This chapter is an extract from LegalVision’s Online Business Manual. Download the full guide here.
It’s now easier than ever to start a business online. But growing and sustaining an online business requires a great deal of attention and planning. Poor planning hinders an online business’ potential for success. Unsuccessful business owners often don’t invest enough time understanding their customer base, their competitors, or their business model. This can reduce cash flow because you sell something people don’t want, or someone is already selling a better version of your
product or service.
Some other important questions that you should ask yourself before launching your product or service include:
- Is there a demand for my product or service?
- What gap is my product or service looking to fill?
- How can I make money from my product or service?
Who Are Your Ideal Customers?
Your product can’t meet a customer’s need if you don’t understand how and why that need arises.
A buyer persona is a fictional representation of your ideal customer that describes their common characteristics and behaviours. Buyer personas will help you shape your business’ web design, content, sales strategy and messaging.
Who Are Your Competitors?
When building an online business, your key focus should be your customers but it’s also important to think about what your competitors are doing. Conducting competitor research and analysing what’s working or not working for them can provide insight into defining your customers’ needs.
A good starting point is to compare your business’ product with a competitor’s, focusing on the quality, price and customer experience. In other words, conduct a competitor analysis. Two businesses can both operate a fashion subscription service but one may be aimed at professionals and another at athletes. You can also use online competitor analysis tools such as SEMRush and Ahrefs to reveal competitors’ top keywords and high traffic pages.
Quick Tip: How to Conduct Competitor Analysis
When browsing the websites of your competitors, pay attention to the following:What are the distinguishing features of their product? How does it compare to yours?
What price do they charge? Does the price represent value for the customers? How do they accept payment?
What did you enjoy about the business’ web design, social media presence or blog? For example, the layout or colour scheme.
What didn’t you like? Did the shopping cart timeout after five minutes or was there no way for you to save your details for a repeat visit?
How will you improve the customer’s online experience? This is particularly important if you are selling a product or service that already exists.
Which business model you choose will depend on your business idea. ‘Business model’ refers to how you engage and serve customers and how you monetise that service. Each business model requires a different set of legal documents to protect your interests and the customer’s interests.
|Business Model||How It Works||Examples||Legal Documents|
Customers sign up and make regular payments to access your product or service.
Customers choose the subscription level depending on the number of features or support they will receive.
|Netflix, The Wine
Business Terms and Conditions, including subscription payment terms
|Direct Sales of Single
|Business sells each product or service directly to the end customer for a fixed price.||The Iconic,
Sales Terms and Conditions
|Marketplace||Marketplace operator provides a platform for party A and party B to buy and sell goods and services to one another.||Uber, Airbnb,
Marketplace Terms and Conditions. These may include a template agreement between the service provider and the customer
|Software as a Service
|Services that are delivered over the internet rather than provided locally or on-site.||Xero, Atlassian,
Software as a Service Agreement
If you have any questions about your customers, your competitors or your business model before you continue reading, you can contact LegalVision’s online business lawyers by calling 1300 544 755 or filling out the form on this page.
This chapter is an extract from LegalVision’s Online Business Manual. Download the free 53-page manual which includes all chapters and features case studies from NAB, Deliveroo, Airtasker and HubSpot.
This manual covers all the essential topics you need to know about starting your online business, including setting up your online business, protecting your brand, growing your team and scaling your business.
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