speak with your lawyer or accountant to see if this form of business will benefit you. This structure is generally not appropriate for smaller businesses.
   • S Corporation – An independent legal entity owned by shareholders, like a typical corporation, except that to avoid double taxation, profits and losses are passed through to the owners’ personal tax returns, instead of the company paying taxes.
2. Register your business name with your state government, if necessary. A DBA (Doing Business As) is needed whenever you are doing business under a name other than your own. If you are working as an independent contractor under your own name, you don’t need one. If your business has a name other than your own, you will need to register that name as a DBA.
   • Registering a DBA name is typically done through your state government or county clerk's office. Since the procedure for registering varies between states, it is wise to search the specific requirements of your state online beforehand. The registration process typically only takes a few minutes to complete.
   • This is typically useful for sole proprietorship, since not using a DBA name means that your business name will automatically default to your personal name. Note that a DBA name is also required if you are starting a corporation.
3. Determine if you need to get a tax identification number for your business. Corporations that must file tax returns will need one, as well as partnerships, which don’t file taxes, but do have to file business information annually with the IRS While the IRS does not generally require a tax ID number for sole proprietorship (you can use your Social Security number instead), there are instances where you will need a separate tax ID:
   • You have employees. Your company will be responsible for half their payroll taxes, and must thus have a tax ID with which to pay them.
   • You file employment, excise, or alcohol, tobacco and firearms tax returns related to your business.
   • You withhold taxes on income other than wages paid to a non-resident alien.
   • You have a Keogh plan (a tax-deferred pension plan for self-employed individuals or unincorporated businesses).
   • You are involved with trusts, estates, real estate mortgage investment conduits, non-profit organizations, farmers' cooperatives, or plan administrators.
4. Obtain the necessary licenses and permits to run your business. For example, if you are offering accounting for financial services, you will need a license in most states. Check https://www.sba.gov/content/what-federal-licenses-and-permits-does-your-business-need to see if your business needs any federal permits or licenses, and https://www.sba.gov/content/what-state-licenses-and-permits-does-your-business-need to see if it needs a state permit or license.
   • There are also permits and licenses that may be required by your city or county. Unfortunately, these vary tremendously. The best way to find out if your particular business requires any unique permits is to contact your city, describe your business, and inquire about any requirements. For example, many cities require "Home Occupation Permits", which enable you to operate a business from your home.

Creating Your Website

1. Decide whether to use a professional web designer. If your business is exclusively online or an e-commerce business, you will probably want to hire a professional to create a polished website. On the other hand, if your site is more of a marketing tool for a business that mostly takes place offline (like dog walking or writing novels, for example), then a simpler do-it yourself site will likely suffice.
   • Web designers will build your site and take care of registering your domain name and selecting a web-host. The more you pay, the more input you will have in creating a unique site.
   • The cost of web design varies depending on whether you use a solo developer in the US ($25-$100/hr), an offshore web company ($10-$40/hr), or an established US agency ($60-$200/hr).
   • Offshore firms can design sites starting at around $500, while the cost of a US firm will usually range from $5,000-$10,000, with solo developers falling somewhere in-between.
   • E-commerce sites typically cost more. Consider using your webpage mainly as an advertisement for your goods, with links to another site like Amazon or Etsy to take care of the actual billing.
2. Register your domain name with the Internet Corporation for Assigned Names and Numbers (ICANN). Your domain name is the web address of your online business. Once you choose it, you will need to pick a registrar from http://www.internic.net/regist.html and pay a registration fee ranging from $10-$35 in order to register your name for a year. You will need to renew it annually at the same cost. Most web-hosts will do this for you.
3. Decide how you will build your website if doing it yourself. There are multiple options available for creating a website, and the option you choose will vary based on your web-design abilities, time, and level of quality demanded.
   • Use templates – Sites like WordPress offer free or professional templates that you can customize to create your site. Working with these services requires both time and a moderate degree of web design knowledge
   • Free business website services – Services like Moonfruit, Weebly, Qapacity, Jimdo, and Yola offer website construction where all you have to do is pick a format and provide content. Many are free, with inexpensive upgrades for premium services.
   • Contact your local or state business office – Many states will assist you in building a business website for free. Check here for a list of state business offices.
4. Organize your site and provide content. Whether you build your site yourself or use a designer, you will still need to create the content that fills the site. This includes:
   • Pictures and descriptions of your services / products.
   • A business value statement that indicates why your business is a better choice than its competitors. For example, if you are in the greeting card business, you may state something along the lines of "John's Greeting Cards provides high-quality and totally customizable card templates with free, next-day shipping, so your card can get where they need to go -- fast". This statement clearly identifies that your business is creating value through speed and affordability, and through customization.
   • A business history and/or personal bio.
   • A blog or any other additional content you wish to add.
   • The main purpose of your website is to not only provide a one-stop destination for information regarding your business, but to also serve as a marketing tool to clearly identify why your business is a superior choice.
5. Improve your website's placing in searches with search engine optimization (SEO). Search engine optimization will help your website to show up near the top of searches. You can hire a company to do it for you, or try some of the following on your own:
   • Put keywords in the copy on your webpage. Think of words or phrases customers might use to search for your product, then use the Google Keyword Tool to find similar phrases. Include these phrases on your home page and throughout your site.
   • Add links to sites your customers might be interested in. Links into and out of your site are another factor in how high you rank in search engines.
   • Update your site regularly. This will push your website higher in the search rankings. Consider writing a blog twice a week, and use keywords whenever possible. If you can’t write a lot, add pictures regularly.
   • Use website analytics such as Google Analytics to see the effectiveness of your website's search engine optimization.
6. Decide whether you want to install e-commerce software on your site or have your transactions handled by a third party. Hosted e-commerce solutions like Shopify or Etsy are much easier to set up and provide more technical support. Or, you can install an e-commerce platform directly on your website with services like Magento, Bigcommerce, Woocommerce (works with WordPress) or Webs. These services are more powerful and customizable, but also require much more time and technical know-how.
   • For most newcomers to internet business, a hosted solution is advised. These services are easier to use and maintain, and work well for initially small purchase volumes.
7. Follow these best practices to ensure your website is successful. As you build your website, keep in mind that it serves two main purposes: to advertise your product / service and to facilitate sales. It should do both as simply and clearly as possible. Make sure your site:
   • Is simple and looks professional.
   • Loads quickly and is viewable on all browsers and devices.
   • Is easy to navigate in order to find necessary information and purchase goods or services. To test this, ask friends or family to navigate the site for the first time, and observe their ease of use.
   • Features attractive photography, particularly if you are selling tangible objects that can be photographed.
   • Provides contact information including your phone number.
8. Select a web-host. The web-host provides the space and support services necessary to run your website. They own the physical servers that your site exists on. When picking your web-host, be sure to:
   • Use sites like HostMonk and WHReviews to compare prices from a variety of hosts.
   • Understand how much processing power and disk space your site will need. If you’re hosting an e-commerce site, videos, or other memory-intensive content, then going with a cheap web-host may leave you with a slow, poorly functioning website.
   • Check the reviews. To avoid fly-by-night companies, be sure to pick a site with multiple good reviews.
   • Choose a company with good tech support. That means if your site goes down, you should be able to call someone to get answers. Since your business is dependent on being online, an issues need to be promptly resolved.
   • Pick a site that backs up your website and provides technical patches automatically.

Marketing Your Business

1. Explore pay-per-click advertising. Buying traffic is the quickest way to bring people to your site, and vendors will allow you to target specific geographical areas with keyword searches. Make sure you are targeting the right audience. Clicks cost you money, and if tons of visitors leave without purchasing your services or product, you can lose money. There are two major advertisers:
   • GoogleAds – Your ads appear in the sidebar when someone enters certain search terms that you select.
   • Facebook – Your ads appear in the newsfeed for an audience that you select according to location, sex, age, and interests. The more specific your audience, the more successful you will be.
2. Make contacts and establish affiliate sites. Find quality sites related to your business and ask if you can advertise on their site, in return for their advertising on yours. Affiliate sites bring high quality traffic that often translates into sales.
   • As an example, if you are operating a business to teach English to non-English speakers, perhaps consider reaching out to a high-quality site that provides services to recent immigrants. Advertising through a site like that could bring in traffic for you, whereas by advertising on your site, their business could access your customer base.
3. Create a social media presence. Americans spend 1 out of every 7 minutes on social media, and this represents a tremendous marketing opportunity. Start by focusing on the platform your customers are most likely to be on and build a presence there.
   • Create a Facebook page. Every business should have one, even if this isn’t your main social media outlet.
   • Post pictures on Pinterest, particularly if targeting women 18-65, as this is Pinterest's most popular demographic.
   • Don’t forget video sites like Youtube.com. Youtube can be an effective way to create content that can simultaneously work to market your services and to educate customers. For example, if you offer a membership-based site that provides investing advice to customers, use Youtube to create free advice content, which can then link to your product or service.
   • Post on social media frequently – at least several times a week, and preferably once a day or more. Pictures are an easy way to do this. Also, keep followers up to date on new products, sales, and other business-related info.
4. Publish an e-newsletter. A weekly or monthly newsletter is one of the best ways to use your email list. Make sure to provide value-added content that people want to read, instead of intrusive sales pitches. For example, if you are a graphic designer, offer helpful information about how graphic design and branding solutions can work to attract new customers.
   • Consider writing a blog as a replacement or in addition to an e-newsletter. Every published blog post has the potential to increase your search engine ranking, therefore making it an excellent way to draw in new customers via the internet. As mentioned before, try to make your content useful, rather than a simple sales pitch. For example, if you offer computer training, you might review a newly released computer, or if you’re an accountant, you might discuss some new rules impacting this year’s taxes.
   • Consider guest blogging. Contributing quality content to related blogs shows off your expertise and can bring people to your site.
5. Use press releases. A quality press will be picked up by major search engines and hundreds of websites and posting one is relatively inexpensive, typically $200 to $300. There are several wire services to choose from, including PR Newswire and PR Web.
6. Promote your website in the real world. Mention your site to customers and friends, and make sure your web address is printed on everything, including your letterhead, business card, and any brochures you might have.
   • Keep in mind that simply because your business is online does not mean you cannot benefit tremendously from traditional advertising methods, and this is especially true if your online or home-based business relies on or markets to local customers. A graphic design service, for example, can benefit tremendously not only from internet traffic, but also from relationships with local businesses and organizations.
   • If your business fits this profile, consider taking out advertisements in newspapers or on radio, or attending local networking events related to your product or service.
7. Keep up with reviews on sites like Yelp and Kudzu. Good reviews are a great way to get business, and the best way to get them is to provide friendly, quality service and great products. But you should also keep an eye out for negative reviews so that you can post your side of the story.

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Sources and Citations

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