What Is Online Business? Definition, Examples, & Startup Steps

What is online business?

Online business is engaging in professional, commercial, or industrial activities through the internet. An online business generates income by offering goods or services through digital channels. 29.7% of business is done online in the United States, while 18% of business is performed online globally, according to Zippia. 

What is online business definition? The definition of online business is any entity that primarily leverages internet-based channels to promote and perform its revenue-generating function. 

What is online business meaning? The meaning of online business is any business activity that occurs through the internet. 

What is another word for online business? Another word for online business is internet business or E-business (electronic business). 

What is an online business example? An example of online business is local lead generation. 

Who is an online business owner? An online business owner is a person who turns their online business idea into a functioning business that generates revenue through the internet. 

What is the difference between online business and offline business?

The difference between online business and offline business is that you can run an online business from your computer while an offline business requires you to attend to customers in-person. Offline businesses, like restaurants, retail stores with physical goods, laundromats, and car washes, require a physical store or location to operate. 

What are the advantages of online business? 

An online business can operate as long as internet access is available. Fortunately, internet access is widely available even in the most remote places with modern technologies like satellite internet. Therefore, you can run an online business from virtually anywhere.

There are over 5 billion internet users on the planet, according to Statista. With an online business, you could potentially reach anyone on the internet. You have the potential to attract many more customers because your reach isn’t limited to people in a single location. Access to more customers means more revenue potential for your business. 

An offline business, like running a McDonald’s franchise, is limited to hiring local talent. Furthermore, offline businesses must adhere to local regulations in their state of business. For example, an offline business in California must pay employees a minimum wage of $15.50 per hour. 

On the other hand, an online business can affordably hire high-quality talent from all over the world. Employment platforms like LinkedIn, Fiverr, and Upwork make it easy for online businesses to find and hire the best available employee, instead of just the best option available nearby. 

What are the disadvantages of online business?

Online businesses are susceptible to cyber-attacks and hacking. In fact, according to a survey by Duke University, 80% of US companies indicate they have been hacked at some point. The 2021 Cyber Readiness Report from Hiscox highlights that the average cost of a cyber attack for a small business in the United States is $25,612. To avoid this, online businesses are forced to put resources towards cyber security.

When you use an online business model, your business can be disrupted and lose revenue through technical failures like your website crashing. In fact, a report by online business service provider Box UK finds that Ecommerce businesses lose at least 10% in revenue on average due to website downtime and performance issues. As an online business owner, you have to be prepared to overcome technological challenges.

6 Common online business models

1. Offer services online

For those with business skills that are translatable into an online format, starting a service-based business can be one of the fastest ways to start making money online. An online service business, like a bookkeeper or virtual assistant, generates income by performing digital services for clients. Of all the online service business models, digital marketing is one of the most popular. Digital marketing is a massive industry, with a market size of $60 billion and a 7.7% growth rate in the United States alone, according to IBIS World. Some of the best opportunities within digital marketing include:

• Lead generation: Specializing in attracting valuable customer leads for businesses over the internet, like local lead generation does.
• Social media marketing: Using social media platforms like Facebook to drive marketing initiatives for brands. 
• High ticket digital marketing: By leveraging channels like social media platforms and search engines like Google, you use high ticket digital marketing to get luxury products or services in front of the right people. As a result, you can make more with high ticket sales but need fewer deals.
• Email marketing: Managing client email campaigns to educate and promote their customers on the business’s offer. 
• Content marketing: Creating and sharing online materials like blog posts and videos to attract internet users and stimulate interest for the brand. 
• Web design: Planning and implementing the look and feel of a business's website. 
• Paid advertising: Paying ad networks like Google ads to display digital advertisements to internet users and attract customers. 
• Search engine optimization (SEO): An online marketing strategy that entails formatting web content in a specific way that makes it easier for customers to find a brand’s web content in search engines like Google or Bing. 
• Graphic design: Creating visual content to communicate messages to an intended audience. 

2. Sell products through Ecommerce

Global Ecommerce retail sales account for $5.7 trillion in spending, with 21% of all retail sales attributable to online shopping, according to Zippia. These impressive figures continue to rise each and every year as more people access the internet and technology improves. You can capitalize on this trend by starting your own Ecommerce business. There are many options for getting your first online sale. You can establish a loyal customer base by starting your own online store or you can sell products to the existing audience of another company by selling through an online marketplace like Amazon. Some of the most popular online commerce business models are:

3. Be a content creator

A content creator, like a TikToker or YouTube channel owner, establishes an online presence by creating various forms of content for their audience to consume. The creator economy has exploded in popularity over the last decade. In fact, there are upwards of 50 million content creators online today, according to SignalFire. Some creators, like Mr. Beast or Markiplier, generate millions of dollars in income from their content. However, many others don’t make any money at all. The key to success as a content creator is to have a specific target audience that you create high-qualify content for and then use various monetization strategies to derive income from your audience base. The most common monetization strategies content creators use to make online income are:

4. Create and sell a SaaS product

Software as a service (SaaS) is a business model where a software product is created and centrally hosted to be easily licensed out on a subscription basis. Many SaaS companies, like Zendesk, operate in a primarily remote setting. For software engineers and IT professionals, starting a SaaS company can be an incredibly lucrative endeavor. As of 2023, the SaaS industry is worth over $195 billion worldwide.

5. Help people achieve their goals through online coaching 

Online coaching is a business model that involves a mentor providing guidance and information through virtual channels like video conference or audio connection. As of 2021, the online coaching industry is valued at nearly $2 billion globally, according to Growth Market Reports. Similar to consulting, online coaching allows you to share your expertise with someone willing to pay you for your exclusive knowledge and insights. Common niches online coaches target include:

6. Create and offer an online course

If you have extensive expertise in a particular area, like small business owner accounting or how to run a profitable e commerce business, you can put the information into digital format and sell it as an online course. A successful digital course business can make anywhere from $1,000 to $100,000+ per year, according to Online Course Host. Many online course owners use a digital course online platform with an existing customer base like Udemy to improve marketability and audience reach.

The best part about an online course business is that it’s one of those business models that allows for passive income. Once you create a course and make it live, you can start earning income without ever touching the course again. Although, many online course owners do update their courses over time to remain relevant. 

How to start online business from home?

1. Choose a business model - There are many profitable online businesses you can start. Consider your skills and interests when deciding which is best for you. 
2. Do market research - Assess the viability of your business by looking at the potential market size for your offer and the current competition. 
3. Find a niche - Pinpoint a specific niche to focus on to improve your chance of success by tailoring your offer to a defined group. 
4. Develop a business plan - A business plan forces you to thoroughly think about your intended business venture and guides you along the way. It's also necessary to have if you want to attract partners or investors to your business. 
5. Decide on a business structure - Depending on the type of business you're running, you may need to set up a legal business entity like an LLC. 
6. Hire support - According to the U.S. Small Business Administration, 80% of small businesses in the US are solo! However, if you have a large idea or don't have all the skills to bring your business to fruition, there's plenty of remote support available out there. 
7. Finalize your offer - Once your product is ready and your website to showcase your services is finished, it's time to launch. 
8. Promote your offer - Formulate and implement a digital marketing strategy to get your product or service in front of potential customers. 
9. Analyze performance - Keep track of your business's operations, making adjustments where needed to ensure profitability and promote growth. 

5 Useful tools for online business

1. Google Workspace

A standard Google account can provide a bootstrapped entrepreneur a lot of useful tools. You get access to free cloud-based programs like the Docs, Sheets, and Slides. However, if you want access to advanced features for improved collaboration, upgrading to a Google Workspace account is worth consideration. With a Google Workspace account, you get domain name email addresses instead of the standard gmail.com, more cloud storage, and a better video meeting experience.

2. Notion

A cloud-based collaborative project management tool like Notion can be very helpful in ensuring project milestones are accomplished in a timely manner. These kinds of tools allow you to schedule and assign tasks across timelines. There are many other popular options as well, including Monday, Asana, or Trello.

3. Toggl Track

Managing a remote team can be difficult. However, a time tracker tool like Toggl can help promote productivity. They also help to assess whether resources are being efficiently used to progress towards business goals. 

4. Slack

Nearly 80% of Fortune 100 companies use Slack for inter-company communications. Slack is an instant messaging and audio communication app that allows you to group people into channels so you can efficiently communicate with team members in a remote setting.

5. Google Analytics

Most online businesses need a website. Google Analytics enables online businesses to track up to 200 different metrics to assess website performance and digital marketing initiatives.

Online business FAQ's