Buzz
Running an online business from home means managing your operations right from your residence, reaching out to and interacting with customers via a website. Offering online services or using a website to promote products and skills are both attractive paths. These approaches can help you earn extra income or even start a career with relatively low costs. Despite their advantages, home-based online businesses can be challenging, and most fail. To succeed, a clear plan, a well-maintained website, and an effective marketing strategy are essential.
Steps
Develop a Business Plan
Choose a product or service to offer. Consider your special skills, training, or personal experiences. How can you leverage them to create products or services that provide better value for customers in relation to potential competitors?
- For example, if you are trained in graphic design and have web design experience, starting an online website design business could be a great option.
- Think about the type of business you want. You can run your business entirely online, such as designing websites, or sell physical items, like crafts or handmade goods.
- Consider how much time you can commit to the business. Freelance and flexible work, such as web design or selling crafts, may not require you to dedicate your entire day. Others, like childcare or consulting services, may require more time.
Conduct Market Research. Once you've determined the product or service you wish to offer, it's time to assess the market demand. Look at potential competitors, conduct customer interviews or phone surveys, and identify if there's an unmet market need.
Select a Business Model That Can Operate Online. Not all business models are suitable for home-based operations. For instance, if your business idea involves large inventory storage, hiring staff, or manufacturing, operating from home might not be the best choice. Below are a few business ideas that require little capital and can operate from home:
- Accounting or financial planning
- Affiliate marketing (promoting other companies' products on your website)
- Artist
- Blogging
- Consulting
- Handicrafts
- Writing and editing services, such as copywriting, proofreading, cataloging, technical writing, or freelance writing
- Gift services
- Graphic design
- Online research
- Jewelry making
- Virtual assistant
- Web design
Understand Startup Costs. The initial costs of launching a business can vary greatly depending on the business type. For example, if you plan to start an online bookstore, you'll need funds to stock inventory. However, if you're offering services, costs may be lower and limited to what’s required to provide that service. Some common costs that impact most online businesses include:
- Online data storage and sharing services – You'll likely need a website. These services maintain and ensure the functionality of your website. Costs typically range from 150,000 to 400,000 VND per month, depending on technical support and the size of your website.
- Email Marketing Services – Building an email list is key to promoting your product and generating income. Start by building your email list. This service typically costs around 400,000 VND per month.
- Shopping Cart – If your products or services can be sold online, having a shopping cart system is essential for customers to make purchases. Some payment service providers (free to sign up but charge per transaction) offer free shopping carts with their services. If purchased separately, the cost is generally around 200,000 VND per month.
- Website Design – The cost of website design depends on whether you use a free e-commerce website builder, services like WordPress (starting around 140,000 VND), or hire a designer (typically ranging from 20 to 100 million VND).
- Production Costs. For example, if you’re selling cards, you'll need paper, packaging, and an investment in specialized printing equipment or printing services. You’ll also need design software or professional design services.
Create a Business Plan. Regardless of how small your business is, a clear strategic plan is beneficial. It is a document that outlines the entire business planning process. You can learn more about how to create a business plan in our detailed article. In general, a business plan includes the following sections:
- Business Idea: Focus here is on describing the business activities, market, products, and your organizational and management structure.
- Market Research: Market research is crucial. It describes the market you're planning to enter, identifying key competitors, target markets, and preferences in the target market. A market analysis will help you accurately identify customer needs.
- Marketing Plan: This outlines your strategy for entering the market, how you will communicate with customers, and how you'll distribute products or services.
- Operations Plan: Describes your day-to-day activities, such as the steps involved in product production or service delivery.
- Financial Plan: Describes how to secure finances for the business, expected expenses, and projected revenues.
Legalize Your Business Operations
Determine the Legal Structure of Your Business. This involves registering and paying taxes. Most small businesses opt for sole proprietorship due to its simplicity and minimal paperwork. If you're considering other types, consulting a lawyer specializing in online business may help you choose the right structure.
- Sole Proprietorship: A sole proprietorship is owned and operated by one individual. Legally, there's no distinction between the owner and the business. As a result, all profits, losses, debts, and business actions are the owner's responsibility. Given its ease of setup and full control, this could be an appealing choice for home-based online businesses.
- Partnership: A partnership is a business where ownership is shared between two or more individuals. These companies are formed through negotiations and agreements (often with legal assistance). Each partner is responsible for their share of profits, losses, and other liabilities. If you plan to collaborate with someone to leverage both of your skills, this might be a good fit.
- Note that, generally, each partner is jointly and severally liable for the company's debts. A partner who pays the full debt may seek reimbursement from the other partners if they fail to contribute their share. The level of responsibility depends on the loan terms.
- Limited Liability Company (LLC): To form an LLC, you need to choose a name and submit a draft of the company's articles of incorporation. The registration fee is 200,000 VND per new registration (Circular No. 176/2012/TT-BTC). LLC owners pay tax on profits through personal income tax, and if in the U.S., they also pay self-employment tax. However, LLC owners are not personally liable for the company's decisions or actions.
- Corporation: A corporation is a separate legal entity owned by shareholders. To register, you need to choose a company name and file with the Business Registration Office or online as per regulations. Corporations file taxes independently of the owners, which can be beneficial as they can take advantage of business tax rates. However, double taxation may occur (corporate income is taxed, and individual income from the corporation is taxed when dividends or profits are distributed). Consult a lawyer or accountant to determine if this business structure is suitable for you. Generally, this is not ideal for small businesses.
- S Corporation: In the U.S., you can register your business as an S Corporation. Like a traditional corporation, it’s a separate legal entity owned by shareholders. However, this structure avoids double taxation because all profits and losses are reported on the owners’ personal tax returns rather than being taxed at the corporate level.
In the U.S., consider whether you need to register your business name with the state authorities. A business name is necessary if you are not operating under your own name. If you are working as an independent service provider, you won’t need one. Registration is required only if your business uses a distinct name.
- Registering your business name is usually done through a government office or county clerk. Since registration procedures may vary by location, be sure to check the specific rules in your area before proceeding. The process is generally quick and straightforward.
- This is particularly useful for sole proprietorships since, without a business name, your personal name will be used as the business name. Keep in mind that a business name is also required for corporations.
In Vietnam, when registering your business, the Department of Planning and Investment will automatically link with the tax authority to assign a tax number to your company. In the U.S., you must decide whether a tax number is required for your business. A corporation must file taxes, thus requiring a tax ID. While a partnership doesn't have a tax filing requirement, you will still need to report your business information annually to the IRS. For a sole proprietorship, the IRS typically does not require a tax number (you can use your Social Security number). However, there are situations where a tax ID is necessary:
- If you employ workers, your business will be responsible for part of their payroll taxes and thus must have a tax number.
- If you need to file taxes on firearms, tobacco, alcohol, excise taxes, or employment taxes.
- If you withhold income tax from non-U.S. citizens.
- If you have a Keogh plan (a tax-deferred retirement plan for self-employed individuals or non-corporate businesses).
- If your business involves securities, real estate, investment funds, non-profit organizations, cooperatives, or insurance and pension program management.
Obtain the necessary licenses for your business to operate. For example, if you're providing financial accounting services, you'll need a professional license in most countries or regions. In the U.S., you can check https://www.sba.gov/content/what-federal-licenses-and-permits-does-your-business-need to see if your business requires federal licensing, or https://www.sba.gov/content/what-state-licenses-and-permits-does-your-business-need to check for state-specific requirements.
- Your local area may also require other licenses or certifications, which can vary greatly from one region to another. The best way to find out if your business needs any special permits is to contact your city, explain your business activities, and inquire about their requirements. For instance, many cities require a 'Home Occupation Permit' if you plan to operate your business from home.
Build a website
Determine if professional design services are necessary. If your business operates entirely online or is an e-commerce business, you may want a website designed and maintained by professionals in the field. On the other hand, if your website is just a marketing tool for a business where most activities don’t involve the internet (e.g., dog walking services or writing novels), a self-built website may suffice.
- Web designers will build your site and handle domain registration as well as choosing hosting and online data-sharing services. The more you invest, the more unique your website will be.
- Web design costs can vary greatly. In the U.S., for example, it depends on whether you hire an independent designer (500,000-2,000,000 VND per hour), an international web company (200,000-800,000 VND per hour), or an agency based in the U.S. (1,200,000-4,000,000 VND per hour).
- Companies in other countries may design websites starting from over 10 million VND. Meanwhile, hiring a U.S.-based design company typically costs between 100-200 million VND, with independent services priced somewhere in between.
- E-commerce sites usually come with higher costs. Consider using your website primarily for advertising your products and linking to other platforms like Amazon or Etsy to handle sales and payments.
Register your domain with the Internet Corporation for Assigned Names and Numbers (ICANN). A domain name is the address of your online business. Once you’ve selected a domain name, you’ll need to choose an international domain provider from http://www.internic.net/regist.html and pay a registration fee ranging from 200,000-700,000 VND for one year of usage. You’ll need to renew this registration annually at the same cost. Most hosting and online data-sharing service providers can assist with this process.
If you decide to do it yourself, determine how you will build your website. There are numerous options for creating a website, and the choice you make depends on your design skills, the amount of time you have, and the quality requirements.
- Using templates – Platforms like WordPress offer free or professional templates that allow for customization and personalization to create your unique site. Working with these services requires both time and a moderate level of web design knowledge.
- Free e-commerce website services – Platforms like Moonfruit, Weebly, Qapacity, and Yola provide website frameworks where all you need to do is select a format and enter your content. Many of these services are entirely free, with affordable upgrade options available.
- Contact your local business management office. Many areas provide free assistance for building e-commerce websites. If you're in the U.S., you can check here for a list of state business management offices.
Organize your website and input content. Whether you're designing it yourself or using a service, you'll need content to fill your pages. This includes:
- Images and descriptions of products/services.
- Your business value proposition, stating why your business is a better choice than your competitors. For instance, if you're in the greeting card business, you might say: 'Mai Blossom Cards offers the highest quality with fully personalized designs and free, fast shipping, ensuring you always have the best cards when you need them.' This statement clearly highlights the value your business provides in terms of speed, affordability, and customization.
- Business history and/or personal bio.
- A blog or any additional content you wish to add to the website.
- The website should not only provide all relevant business information but also serve as a marketing tool that clearly communicates why your business is the superior choice.
Improve your website's visibility in search results using search engine optimization (SEO) techniques. SEO helps your website rank higher in search results. You can either hire a service or try a few tricks on your own:
- Place keywords on your website pages. Research the terms or phrases customers might use when searching for your products, and then use the Google Keyword Tool to find similar terms. Incorporate these throughout your homepage and website.
- Add links to pages that might interest customers. Linking both to and from your site is another factor influencing search rankings.
- Keep your website updated regularly. This helps it rank higher in search results. Consider blogging twice a week and using keywords whenever possible. If writing frequently isn't feasible, at least add images often.
- Use website analytics tools, like Google Analytics, to monitor your SEO efforts' effectiveness.
Decide whether to install e-commerce software yourself or have a third-party handle transactions. E-commerce solution providers like Shopify or Etsy are easy to register with and offer substantial technical support. Alternatively, you can install e-commerce platforms like Magento, Bigcommerce, Woocommerce (on WordPress), or Webs directly on your website. These services are more efficient and customizable but require more time and technical know-how.
- For most newcomers to online business, using a provider's service is the recommended option. They're easier to maintain, user-friendly, and work well for small-scale transactions.
Follow best practices to ensure the success of your website. When building your website, remember that it serves two main purposes: advertising products/services and supporting sales. Your website should do this as simply and clearly as possible. Ensure it is:
- Simple and professional.
- Fast-loading and accessible on all browsers and devices.
- Easy to navigate, allowing users to find necessary information and purchase products/services. To test this, ask a friend or family member who has never visited your site to use it and observe their experience.
- Visually appealing, especially when your products can be showcased through images.
- Provide contact information, including your phone number.
Choose a provider for online data storage and sharing. These companies offer the necessary space and services to ensure your website runs smoothly. They own the servers where your site is hosted. When selecting a provider, make sure to:
- Use websites like HostMonk and WHReviews to compare prices across numerous providers.
- Understand the processing and storage requirements for your website. If you have an e-commerce site with videos and other media-heavy content, opting for a low-cost provider could lead to slow performance and poor functionality.
- Check reviews to avoid unreliable companies. Choose providers with positive feedback.
- Choose a provider with excellent technical support. This ensures that you can easily get help if your site encounters any issues. Quick resolution is crucial for businesses that rely entirely on the internet.
- Pick a provider that offers automatic technical updates and supports your website efficiently.
Market Your Business
Build your brand on social media. Americans spend 1 minute on social media every 7 minutes, presenting an excellent marketing opportunity. Start by focusing on platforms your customers are most likely to use and establishing your presence there.
- Create a Facebook page. Every business should have one, even if it's not your primary social media outlet.
- Share images on Pinterest, especially if your target audience is women aged 18-65, as this is the most common demographic on the platform.
- Don't forget video platforms like YouTube. YouTube is an effective way to create content that promotes your services while also educating your audience. For example, if you offer investment consulting, you can provide free advice and link to your services or products.
- Post regularly on social media—at least once a week, ideally once a day or more. Sharing images is the easiest way to engage. Also, keep your audience informed about new products, sales, and other customer-relevant information.
Publish an email newsletter. A monthly or weekly newsletter is one of the best ways to leverage your email list. Be sure to provide valuable content that recipients want to read, rather than overdoing the sales pitches. For example, if you are a graphic designer, share useful information on how branding and graphic design can help attract new customers.
- Consider blogging as an alternative or supplement to email newsletters. Each blog post can improve your search engine ranking, making it a great way to attract new customers online. As mentioned, create helpful content instead of just focusing on sales. For example, if you offer computer training, you could write a review of newly released products. Or, if you're an accountant, you could discuss new tax laws affecting this year's filings.
- Consider guest posting on other blogs or websites. Contributing quality content to other blogs can showcase your expertise and drive traffic to your own site.
Use press releases. High-quality news outlets are selected by major search engines and many websites. Publishing a press release is relatively inexpensive, typically costing between 4 and 6 million VND. You can choose from a variety of news agencies, such as PR Newswire and PR Web.
Promote your website in the physical world. Mention your website to customers and friends, and ensure the web address is displayed on everything, including email signatures, business cards, and all your marketing materials.
- Keep in mind that operating online doesn't mean you can't benefit from traditional advertising methods. This is especially true if your local customer base is the foundation of your business. For example, a graphic design service can benefit from internet traffic but also from strong relationships with local businesses and organizations.
- If your business fits this description, consider advertising in local newspapers or participating in local events related to your products or services.
Maintain reviews on sites like Yelp or Kudzu. Having good reviews is an excellent way to attract customers, and the best way to achieve this is by providing quality service, a friendly attitude, and excellent products. However, you should also pay attention to negative reviews and present your perspective in response to these situations.
