How to Start an Online Business: The Beginner’s Guide

Online Business is my thing: I’ve been building websites, software, apps and businesses for over 20 years.

I say with confidence that the majority of the so called “start an online business in [3/5/10/etc] easy steps” articles and programs will not help beginners in getting started. They will make too many mistakes and not get results fast enough to persist.

Most of these articles are just informational, but written by people with no real world experience, or very limited at best.

If you wanted to learn how to fly, who would get you there faster — a physicist or a pilot?

A physicist could give you all the information about how planes fly. Only a pilot can teach you how to fly a plane.

Online Business: Theory vs Practice

Credit: GoComics.com / Wiley Ink, Inc.

In my long career, I made tens of millions of dollars in online sales for companies like American Express and Aviva Insurance. I made millions for software start-ups.

Most importantly, I have made a killing for myself building, promoting, buying and selling websites.

If I could travel back in time, there are tons of things I would do differently. I have made a ridiculous amount of mistakes which looking back seemed really obvious (and stupid).

My goal in this article is to share everything I would tell my beginner self to teach him the ropes, give him the lay of the land, the mistakes that need to be avoided, and the fastest way to a stable, strong and safe income streams.

The Principles of Successful Online Businesses

Before diving into tactical things you should do (since everyone is different), I would first suggest some underlying principles that apply in all online businesses and individuals.

If you follow these principles, the tactics you use can vary significantly but still all lead toward success with your online venture.

“Quick & Dirty” vs “Slow & Steady”

Don’t get me wrong, there are a lot of quick ways to make a buck online.

The problem with them is they aren’t sustainable, and you have to constantly find new, quick ways to do things.

It ends up just being a lot more work. (Although you do learn a lot)

Long Term businesses on the other hand, become easier to run and help you develop mastery by focusing on fewer things.

They also generally scale way better; that is to say, you get more output (money) than required input (time, capital), if you are patient enough.

Some quick examples of how a short-term business and a long-term business might contrast, from my own experience.

Suppose there is a very popular game that everyone’s playing right now. You also love this game and want to build a website about it to sell advertising space, guides or anything. You build the website and it is a success! You have your top organic rankings and everyone is sharing your content on social media.

Online Business: Short Term Results

In less than a year, the game “Pokemon Go” basically died. Credit: Google Trends

However in 2 years, this game is no longer popular. Regardless that you worked so hard and your content was so good, people just aren’t interested in this game anymore. Your site dies.

Now instead of a website about a particular game, how about a website that is just about all popular games?

Long Term Online Businesses

“Gaming” seems to a stable interest over time. Credit: Google Trends

You can reasonably assume that games will always be popular with people, and games will come and go in popularity.

It’s more work, more labor, and more cost to make a bigger site that is about all games. It’s harder to do, and it’s more competitive.

But in the long-run, if your site is successful, each new game that comes out will require less work to promote your content since the site is already popular.

If I had just stuck to some of the original sites I had, and didn’t give up because it was too hard, I could have had some monster sites by now making insane monthly income.

But alas, I didn’t think long-term.

Go Big or Go Get a Job

You don’t have to try to build the next Google, Amazon, Facebook [insert big company du jour].

But you really want to ensure you have serious upside, and your downside is as low possible.

A successful, long-term business requires a lot of work, especially to start. Probably a lot more than you work right now, if you have a full time job.

You are also not likely to make any money in your early days, or at least, less than you are making at work.

Therefore, there is already significant downside to spending your time building an online business: time you could have spent working and earning guaranteed income, while trying to build a business that, statistically, is likely to fail.

I hope that doesn’t turn you off too much, it’s required knowledge to truly grasp the contrasting point about upside.

If you have all this downside risk, you want to ensure it’s a-symmetrical with the upside.

In other words, you want your upside to be WAY bigger than your downside.

Suppose you are currently an office worker making $40,000 per year. You want to try your hand at an online business.

Since it will take you a few years, and there is a good chance you will fail, you want to make sure you upside is well over $100,000.

In fact, if this were the case, I would want a business that could generate a minimum of $1,000,000 per year, or more.

There’s no point of quitting your job to try to simply replace your working income, considering all the risk and downside.

There’s also something to be said by going for a much bigger goal.

Suppose your goal is to make $1,000,000 per year, what happens if you “only” make it to $500,000 per year?

(Insert smiley face here, lol)

You have to be intrinsically interested in your business

I make this mistake all time, even to this day.

Tap Dancing to Work: Enjoy your Online Business

View on Amazon

Sometimes there are opportunities (to a seasoned online entrepreneur) that seem too good to pass up.

Recently, I found an opportunity to sell “Rash Creams” on Amazon (yep, you heard me right)

Seems like it can make decent money for very little effort, so I went for it.

I can tell you already, I hate working on that site. I hate looking at it, I hate spending money on it.

I don’t know anything about rash creams. I definitely don’t care about them.

Sure, the site makes money. But it costs me my soul. I have to do something that I hate now.

In contrast, I have this site (the one you’re on right now)

Maybe you can tell from my writing that I know what I’m talking about. I hope it’s apparent that I am enjoying myself, too.

I don’t even consider what I do on this site “work”, I do it for fun. I look forward to waking up to work on it, and I stay up late working on it.

What happens? I have better content than people who have “Rash Creams” style websites, where they dread working on it.

Learn from Warren Buffett, do what you love and it won’t even feel like work.

Stay on the top of your game

The internet moves insanely fast.

I can tell you from personal experience, if you read a book about internet business, it’s usually out of date by the time you finish the book.

“Back in my day” (I guess I’m old now) – you needed to know HTML to build a website, and you used notepad to do it. It would take months.

Once your site was up, the only way to get traffic was to be on the Yahoo Directory (used to just be a manual human directory). There was no Google.

The average modem speed was 28.8kbps, when 56kbps came out, it blew our mindholes. We could now download a song in only 2 hours instead of 4.

Fun fact: before mp3 format we used .wav format, and a 3 minute song would be about 80mb.

Domains cost $75 a year and hosting was over $30 per month. If you were lucky, you could get 100mb of bandwidth per month.

Now, you can get a domain for $10 with unlimited bandwidth  , have WordPress installed with a free theme and get indexed by Google in a few hours. No coding required.

My point is, the landscape changes really fast, and continues to do so before our eyes.

If you want to make it as an online entrepreneur, you have to be on top of all the latest technology and tactics to reach people online, which always changes.

Imagine how different the internet was before phones and social media. Imagine how different it will be 10 years from now. (Spoiler alert: you can’t)

Online Business Principles: The 4 Principles of Success

  1. Think Long Term – slow and steady wins the race
  2. Go Big or Go Get a Job – ensure you have significant upside relative to your downside
  3. Enjoy what you do – it shouldn’t feel like “work”
  4. Stay Sharp – the internet changes quickly; you must adapt with it.

Common Attributes of all Online Businesses

Online businesses make money in infinitely different ways.

However, they all share some common attributes, which you need to understand.

Mastery over these attributes will maximize your chances of being successful.

It’s all about traffic.

All successful online businesses have traffic to their various properties (website, social profile, app etc)

Some businesses go for massive amounts of general traffic, others go for small amounts of targeted traffic.

Online Businesses require traffic

Growing Traffic = Growing Business. Credit: Google Analytics

There are a lot of ways to get traffic, both free and paid. Depending on the nature of your business, you will need to use different methods.

Later in this article, we will discuss different ways to get traffic to your site.

The bottom line is: if you don’t have traffic, you don’t have an online business. You always need to focus on getting traffic.

Your offering needs to be valuable

This seems like a no-brainer, and as you probably know, there is a lot of garbage on the internet.

Whether it is a low-quality product, and poorly written article or a terrible user experience, these sites won’t go on to be successful.

Having a high quality offering is like throwing a snowball down a hill.

Every time someone interacts with your brand, you are more likely to get referrals, better rankings on Google and better online reviews.

They self-reinforce and make your snowball grow bigger with virtually no additional effort.

A low quality product is like rolling a snowball up a hill. It’s much more work, and you are more likely to slip and fall.

You will need to issue refunds, deal with poor customer reviews and can’t expect any referrals. Google will see this and penalize you in search rankings.

All great online businesses have something to offer to their visitors, whether it is a great product, informative content or a fun experience (hopefully all 3).

Coloring in the lines

There are a lot of sketchy ways to make money on the internet. Sometimes the legality can be “iffy” at best, especially considering that different countries and states have different laws.

For example, consider the following types of sites:

  • File sharing sites – Torrents, Uploads etc
  • Image Hosting Sites
  • Streaming Sites, Downloading Sites
  • Adult Sites

There are many people who have made fortunes in these kinds of businesses. There are also many who have been arrested, sued and thrown in jail.

It’s obvious that these sites are illegal and you are taking a big risk by getting into these types of online business.

But consider the following types of sites:

  • Fun games for kids site that has online registration
  • Personal blog site where you post images from the internet
  • Item review site about a popular consumer product

These sites seem perfectly legitimate, but all have legal implications that you need to know and be aware of, for example

  • Laws about the handling of information about minors has additional legal considerations, even on a simple gaming site;
  • All images you post on your blog may be required to have certain credits or licences;
  • Companies can attempt to sue you if you write negative articles about them

There are legal implications in every business, even the most innocent and simple ones.

The key is that you are legally covered — meaning your business doesn’t carry much legal risk. You can achieve this by speaking with a lawyer who specializes in online businesses.

The 3 Key Attributes of Successful Online Businesses:

  1. They have traffic
  2. They have something valuable to offer
  3. They are legally able to operate

The Best Online Business for Beginners

Now that you know the principles and the key attributes of successful online business, where do you start?

There are so many options to choose from, and you don’t have experience in any of them, how do you choose?

Remember our principle about enjoying what you do? Your business should be related to something you’re already interested in (or good at).

You also want to limit your downside risk, so ideally it’s not a business that requires (much) money to get started.

Therefore, I believe the best way for a complete beginner to get started is to build a content brand about something you’re interested in.

It requires less than $50 to get started, and gives you hands-on experience that will help you with your future venture.

Even if this first business fails (which it probably will), you will be much better prepared for your 2nd, 3rd (4th, 5th… 100th) attempt.

A successful content site: Simple, but Not Easy

It’s very simple to create a successful content site. All you need is:

  • Amazing Content (ideally, the best available on the internet)
  • A Smooth User Experience
  • People Linking, Sharing and Interacting with your Content

Do these things better than your competitors, and your site will be successful.

It really is that simple. Unfortunately, it’s very hard to do.

Running a marathon is simple. You just run from point A to point B and you complete the marathon.

Just because it is simple, doesn’t mean it’s easy.

So let’s get started on how you can deliver these three core features of a successful content site.

How to make Amazing Content

By amazing content, I literally mean the best content available on the internet.

If your content isn’t the best, then you don’t deserve any traffic. Period.

Content is King in Online Business

Content is King

Master of your Domain

The key to making great content is to actually know what you’re talking about.

Doesn’t matter if it’s an article, a video or a PowerPoint presentation, you can only make it amazing if you understand what you’re presenting.

Listen, most information is already “out there”, if you are just passing the information along, what value are you adding?

If you truly understand a subject, not only can you explain it in a simple fashion, you can also connect it to other ideas and use narratives to make it more compelling.

You can write in a more entertaining way than a snooze-fest Wikipedia article, even if it is more “informative”.

If the reader actually remembers your content, and is compelled to share/recommend it, that adds value that Wikipedia does not.

Easy, Informative and the right length

Your content needs to be simple to understand. Your goal post should be “Could a child understand what I’m talking about?

Of course, not all subjects are appropriate for children, but you get my point.

That means short sentences, concise statements and fun vocabulary.

The content piece needs to strike the right balance of entertaining writing, quality information and reasonable length.

If your writing is fantastic but there is no substance, it will fail.

If your information is good but it can be consumed in 1 minute or less, it will fail.

If your writing and information is good but it takes hours to consume, it will fail.

There is no easy answer to how you balance, but there are some goal posts that you want to aim for:

  • A high score (60 or higher) on the Flesch Reading Ease test
  • No less than 1,000 words, or 2 minutes to consume. No more than 10,000 words, or 30 minutes to consume.
  • Well referenced by leading experts, academic studies and facts
  • The occasional joke and fun stories

Mix up your Media

Your content should be a mix of text, imagery, audio and video.

Humans don’t all learn in the same way, so make sure you have something for everyone.

The 4 Ways Humans Learn

If at all possible, try to have develop the media yourself. Good imagery and videos are often promoted by bloggers who don’t want to create the media themselves.

A Smooth User Experience

User experience will always be relative to the time. 20 years ago, our CRT monitors had display sizes like 800×600 and there were no phones.

Old CRT Monitor

This was the most common screen size and resolution for a while.

Needless to say, user experience now a days has to accommodate a huge variety of screen sizes, devices and data speeds.

Your content needs to be beautiful on all devices.

The most important thing to remember is user experience is a moving target and will always have to change with the times.

You may be able to share timeless content that will be relevant in years to come, but it is all but guaranteed the expectations on user experience will change over time.

So what does that mean? Ensure you are up to speed on

  • The most popular content management platforms (WordPress, Joomla, Shopify, etc)
  • The most popular traffic sources (Google, Facebook, Instagram, etc)
  • The latest design styles, usually by updating your theme, or purchasing new ones as they come out
  • The latest devices, screen sizes and resolutions. Ensure your content can load properly on all the most popular (iPhone,  Android, PC etc)
  • Appropriate load times and bandwidth for your target audience.

Human Interaction and Endorsements

Finally, if you have produced amazing content and delivered it with a smooth user experience, this part should be a natural outcome.

Google, Facebook, YouTube and other platforms know how others are interacting with your content.

Whether it is through time on page, likes/shares, up votes/down votes, they know what content is resonating.

They use these signals to inform the rankings for content on their platforms.

Google: Organic Search

While social signals (facebook likes, retweets, comments) play a role in search engine rankings, the biggest signal for Google is still a natural link from a high authority site.

When strong sites link to your content, it’s a very strong signal to Google that your site is important.

Getting good links isn’t easy, and getting bad links can be very dangerous.

Make sure to focus on solid, white-hat link building techniques. This article is a fantastic guide on the subject.

Facebook Signals & Organic Reach

Facebook promotes content that it thinks people like you might engage with.

For example, if 2 or more of your friends like the same content, it’s likely to be promoted to you.

Social signals: facebook likes

This is the primary way that you get organic reach, when someone who follows your page likes your content, their friends might see the post.

The more people you reach, the more people you engage, the more traffic you will get. (and it will help your Google rankings).

You may ask “How do I get people to actually engage?”

Well that is covered in #1 – Create amazing content. If your content is worthy of engagement, you’ll get it.

Anything that gives you tips and tricks to dress up terrible content, you’re doing it wrong.

Charlie Munger has a great quote that I always remember:

“If you mix raisins with turds, it’s still turds.”

Colorful Charlie, gotta love him.

Wrap Up: Online Business for Beginners

You’ll notice there’s no steps, how-to or instructions on how to build a specific online business in this article.

That’s done for a reason, there is already literally millions of pages that explain that stuff.

The purpose of this article is to provide you with the guiding principles and the winning attributes of successful online business, so that you may sift through the mountains of information on the internet.

For example, if someone suggests making a Product Review site to make affiliate commissions, you know that you want to review products that have long-term futures, that you are interested in and willing to become the expert on, and that your reviews are the absolute best available on the internet.

Otherwise, don’t waste your time.

 

Barry Deen is an online entrepreneur and investor with over 20 years experience building, acquiring and selling businesses.