How to Set Up an Online Business – Complete Beginner’s Guide

Meet Steven.


Steven is 28 years old and he wants to know how to set up an online business. You know, he’s been reading a lot of articles on the internet, hearing a lot of success stories, and now he wants in! He wants a big fat piece of this mysterious internet-lifestyle pie.

Unfortunately, he can’t simply skip some steps and go straight to relaxing at the beach while everything is done on autopilot. Before he can do that, he has to put a number of elements in place.

First and foremost, he has to have the right …

Having the right mindset is the most important thing

Having the right mindset is the most important thing no matter what we do. Whether it’s setting up an online business or learning to play table tennis.

To be honest, when someone wants to know how to set up an online business it can be a lot more difficult for them than mastering some traditional activities (like sports, for example). That’s because not everyone knows what an online business is (in oppose to table tennis), and what the exact steps that need to be taken are. Hence:

Online business – It’s every business venture where the internet is the main vehicle of: attracting customers, marketing, advertising, processing payments, delivering products (usually), and managing other vital business components.

…How do you like my definition? Anyway, back to the topic… Online business is very different from his offline older brother. You can find out why here: Why Running an ONLINE Business is so Utterly Different Than Running an OFFLINE One.

Now that Steven knows what the difference between online and traditional offline business is, he needs to realize one more thing since we’re talking mindset. And that is: What Mind-Shift You Need to Take When Starting Your First Business. It’s not strictly an online business thing, although it touches upon business in general.


“There’s a lot to think about” – says Steven – “I don’t know if this whole online business thing is for me after all.” Don’t worry, Steven! It will all become clear in a moment, but for now here’re some entrepreneurial quotes to keep you motivated: 12 Quotations on Success That Are Sure to Change Your Life.

The Roadmap

First stop – finding a niche

Steven suspects that he needs to focus his efforts on a specific market. He has some passions but he doesn’t know if he’s going to be able to monetize them, so he’s kind of stuck here.

Indeed, selecting a niche is the most important thing to do. You can be a slash, there’s nothing wrong with that, but your online business should focus on one thing and one thing only, at least at the beginning stages of its existence.

There’re many ways of finding a perfect niche, here’s a good starting point: 12 Creative Ways to Find Your Niche. Steven doesn’t look like a ninja but in case he wants to put his wise guy hat on, here’s a more cunning tactic: Can’t Find a Niche? Create a Fake One!

2nd stop – finding out if there’s an audience and some competition

Deciding upon a niche is not sufficient if you want to say that you’re all set to go, Steven. Sorry…

You need some solid data about your future audience and competition. The best place to obtain it from is Google.

Since you already have some niche ideas you can put them into Google Keyword Tool and find out if there’s anyone interested in it. Here’s how. Just visit the tool and input your desired niche (for example, Steven’s favorite thing in the whole wide world – “medieval swords”). In return Google will give you some data on the number of global searches done every month.

At the time of writing this, “medieval swords” receives 9,900 monthly global searches, which is 330 a day. I would advise to aim for results between 50,000 and 10,000 a month, so our medieval swords niche almost makes it.

Now it’s time to find out how big the competition is. In order to do that just go to Google and input “medieval swords” as your search term (including the quotation marks). Then note the number of results. Right now there are 524,000 competing sites, which is a big number. I would advise to aim at numbers lower than 300,000. In the end, it seems it’s “back to the drawing board” for Steven to find a new niche.

3rd stop – domain and hosting

Ok, Steven’s back, he’s selected a niche that fits perfectly within the advised amounts of searches and size of competition, unfortunately he doesn’t want to share this niche with me. Anyway, it’s time to get him some online real-estate.

There’s no online business without a domain and a hosting account. So pay attention Steven because it’s a vital step if you want to learn how to set up an online business.

First, you have to realize that there are 3 main types of domain names and there are 6 important factors when choosing a domain name. Once you have some ideas lined up you can proceed to a tool like Domain Typer to find out what’s available.

Registering an actual domain is not difficult at all. Just go to GoDaddy and you will have a new shiny one in no time. When it comes to hosting I recommend a company called Site5 – they’re both affordable and reliable. Now how to put it all together (connecting your domain to your hosting and everything)… well, it’s too boring for me to write about, so show me some dedication and Google it on your own. 🙂

4th stop – setting up a website


Steven hasn’t been sitting under a rock for the past decade, so he knows that everything you need these days is a WordPress blog. Point for you, Steven!

WordPress is a great platform. You can use it to launch your website in minutes, and you don’t have to be a programming specialist or anything.

I won’t describe in detail how to install WordPress because again, it’s boring and there are hundreds of resources online, so you’re on your own, but I do have two pieces of advice for you.

Here’s a little WordPress glossary to help you understand all those strange WordPress terms. And here’s a set of must-have WordPress plugins.

Of course, using a standard WordPress theme is lame. So you want to get something more interesting and better looking. If you don’t have much money to spend on a professional designer (which is totally fine) you can get a cheaper theme from a place like ThemeIsle (you can even get some free themes there too). The themes are beautifully designed and well engineered. Highly recommended.

5th stop – signing up for an email delivery service

This might not make much sense to you right now, but trust me. Email is the most effective way of promotion and marketing on the internet. To be able to use it fully you need to sign up for an email delivery service.

Such a service takes care of delivering emails to your customers or prospects. What I’m using, and what I advise you to use as well is MailChimp. Not only are they one of the leaders on the market but they also provide a free account – a perfect starting point.

To be honest, in my opinion, their website is one of the most user friendly websites on the internet. The number of exceptional training videos they provide is just incredible. Just go there, sign up for a free account and see for yourself.

6th stop – content is king (sorry for the cliche)

Once you have your website set up you need that mysterious quality content. Why do I call it mysterious? It seems like every day I stumble upon a post that tells me to produce quality content all the time. However, no one can explain what this quality content is exactly.

And you know what? I don’t have a clue too. The truth is that there’s no one-size-fits-all kind of a solution. It all depends on your niche, type of audience you’re attracting, your personal style of writing and so on. All of this means only one thing – quality content is not something that happens overnight, it’s something that evolves over the months or years of your blog’s existence. You need to keep producing what you consider being valuable and monitor the impact it has on your audience. Measure the response and you will be on the right path to improving your content.

And yes, every website needs good content. Especially when you’re in a niche market trying to kick-start your online business.

If you need some advice on how to get started check out these posts:

7th stop – traffic and promotion/marketing

If you build it they won’t come.

no traffic

…sorry to be the one to break this to you, but it’s true in the online world. It’s one of the most important things if you want to learn how to set up an online business.

If you want to attract some real traffic to your website then there are two main paths: the free path, and the paid path. The free path requires more time to see any results, while the paid path requires money to see any results.

There are many possible sources of traffic. In one of my posts I present a list of more than 9,200,000 blog traffic sources. Feel free to check it out.

If you want quick results you can start advertising your business online and get traffic within minutes. There is one thing to understand though – people essentially hate advertisements and sometimes it’s not easy to get pass this.

Google AdWords is probably the best place to begin your advertising career. But be careful, it’s not that easy to use as Google says it is. You need to learn the basics first if you don’t want to lose your shirt. Like for example: How Does This Little Money-Sucking Machine Work? or 3 Facts About Setting Up Your Google AdWords Campaign Which Google Is Not Telling You and 4 Common Mistakes People Make While Managing Their AdWords Campaigns.

8th stop – networking and being a part of a community


Sitting in a closed room and speaking to no one probably won’t get you very far in terms of business. You need to go out there and be a part of a community.

What’s the easiest place to start? Join a forum within your niche. Browse some threads, ask questions, answer questions, participate in discussions… simply engage.

But wait, there’s more! Comment on blogs within your niche. Engage in twitter conversations. Join a LinkedIn group. Join a Flickr group. Join a Facebook group. Make some friends on StumbleUpon and YouTube. Just get out there and be visible.

Networking can be fun. But you need to know exactly what you’re doing. Finding out how to email important people might be a good idea.

9th stop – monetization

You’ve all been waiting for this, haven’t you? It’s what we’re here for.

There’s a number of ways to monetize a website. The most common ones are:

  • Selling ebooks or other digital content (like audios, videos, apps, etc.).
  • Charging for membership to a service or a VIP section of a website.
  • Selling in-depth online courses.
  • Running ads on the website (selling them individually or being a part of a larger ad network like BuySellAds or AdSense).
  • Offering consulting or freelancing services.
  • Offering speaking engagements on conferences.
  • Selling physical products (like books, t-shirts, posters, etc.)
  • Being an affiliate and selling other people’s products for a commission.

Selling your own products is often quoted as the most profitable approach. Unfortunately, it’s much more complicated than being an affiliate. Apart from the marketing side (by the way, did you know that you can learn marketing while sunbathing?) you also need to take care of the product creation and customer management side. Skills like copywriting and upselling come handy as well.

Being a super affiliate is usually seen as the holy grail of generating passive income. When in fact it requires much work to achieve any kind of results. So don’t get excited. Every path requires a big amount of work.

(To be frank, the desired passive income does not happen by itself unless you devote some serious time to working on it. “Working on passive income” … it barely makes sense, doesn’t it?)

10th stop – grow and improve


Running an online business is a never-ending journey, and it starts right after you learn how to set up an online business and actually apply this knowledge. You need to be learning new things, improving your skills and growing your business constantly. If you’re not growing you’re dying.

If you want to improve anything about your website, first you need to learn how to use Google Analytics. Installing it on your website is not difficult, and Google provides some simple how to guides on how to get it done in no time.

But remember that not every metric is important, and not everything is worth tracking. One of the first steps to improvement is learning what is a conversion and what it means to your business.

The next step is doing some split testing. You can get started by creating some tests in a tool called Google Website Optimizer. This is not surprising but Google provides some great training videos here too.

One more thing that’s usually overlooked by many marketers – the importance of statistical significance of an A/B split test. Sounds fancy, but actually it’s not that difficult to grasp. Here’s a quick explanation: How to Check the Significance of an A/B Split Test.

This concludes this guide. As you can see, there’s a lot of work to do if you want to learn how to set up an online business and be an overnight success… You shouldn’t get discouraged, though. Just start by believing in yourself and you should be just about fine… However, you do want to make sure you protect your online business the same way you would an offline business with a liability insurance. And finally, keep in mind the following:

Whether you think you can or you can’t, either way you are right.

-Henry Ford

What’s your advice? Feel free to share your own ideas or experiences regarding setting up an online business.


  1. Thanks for the advice man!

  2. You’re welcome πŸ˜‰

  3. Danny @ Firepole Marketing

    Danny @ Firepole Marketing

    Hey Karol, great post – I loved the graphics of Steve! Did you do them yourself?

  4. No, Steve is a “stock-born” character πŸ˜‰

  5. Yeah! Steve is one real “cutie” too!
    Anyway, I can definitely identify with him. πŸ™‚ Love this post! Learned a lot!

  6. Thanks, Phlorizel πŸ™‚

  7. gadget and internet

    gadget and internet

    starting point and the road we choose is the important thing to determinant of success

  8. the most important tip here for me is:
    “2nd stop Γ’β‚¬β€œ finding out if thereÒ€ℒs an audience and some competition”.
    I am talking to many people who like to start business on the net – but have no idea, if there is any demand.
    Can´t stress this tip too much, as there is much supply in my nich which is Sternzeichen & Horoskop

  9. Hypnosetechniker


    Hey Karol, thank you for this very important collection of basics.

  10. When setting up an online business, does the business need to be labeled a type of entity like: LLC, Inc., Ltd etcetera?

  11. Sure, if you’re setting up a real legitimate business you have to decide upon one of the popular setups, like LLC, sole proprietorship, and so on.

  12. survive the end of society

    survive the end of society

    Awesome “unique content” man. Most people think their going to throw up a simlple blogger with 5 pages and their gonna make tons of money. Unfortunately that business model is dead. I appreciate the breakdown in steps. It made it a lot easier to read thru.

  13. Thank you, I have recently been searching for info approximately this topic for a long time and yours is the greatest I’ve found out till now. However, what in regards to the bottom line? Are you sure in regards to the supply?

  14. Thanks for the advice, i am looking at setting up my own web based company, this is the best guide i have found.

  15. Hi, really hope you can get back to this!
    I really dont want to sound blonde but I’m completely new to the business and money making sector. I really love hair and beauty and i would like to go into that market where i would sell products and also offer a service (which i wont go into)
    Thanks for your advice it helped so much!
    Im 19 and from east london, very well sociable, on Facebook and twitter as well, so if i was to start something id have the social networking sites to help promote my products and service, but obviously id like to Advertise on a bigger and better scale, But then there’s all the technical things i didn’t get and obviously need to do a lot more research and look into every thing i don’t understand but putting that aside i just wanted to know if you Or anyone else here thinks this is a good idea? Thanks x

  16. Sure, using social media is always a good idea, especially if you’re in the hair beauty niche. You can use your social media profiles to share interesting photos presenting people with great haircuts (just an example, I don’t really know what the market is truly about), run polls and even notify people in your area about different events going on.

    Also, I think that offering services in such a niche can work if you find something that doesn’t take much time to handle, so you can scale and work with multiple customers at once.

  17. Steven Millard

    Steven Millard

    Hey, Steve is me.

    Anyways all joking aside great article. Finding something your passionate about the make a website around it is exactly what I do. If you want to check out my website its here:

  18. Tyrone Ramsay

    Tyrone Ramsay

    Yeah IÒ€ℒve recently started my own online business in affiliate marketing and i have got to say there is a huge potential to earn big dollars if you put the time, money, and effort into setting them up right. Most if it can be automated too once it is set up. If anyone wants more information on how to do this, visit my personal website at

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