Money Matters

How to start an online business: Choose your own e-commerce adventure

Starting your online business? Try our e-commerce adventure and see if you're on the path to success - we've got lots of tips to help you.

Starting an online business can feel like you’re climbing a mountain at times. It may be challenging but you know it’ll be worth it when you get to the top and admire the view.

Find out if you’ve got what you need to launch your own business: choose your own e-commerce adventure!

The more you click, the more you’ll learn.

Where will your journey take you?

It’s happened. You’ve had a great idea for your own online shop. What kind of business is it?



Wholesale and reselling

Direct to consumer

Not sure

Do you have a name for it?

What’s in a name? Well, quite a bit actually.

It’s a major part of defining your brand, standing out in a sea of competitors and, perhaps most importantly, it’s what makes you memorable.

I’ve got a name

Not yet

You’ve got a couple of options here:

  • Work with a designer
  • Come up with something yourself

Choosing a name for your business can be a bit of a challenge.

The name you’ve had in mind for months—maybe even years—might already be taken, or you just might be struggling to think one up.

Here’s how you can beat that creative block and find the perfect brand name:

  • Keep it simple and memorable
  • Consider what you want the name to convey
  • Brainstorm alone or with friends/family
  • Don’t be too literal
  • Avoid anything time-specific or trendy
  • Check out the competition for that name before committing.

Try to choose a name that also helps boost your search engine optimisation, otherwise known as SEO.

An optimised name will make it easier for Google to find your business and show it to people who are searching for it. For example: instead of just

The type of online business you run depends largely on the kind of product or service you’re selling.

And the e-commerce model you choose will shape your business plan to a certain extent, so it’s worth giving this part of your journey some thought before charging ahead with the fun stuff.

Choosing the right model for you will make the road to entrepreneurship a little smoother.

Here are four of the most popular ways of launching your small business online.


Dropshipping is a relatively low-risk route into running your own business.

This e-commerce model involves partnering with a third-party supplier who holds all your stock for you and fulfils the orders once they’ve been made on your site.

As a dropshipper, it’s easier to get started.

But remember, you won’t have control over things such as stock levels, packing, and shipping delays, which could have a negative impact on customer experience.

The margins are also lower compared to other ways of selling online.

In a subscription-based model, customers pay a monthly or annual fee in exchange for a product or service.

This can be anything from a streaming service (think Netflix and Disney+) to print and digital publications, a weekly meal kit delivery (HelloFresh, Gousto) or a monthly subscription box such as GlossyBox, Papergang, or Book of the Month, which deliver a curated selection beauty products, stationery, and books respectively.

The main benefit of running a subscription service is being able to predict revenue and forecast sales more accurate than other approaches.

That translates to more positive cash flow and one less thing to worry about as a start up.

Buying products in bulk from a wholesaler and reselling them at a marked-up price is another lower-risk way of starting an online business.

Like dropshipping, it allows you to set up quickly and sell a range of different products and brands.

It can be difficult to gauge how much stock to purchase initially, and most wholesalers ask for a minimum order of each product, so that requires some thought on the seller’s part.

As a general rule, it’s better to sell out of your stock and buy more next time than to over-purchase and end up with a load of stock you can’t move or have to sell at a knocked-down price.

Margins for this e-commerce model are generally better than dropshipping, but less so than manufacturing the product.

Don’t let the jargon put you off.

Direct to consumer (DTC) means you set up your own website and sell your product directly to customers, without a middleman or a third-party retailer such as Amazon, Etsy, or eBay. You can keep stock at home, and package orders yourself.

You can run this type of business from your kitchen table, or your spare room if that suits you better.

This model allows you to own the relationship with your customers, which feeds into brand loyalty and increases customer lifetime value.

Profits are typically higher, because you’re not shelling out for third-party distributors, but that means you’ll need to navigate shipping and manufacturing costs yourself.

Having a direct line to your community means you’ll be able to get honest feedback faster and show your customers that you’re listening and want to build your brand in partnership with them.

DTC gives you more control over every aspect of your product and brand.

Now you know what kind of business models are out there, it’s time to move on to the fun part. Do you have a name for your online business?

I’ve got a name

Not yet

ecommerce platform

Choose your weapon, er, e-commerce platform

Time to talk about e-commerce platforms. They make it possible to buy and sell goods and services online.

The platforms come with a search function that makes it easy for customers to find what they’re looking for, a shopping cart feature, and payment capabilities too.

Some e-commerce platforms today come with a free domain name for your first year. Best practices suggest you buy a .com or .uk site to increase customer trust, look more professional, and make your website easier to remember.

But which platform will you choose?





Not sure

Favoured by small businesses, Wix is an easy-to-use platform featuring a drag and drop website builder and multi-channel sales capabilities.

There are more than 500 templates to choose from and it comes with a great selection of sales and marketing-focused tools to get your business up and running.

The different pricing plans range from Business Basic at £13 a month, right up to Business VIP for larger, more mature businesses.

This all-in-one platform comes with a bit of a learning curve for new users. But once you’re familiar with the basics, you can take advantage of the fantastic range of features available across all pricing plans.

BigCommerce also allows you to refine the customer’s experience, with real-time shipping quotes, product ratings and reviews, multiple languages and currencies, and a streamlined checkout situation.

The standard plan is $29.95 for up to $50,000 in sales, including the key features we’ve just mentioned.

Easy to set up and feature-rich for the price, Shopify is especially popular among dropshippers because it integrates easily with dropshipping app Oberlo.

Customer support is a priority, and it comes with great integration and built-in abandoned cart recovery tools.

The basic tier costs $29 a month, and there is a payment processing fee of 2.9% plus $0.30 per online transaction, 2.7% for in-person transactions, and a 2% fee on all other transactions, together with your chosen payment processor’s fees.

This WordPress plugin transforms your website into an online shop.

It’s free for personal and commercial use, but doesn’t come with a domain, hosting, themes, support, or anything like that, which will all come with their own individual costs.

Used correctly, WooCommerce can be as powerful as Shopify, with more control over hosting.

While this is a low-cost solution, it’s the least beginner-friendly of the four. If you’re not confident on the technical side of things, it might be worth shelling out for one of the more comprehensive options out there.

Build a business plan

Now you’ve got some of the most important parts of your idea nailed down, it’s time to put it all into a plan to transform that business dream into reality.

All entrepreneurs need their trusty business plan, and e-commerce is no exception.

This is a living document you can refine over time and refer back to when you need to think about your strategy, goals, competitors, marketing, finances, and more.

Fear of the blank page?

Use a business plan template to overcome those nerves and get guidance on every part of your business-to-be.

You’re welcome.

Ready to register your online business?

Let’s register my business

Just start trading

You can register your brand as a trademark at This means you can sell and license it, and take legal action against anyone who uses your brand without your permission.

You’re also legally required to register your business for tax purposes, so make sure that’s done before you start trading.

If your business brings in more than £1,000 a year, you’ll need to register for the Self Assessment system to make sure you stay in HMRC’s good books.

You’ll need to do this even if you’re working a full-time job that pays a wage for which your employer deducts tax and National Insurance through PAYE.

You’ll also need to register for VAT if your side hustle turns over £85,000 or more, which means charging VAT on the products you sell and sending VAT returns to HMRC every quarter.

In addition, you have to adhere to Making Tax Digital for VAT rules when submitting your returns. (Under the VAT threshold of £85,000? MTD for VAT applies to you to from April 2022.)

That’s something you’ll need to factor into your pricing.

But enough about that.


Businesses that aren’t registered with HMRC could be slapped with a Failure to Notify penalty, which can cost you up to 100% of the tax owed on top of the rest of the ongoing tax you need to pay.

Save yourself the hassle and get registered before you start trading as a business.

OK, let’s register my business

Time to talk pounds and pence. Say you need £1,500 to get things up and running. How will you fund your new venture?



Small business loan

Not sure

Crowdfunding came about in the late 2000s and involves raising money with the support of backers—the people donating money to help you get your project off the ground.

Anyone can contribute, and you can offer rewards such as early access, pre-order, exclusive deals, and physical gifts to thank your backers for their support once you go live.

Donations can start from as little as £1, and platforms such as Kickstarter and Indiegogo allow you to create different ‘reward tiers’ depending on how much your backers pledge, increasing in value as the amount pledged increases.

This method does take time to build capital, however, and might not be the best route if you’re keen to get started ASAP.

If you’ve got some money squirreled away, this is the easiest option.

Don’t drain your account—make sure you’ve got enough in there to fall back on if that rainy day does come around.

An small business loan is specifically tailored to smaller businesses that might not qualify for a traditional bank loan.

That means you can borrow in smaller amounts—such as £1,000 or £5,000, for instance—if you’re eager to get your business up and running and don’t have the capital on hand.

Want to know more? Here’s a full list of funding opportunities for small businesses like yours.

So… what will it be?

  • Crowdfunding
  • Savings
  • Small business loan
  • I’ll decide later

Show me the money

It’s early days yet, but you’re seeing a steady stream of sales and your customers are loving everything about your brand. Woo!

Before you rush out to celebrate, maybe we should crunch the numbers to find out if your finances are more champagne or sparkling water?

I’ll wing it. As long as I’m making sales, right?

Let’s crunch some numbers

When it comes to money matters, you’ll need to factor in things such as domain costs, hosting, and payment processing.

Inventory depends on the product you’re selling and your business model.

Then there’s your overheads—the expenses that help you run the day-to-day operations of your business—including the materials you buy, labour, production, packaging, shipping, and marketing.

And let’s not forget about cash flow. This is the amount of money flowing into and out of your business.

Then there’s the important matter of how much you can pay yourself.

With all that in mind, we’ve checked the figures and it turns out you can afford that new coffee machine you’ve been eyeing up. Enjoy.

What about your tax obligations? Will you hire an accountant?

Accountants, assemble!

Fly solo for now

It makes sense to work with an accountant, but it’s not essential in the early days.

Later down the line, as you grow your business and see more money going in and out of it—or maybe even start employing people or renting a premises—then having an accountant will pay for itself.

They will know what you can claim to offset your total tax bill and save you a lot of time and effort filling in tax returns.

And that’s just for starters.

How will you market your business?

Business? Registered.

Stock? Sorted.

Website? Live.

Great. Time to let the world know about your business. But how are you going to do that?

Use social media

Run a print ad

Get creative

Great idea.

Social media is the cheapest, quickest way for you to get the word out about your online shop. Instagram, Facebook, and TikTok are the most popular platforms for small businesses to build a community.

Showcase your product with clear, vibrant images and videos, and don’t be afraid to engage with your followers in the comments.

Share ‘Stories’ to show your followers what goes on behind the scenes, from packaging products to what a day in the life of a small business owner looks like.

Keeping costs down is crucial when you’re starting a new business.

Running a print ad can get expensive. A quarter-page ad in a local newspaper could cost upwards of £100 depending on the publication.

You also can’t track the success of your ad when it’s in print, unless perhaps you offer a discount code.

Using £100 on paid social ads would be more effective, particularly when you’re just starting out.

Jo Malone, a name now synonymous with luxury fragrances and candles, kickstarted her business by printing her logo on empty shopping bags and paying people £10 each to carry them around Knightsbridge in central London along with their other shopping bags.

The moral of the story?

Think outside the box to get your brand out there.

It could be anything from creating exclusive, invite-only access to your product—a method used by mobile phone company OnePlus—or you might want to sponsor a podcast episode for a shoutout to a captive audience.

You may want to use your brand to support local artists, who could paint a mural promoting your brand.

It all depends on you and the resources you have.

Let’s talk about shopping cart strategy

It’s not just the orders that come through you need to think about. You also need to pay attention to the orders that are abandoned at checkout.

This is your cart abandonment rate.

It measures the percentage of visitors to your site who showed interest in buying your products but either forgot to complete their purchase or were put off by something on the checkout page.

This could be anything from shipping costs to an issue on the page itself, so it’s important to keep an eye on this part of your e-commerce business.

So let’s say it’s a few months down the line and you’ve noticed a slight increase in your cart abandonment rate, all from new customers who haven’t made their first purchase yet.

What do you do?

Offer free shipping for one week only

Create an email to remind customers about their cart

Wait it out, they’ll come back

Great move.

Keeping an eye on your analytics is crucial, especially in the early stages of your e-commerce journey.

These metrics give you a strong indication of what you need to do to keep visitors to your site engaged and guide them through the sales funnel, right through to conversion.

In a nutshell, conversion is when a user completes a purchase and becomes—converts to—a customer.

In this case, you’ve used data, the cart abandonment rate, to tweak your marketing strategy.

Email marketing is a great way to re-engage with both new and existing customers, whether that’s through discounts, free shipping offers, or a gentle reminder that they should treat themselves to whatever is in their cart.

Initially, it might be difficult to measure performance as you’ll be working with a limited amount of data. But use the data you do have to come up with actionable insights about your customer.

It’s crucial to collect all the information you can from visitors to your website­­—it’s your most valuable resource.

How long they spend on your site, how likely they are to buy your product, and how likely they are to purchase your product again are three of the most important questions you can ask.

Answering them will better inform your selling strategy and product offering.

OK, if you’re sure.

Just a heads up—if your abandoned cart rate is high, that means your products are appealing, but there might be something going wrong at the final stage.

It could be a high shipping fee, lack of payment options, or general a bug on the page, for example.

Figure out what’s keeping visitors from sealing the deal and make it disappear.

Over time, you’ll gather more customer data, empowering you to make better informed decisions about your e-commerce strategy and ensure a steady stream of returning customers.

Want to reconsider your options? OK, then…

Offer free shipping for one week only

Create an email to remind customers about their cart

Congratulations, you made it

You are your own boss.

Your e-commerce business is thriving, your customers are happy, and you’re staying on top of all things tax. On top of that, you’re even earning enough money each month to pay yourself a regular salary.

But now’s not the time to slow down.

Keep delighting your customers by providing the best possible experience, carry on offering great products, and stay on top of your numbers to ensure your business continues to succeed.

You’ve got this!

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