An online home based business starts with an idea. This idea needs to be defined, and focused into an established and quantifiable goal. Next, a strategy needs to be established. Part of this strategy is a criteria for measurement and monitoring the progress toward the goal. The next phase is to follow five foundational steps in setting up your online home based business.

Market Research - Taking the Pulse of the Market

Gathering feedback from the marketplace is a very important and often overlooked step in the process of starting your online home based business. Feedback is very valuable especially from the people that you can trust. Some good sources of data are potential customers, vendors, suppliers and other experts in the field. There are many other good sources such as librarians, lawyers, accountants, bankers, state agencies, and federal agencies. Additionally, there are research tools on the Internet that can help determine if the idea is marketable.

Developing a Business Plan - Defining the Business Structure

Most online home based businesses are going to be set up as a sole proprietorship. This is a simple form of business to create. There is less expense involved, and the owner receives all the profits. The owner is in charge of making all the decisions and there is a minimum of legal restrictions.

You can decide on other forms of business structure for your home based online business. One of these is a partnership. Another is to set up a corporation.

The U. S. Small Business Administration has many excellent resources available at their web site that will help you write a great business plan for your online home based business. To use them you can visit this URL: http://www.sba.gov/smallbusinessplanner/plan/writeabusinessplan/index.html U. S. Small Business Administration.

Procure Start-Up Cost

Now that you have your business plan completed it is time to raise the funds needed to start up your online home based business. These funds can be from your own personal finances. You might also be able to obtain loans. Loans can be obtained from a variety of sources. Banks are one of the best places to seek a loan. Many online home based business owners can obtain a Small Business Loan if they can show a well thought out and well written business plan. Loans can also be obtained in the form of a second mortgage, or even as a line of credit. In addition to loans and personal funds, a home based small business owner might be able to find grants and investors to help with the start-up cost.

Create Your Marketing Program

The primary function of marketing is to identify markets that your new online home based business can service. You need to be able to uncover niches that can be exploited. The primary components of your marketing program should be research, positioning, promotion, pricing and sales.

Research

Market research is an process that will help you identify needs and wants of your potential customers. Good research helps with making wise decisions as it gives the online home based business owner a better understanding of the upside and the risk involved. Marketing surveys are one way to collect the needed data. Also helpful are personal interviews, and focus groups.

Positioning

Positioning is the strategic system for finding windows of opportunity in the the market place. The key to positioning is to know the needs of the customers and have the solution in their plain sight.

Promotion

Promotion is the process of making your online home based business visible to the right people. The purpose of promotion is to bring in new customers, help some customers to upgrade, and to cross sell products and services. Promotion should be targeted to the right people.

Pricing

Finding the right price for your products is very important. If you sell to high people will not want to buy the products, too low and you will not make a profit. You might be able to under price the competition and still make a profit.

Sales

Yes the is the most important key to having a successful online home based business. You must make sales happen. A market penetration strategy seeks to improve sales of products in current markets through better sales and promotional efforts. A market development strategy requires the online home based business owner to increase sales by introducing current products into new markets. Finally, a product development strategy is a plan to increase sales volume by the creation of new products and services for existing markets.

Maintaining Commitment

The final step is to maintain a strong commitment to your new online home based business. This requires a strong desire to succeed. An online home based business may require more effort than the regular 9 to 5 job. You will also need to show strong commitment to your customers. Never take your customers for granted. Commit to never quit.

In conclusion starting an online home based business is possible with the prior proper planning. There are five foundational steps involved. Anyone who follows these five steps can see success.