Are you looking to start a business without the hassle of running a brick-and-mortar shop? Digital entrepreneurship might be the perfect fit for you.
As a digital entrepreneur, you have the advantages of running an online business; you can work from home, set your own hours, and connect with potential customers around the world—often with lower overhead costs. Here’s how to get started.
What is a digital entrepreneur?
A digital entrepreneur is a business owner who runs their company online. Podcasters, bloggers, digital retailers, online course creators, and some types of freelancers, such as virtual assistants and graphic designers, are a few examples of digital entrepreneurs.
Digital entrepreneurs rely on digital technologies to establish and run their businesses. They set up online storefronts to sell their goods, use social media platforms such as Facebook to advertise, and monitor customer trends using tools such as Google Analytics.
Digital entrepreneurship vs. traditional entrepreneurship
Traditional entrepreneurship and digital entrepreneurship both carry risks and potential rewards. Both types of businesses must promote their product or service and build a network of customers.
The difference between traditional and digital entrepreneurs is where they operate. A traditional business primarily uses a physical space to sell goods and services, and they can easily form customer relationships in person. Of course, these days, many traditional businesses also sell online. Although digital entrepreneurs also need physical space with a home office or rented office space, they usually operate exclusively online and may have limited opportunities for meeting clients in person.
Why become a digital entrepreneur? 6 reasons
One major advantage of being your own boss is having control over when and where to work and how to expand your business. If you’re trying to figure out whether to open shop online or in person, consider some of the major benefits of digital entrepreneurship:
- Easy access to consumers
- Potential for part-time work
- Lower costs
- Potential for growth
As a digital entrepreneur, you usually target a niche market with your product or service. Once you’ve reached a certain level of success, you can scale your business to a broader audience.
While you may need to hire more workers and increase production, it’s usually cheaper and easier with a digital shop than an in-person business. Ecommerce business owners can find and hire workers outside the local market, while expansion might require little or no additional workspace. It’s also usually easier to downscale a digital business if you want to spend more time on other activities.
2. Easy access to consumers
A physical business is confined to a geographic area, but an online business with a well-defined digital marketing strategy can reach potential customers around the nation and even globe. Businesses can leverage social media accounts and other digital tools to meet customers where they are.
The ability to set your own schedule is a major perk of having your own online business. You can work when you want and have time to care for family members, travel, and establish a work-life balance. Not to mention, you often can work from anywhere, as long as you’re connected to the internet.
4. Potential for part-time work
Digital entrepreneurship also makes it easier to start a part-time business venture because you can keep overhead costs low and work any time of the day or night. This is an excellent option for those who aren’t ready to quit their regular job or need to work around their family’s schedule.
5. Lower costs
Online businesses generally cost less to start. Although an online business may need workspace and software subscriptions, physical shops require a storefront along with furniture, shelves, inventory, and employees to run the store. You’ll have to pay for all of these things even if you don’t make a sale. Online businesses, on the other hand, can make cost-saving adjustments when necessary. They may consider dropshipping, selling dead stock at a discount to save money on storage, and paying workers only for income-producing activities, like assembling products.
6. Potential for growth
Online businesses took off in the late 1990s, but growth accelerated with the onset of the COVID-19 pandemic. Customers shifted from shopping in stores to buying online, pushing ecommerce sales up by 43% in 2020 alone. While online purchases slowed at the beginning of 2023, the industry is resilient. An estimated one in five retail sales will be made online by 2024, up from one in four in 2022.
Skills needed for digital entrepreneurship
Every successful digital entrepreneur is different, but the ones who prosper tend to share certain skills and traits. These include:
- Digital skills. It’s easier than ever to set up an ecommerce website, accept customer payments, and advertise on social media accounts, but you need to feel comfortable learning and using these tools.
- Creativity. Successful digital entrepreneurs use their ingenuity to solve problems, often with limited resources. For example, you may need to develop a search engine optimization (SEO) strategy on a tight budget or differentiate your business in a crowded market.
- Adaptability. Technology, customer preferences, and global supply chains are constantly evolving, and you need to figure out how to adapt your business to succeed in the digital landscape.
- Leadership. Online business owners need the confidence and flexibility to guide a team (that might be entirely remote and online) and the vision to scale a business to audiences around the world.
- Networking. Forming relationships with your employees, colleagues, and customers can increase brand awareness and may even evolve into mutually beneficial collaborations.
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How to start a digital venture in 6 steps
Here’s a general path you can follow to establish your online business:
- Generate ideas and identify a market
- Research your market
- Set goals and make a business plan
- Establish your brand
- Launch and promote the venture
- Scale and grow the company
1. Generate ideas and identify a market
Every business starts with an idea, whether unique or built on an existing concept. When brainstorming business ideas, consider the pros and cons of each. For example, digital products like online courses typically have low overhead costs and high profit margins, but you need to prevent intellectual property theft. When you’ve landed on a promising idea, decide whether the concept is a worthwhile investment.
2. Research your market
Market research involves collecting information about your customers and their needs. This can help you develop the right products and a targeted marketing plan. Market research can give insight into your:
- Customer base. What characteristics define your customers? Are they young or old? Are they looking for bargains or seeking luxury goods?
- Market size. How many people are potential buyers? What’s the projected growth of the market?
- Customer location. Where your customers live can affect logistics such as shipping, taxes, and what they might buy.
- Competitors. What do existing businesses offer, and how will your product or service differ?
- Pricing. You must factor in your costs and what your competitors charge when setting prices.
3. Set goals and make a business plan
Your business goal is a target for what you want your business to accomplish, and your business plan is your approach to accomplishing your goal. Product and marketing strategies might be obvious items to include in your plan, but be sure to cover the following as well:
- Funding. Where is your funding coming from? Local lenders, angel investors, the Small Business Administration, and friends and family members are typical sources of capital for new enterprises.
- Costs. Include any associated costs for your digital business, such as web hosting, manufacturing, and shipping costs.
- Tools. Having the right tool set can help set you up for operational success. Whether you need help with project management, communication, website hosting, or something else, there’s a tool that can help you get it done quickly.
- Sustainability. Burnout is common in all industries and job roles, but it can be especially difficult for entrepreneurs whose business success relies on a high level of productivity and engagement.
- Team. Depending on your company’s needs, this could mean hiring contractors or full-time employees. Properly managing your team can help you get results and avoid overload.
- Security. Understanding cybersecurity, preventing ecommerce fraud, and investing in data breach insurance are all ways to help you protect your digital shop.
4. Establish your brand
Building a brand involves influencing how people perceive your company. Some of the items on your branding to-do list may include naming your business, finding ways to appeal to your target audience, establishing your company culture, and creating a logo. As an online business owner, your branding plan likely involves building a website or digital shop and running social media accounts to help you engage with customers.
5. Launch and promote the venture
Once you’ve set up your website and established your manufacturing, payment, and shipping procedures, it’s time to go live. You need a well-planned digital marketing strategy to drive traffic to your website and convert visitors into leads and sales.
Content marketing campaigns can be inexpensive and effective ways to reach your target audience. For instance, use SEO strategies to create blog posts, videos, and social media posts. Then include compelling calls to action (CTAs) on your website. (CTAs, such as a Buy Now button on a website, help a business convert a visitor or reader into a customer.)
6. Scale and grow the company
Growth can be good for a company, but it’s not always sustainable. Growing too quickly can lead to overspending while growing too slowly can prevent you from handling a spike in sales. Scaling in controlled and deliberate fashion helps avoid these pitfalls. You may, for instance, start by making a plan and hiring the right people to carry out the steps in that plan. To save on costs, you might consider outsourcing and automation.
Digital entrepreneurship FAQ
What does a digital entrepreneur do?
A digital entrepreneur runs their business online, usually through a website or an ecommerce platform. Some examples of digital entrepreneurs include bloggers, online retailers, and contractors who offer services ranging from website design to food delivery.
How do I identify a market for my digital business?
Once you know what you want to sell, start your market research. You might ask consumers what they like and don’t like about certain products. From there, check out your competitors and consider who else might use your products or services. Use your insights to create a marketing plan for your different customers.
How do I manage the growth and scale of my digital company?
You might be ready to scale when you have the time and financial resources to handle an uptick in sales. First, you need to create a plan for how you’ll expand and market the company and include a realistic revenue goal. From there, evaluate how your sourcing and manufacturing processes change, and whether to outsource or hire help and find capital if needed.