How Creating an Online Business Works

There's no one definitive list of tools you'll need to create a successful online business. Everything depends on the product or service you're selling and how your website fits into the picture. So first ask yourself the following questions.

Are you going to design your site yourself? If so, you'll need:

Are you going to sell products from your site? If so, you'll need:

Do you have a large number of products or services that need listing on your website? If so, you'll need:

Would your website benefit from sound, video or animation? If so, you may wish to hire a specialist to incorporate these features. If you want to add them yourself, you'll need:

If you want to sell products and collect payment electronically, you'll need:

A merchant account allows you to accept and process credit and debit card payments either manually, by swiping the card or keying in the card number, or through your website. Be aware there are many charges associated with accepting credit cards. Here are some of the more common ones [sources: Brooks, TransFirst]:

While these fees can add up, you'll be turning away most of your business if you don't accept credit cards. Some electronic payment companies offer discounted rates, so check around to get the best deal.

If you have problems obtaining a merchant account, try going through an independent sales organization (ISO) for electronic funds processing. These firms usually provide many options for transactions, both electronically and in-person. FirstData is one vendor, but many others exist.

Already have a merchant account with your brick-and-mortar business? Then simply take the credit/debit card information received online and process the card manually via your existing merchant account. No additional account is necessary for Web transactions.

Processing cards manually gives you the advantage of being able to hold the card information and charge customers when their purchase ships. Most people don't like to be charged for something they haven't received yet; the automated card processing on websites does just that, transferring funds from customers' accounts within hours or a few days, rather than when the order ships. Remember, though, that if you're not able to ship the product within 30 days of the order, you must notify the customer of the delay [source: Federal Trade Commission].

If you're not sure a merchant account is the way to go, there are alternatives such as PayPal and ProPay. These types of companies handle the checkout and payment processes for you, meaning no merchant account and associated fees. You have to pay for their service, of course, but the fees will be less. PayPal, for instance, offers a transaction fee of 2.9 percent or lower plus 30 cents per processed transaction, but no monthly fees (as of May 2015).

Besides processing credit cards, you may wish to accept electronic checks, or e-checks. Customers wishing to pay via e-check input their checking account information into your site, and your payment is pulled from their checking account and deposited into your banking account through the ACH process. You'll need to contract with a company like Authorize.Net to incorporate this feature into your website [source: PracticalEcommerce]. PayPal and ProPay also offer e-check options.

Let's assume you now have a merchant account, or an alternate method of processing payments. Next up is creating a way your customers can select the products they want from your website, preview the sale amount, edit their selections and enter in payment and shipping info -- or cancel the order completely. (Hopefully they won't do the latter!) These functions come via shopping cart software. You want something good; the easier and more intuitive you make it for your shoppers, the more sales and repeat business you may have.

Most shopping cart programs offer features like inventory control, tax and shipping calculations, and social network marketing options. Quality shopping cart programs also offer professional templates with customization options so you can set up the ordering functions the way you want them, and/or design the ordering pages to have the same look and feel as the rest of your site. In addition, look for programs with these features [source: Top Ten Reviews]:

Before you plunk down any money, test-drive a few programs by visiting sites that use them. Watch for products or services that take the shopper away from your site. And make sure you know which payment services a program is compatible with (e.g., Authorize.net). To get started, check out 3dcart and Shopify, two programs that received positive reviews in 2015 [source: Top Ten Reviews].

If this seems all too complicated, there are companies out there that will not just create your website, but register your domain name(s) and even host your site if you'd like.

If you go this route, do your due diligence by checking out several vendors and asking about any hidden fees. Make sure to look at several of the sites the vendors have developed for other companies to see if you like what they've done. Go through an ordering process to see how it works, and assess its level of intuitiveness. Before you sign a contract, show your preferred vendor your list of site functions to make sure the company can accommodate your wants and needs.

Two vendors you can visit to get a sense of what's out there are Blue Fountain Media and Web Intellects.

In the Internet's early days, people were afraid to shop online. Specifically, to give out their credit card information. Eventually they became comfortable with the security issues in place, and online shopping flourished. But in the early 2010s, retail hacking became somewhat commonplace. By 2014, 62 percent of consumers reported being more nervous about online security than ever before, while 23 percent said they're so worried about the issue they're cutting back on their online shopping [source: Thompson]. This means you need to make sure visitors feel your site is professional and secure.

People trust each other more than an anonymous website, so adding an "About Us" page with your photo and bio can help. If you have a team of employees, include their photos and biographies as well. Customer testimonials are useful too, especially video clips. Make sure your site includes info about return policies and satisfaction guarantees, which also calms nerves. And, of course, make sure you display your SSL certificate symbol so customers know your website is protected by standard security protocol [source: Ward].

The No. 1 reason customers abandon shopping carts are high shipping and handling fees. Mitigate that objection by prominently listing your shipping fees, particularly if you can offer a flat rate (or free shipping) for large purchases [source: Ward].

Shoppers often look for a trusted third party (TTP) to approve your site and your methods. Companies like Symantec can provide your site with a digital security certificate that says that you are who you say you are. This helps give visitors the confidence to become buyers, and will often make a big difference in your perceived credibility. Another security watchdog organization is TRUSTe. TRUSTe sets policies for the use of personal information, as well as the protection of consumers. Both of these TTPs control the use of their logos through various embedded links. For example, if you click on the TRUSTe seal on a given site, it should link to an active TRUSTe validation page hosted on truste.com. If it doesn't, you may have visited a fraudulent site.

The use of SSL (Secure Sockets Layer) and a digital certificate provider ensure your customers' sensitive data is protected during its transmission to your secure server. This protection comes via encryption. Encryption involves encoding the information through a public key in your customer's browser, then decoding it through a private key held only by you (or those you authorize). By using a digital certificate provider (like Symantec), the holder of the decryption key is validated as the correct owner and can then use the data as they need.

Once you have been in business for one year, you can apply for inclusion in the Better Business Bureau's Online Reliability Program. In 2010, it had 70,000 participating merchants. To get into the program and display its seal, you had to do the following things [source: Barlow]:

Keep in mind the BBB doesn't endorse companies, so don't add any text to your site saying you're BBB-endorsed.

You must have a privacy policy and a usage policy for your new business website. These policies state how you intend to use the information, personal and otherwise, that you've collected from product orders. When writing your policies, make the language easy to understand and clearly state how customers' information will be used. It's generally recommended to give consumers the option of not sharing their personal information (assuming you're planning on sharing the data you collect with others).

If you will definitely be sharing their information, state with whom you will be sharing it. Remember to include a statement about how you use cookies. Many people are still not clear about how cookies work, and are not comfortable with the idea. You may also want to set up your system so that it doesn't rely on cookies, since many people have them disabled in their browser.

Once you've written your policies, place links to them in conspicuous spots on your home page and ordering pages. Finally, keep in mind there's no messing around here. You have to follow your own policies to the letter or you may be in violation of the FTC Act, which bans unfair or deceptive business practices [source: Federal Trade Commission].

OK, so we've talked about how to make your customers feel more secure, but what about you? What about your liability? What about your losses? Merchants and financial institutions are the ones who pay when credit/debit card fraud occurs. According to the August 2013 Nilson Report, this fraud amounted to a staggering $11.3 billion in 2012; card issuers had to cover 63 percent of those losses, while merchants ate the other 37 percent [sources: Kiernan, The Nilson Report]. There are some ways you can keep such fraud to minimum. Here are a few of the best ones [source: Campbell]:

Building and designing your website can be simple or very complicated. It all depends on the tools you use, the functions you need on your site and your skill level. If your site doesn't require a lot of interactive features or complicated graphics, you might wish to use one of the template- or wizard-based design tools available for sale, or offered free by many Web hosts. If you go this route, make sure you get software specifically for designing a storefront so you'll have shopping cart and commerce tools available. It may also make sense for you to initially set up your site using this type of software. Then, if your business grows, redesign the site with a program that has more features and gives you more flexibility. Or have your site redesigned professionally. This way you're taking less of a gamble with your time and money.

If you're up to the challenge, designing your site using a traditional Web-authoring software program can give you a lot more control over its look and feel, and even its functionality. You can add a lot of things like rollovers and simple animations using these programs. But -- and this is a pretty big but -- it takes time, skill and a little creative talent. If you've never worked with HTML or Web pages and don't really understand how they work, then it's going to take you quite a bit of time to get a good site up and running. If time isn't an issue, then you may be fine. But it will definitely be worth the effort to get some training in a specific WYSIWYG Web editor program or in HTML (HyperText Markup Language), the code behind most Web pages and the Web's most common language. You can get free HTML training at W3Schools.com.

Whether your build your own site or have someone do it for you, you'll want to learn how to optimize it. That means adding certain words or codes that will enable your website to be found by search engines, like Google. All your Web pages should have meta tags, which are hidden from the viewer but give the title of the page and a brief description about it. You can also put similar tags on your page images. The text on your Web pages is also part of search engine optimization [source: SmallBusinessWebsites].

Optimizing your website can be a complicated issue so for more information, read our article How Promoting an Online Business Works.

Good visuals are critical to building an attractive website that will entice shoppers to stop and take a look. There is a lot of free clip art out there, but many times it looks, well, cheap. And if visitors see the same graphic on your site and several others, that doesn't give them the best impression about any of the sites. If possible, create some of your own graphic icons and images using a good illustration program like Adobe Illustrator or Corel Paint Shop Pro.

With an illustration program you can create vector images. These, as opposed to bitmap images, are editable, scalable and usually small in file size. While bitmap images can be edited, you need an image-editing program like Adobe Photoshop in order to change individual pixels or add filters or special effects. But the image's size can't be increased very much without loss of image quality and a big increase in file size.

Another option is to purchase some higher quality clip art. Getty Images' PhotoDisc offers high quality photo images and artwork that isn't always that expensive, particularly for the lower resolution images you would need for your website.

If you're selling products on your website, you'll need photos of them. You can take them on a digital camera or your smartphone. If you're using a camera, set it to low resolution (probably 1280 x 960 pixels) because website pix are limited to 72 dpi (dots per inch). A larger or higher-resolution picture will only make your Web pages take longer to display. Edit your photos so they're the proper size, then upload to your site [source: Small Business Websites].

A few quick photo tips: Use two light sources to avoid shadows and a tripod to ensure crisp pictures. Get two medium-gray foam boards from any office supply store -- one to set your product on, and the other to put behind it. Gray is a nice, not-too-bright, neutral color that will show off your products to their best advantage [source: Small Business Websites].

Most Web-building companies offer templates you can edit to suit your needs. Find a basic look you like, then tweak it to fit your style, changing the color, font, you name it. Or start with an industry-specific template and fill with industry-specific images, which are often offered as well. Remember, though, that the look you create should fit your business' image. You might personally like rainbows and bright colors and big, loopy fonts, but those probably wouldn't be appropriate if your business sells, say, caskets.

Whether you're building your site from the ground up or modifying a template, keep in mind the following points.

A 2013 report showed that 40 percent of Internet time was spent on mobile devices [source: Sterling]. And that number has only grown since then. So, your website had better look good on tablets and smartphones as well as computers. This can be a challenge, particularly with hand-held devices. Sometimes a design that looks great on a large screen is too cluttered on a small one. So, your first step should be to examine your layout on a smartphone or using the link at Google mobile-friendly test. If you don't like what you see, here are some tips to improve its look [source: Schenck].

You can create a mobile version of your existing website that will link to your main site for free or low-cost, using a service like Mofuse. But an even better strategy is to rebuild your website so it auto-adjusts to match the size of the mobile device. This is called responsive design. If you're hiring a design company (and it may seem like the preferred option with all the extra steps you must perform), make sure you tell them you want a site that will look good on a PC, a tablet and a smartphone. Google also offers a guide on how to make your site look good on mobile devices — as well as be found by its search index.

So maybe after reading all of this you've decided your best bet is to hire a professional. Prices vary, and will increase if your site is complex. Remember that while you'll save a lot of time hiring someone to do this for you, you'll still have plenty of work to do. You'll need to provide the person or company with text, images of your products and design ideas. And you'll have to proofread and test the site. Still, it's a lot less work than doing everything yourself.

Your relationship with your website host is an important one. You depend on them, and they depend on you -- and that can be good or bad. Poor customer service and support when problems arise (which they probably will at some point) can cost you a lot of money in lost sales and bad first impressions for the visitors arriving at your site while the problem persists. So make sure you get all of the facts about a host before you move forward.

A Web hosting firm leases space for your Web files on its server, which has a direct connection to the Internet. You can either choose a virtual Web host that allows you to use your own domain name, or a nonvirtual web host that will give you a subdomain name that uses its primary domain name. For example, using a virtual Web host, your address might be www.MyGreatBiz.com, while using a non-virtual web host, your Web address could be www.earthlink.com/MyGreatBiz. There are some non-virtual web hosts, however, that will let you use your own primary domain name, so be sure to ask.

The good thing about non-virtual Web hosting is that it is usually free. But its tools and capabilities are usually limited, which is why most businesses look for a virtual Web host. The most affordable virtual Web hosting is through a shared package, which means your host has a single server serving multiple websites, not just yours. Look for Web hosts offering 24/7 customer support and easy options for expanding your site if and when you grow [source: Rashid and Wilson].

Before you can look for a website host, you first need to figure out what you want your site to do -- now, and several years in the future, as your business grows. Once you've determined this, start comparing hosts' packages. Most should provide you with the following [source: Web Hosting Secret Revealed]:

There are other features hosts offer, so it's important to investigate your options. It's also helpful to speak with other online business owners to see what their host experiences have been like. See what tools they use and what tools their hosts provide. Ask how many problems they've had with their host and anything else you can think of to help you put a list of prospective host candidates together. Get as many recommendations as you can.

Once you have a list of potential hosts, ask the following questions regarding their services [source: Farin]:

Make sure to contact all references given and ask about any downtime they've experienced and how closely it matches what they were told is the norm; how they've been reimbursed for this downtime; and about the quality of the customer support and service. Then test the potential host's customer support by sending them an email and seeing how long it takes them to respond. Or call them at random times and see how helpful and accessible they are. The main thing here is to do your homework.