You can start an online business with a small budget. Online businesses are one of the most affordable businesses you can start and run if you know what you need to pay for and where to go.

Some things you need to pay for and other things you can do just as well for free. The steps outlined here are to guide you in creating your first business website.

Step One: Choosing and Buying a Domain Name

Domain names can be bought from many sources for $10 or less. There is a difference in the services provided by the sellers so shop around. One of the biggest is GoDaddy and I like them because the domain often starts propagating within an hour. With some registrars, you will need to wait 24-72 hours to see your domain propagate. Domains are important because they are how your customers and search engines will find your business. Choosing a domain name with your primary keyword in it gives you a boost.

Free websites often use sub-domains so your URL might look something like mybusiness.freespace.com instead of mybusiness.com and your prospects will not take you seriously as a business that will be around for awhile.

The only thing you have to differentiate yourself from other vendors selling the same or a similar product is your credibility

Step Two: Find The Right Host for You

There are a LOT of hosting companies and resellers of hosting plans out there. Hosting plans can range in price from a couple of dollars a month to hundreds of dollars a month or more.

Cheap is not always affordable when it comes to finding the right host for your business.

Working with a reseller or a big hosting company might not be a good fit either. Many resellers aren't able to answer your questions and the really big hosting companies may see you as too small to be concerned about.

Look at what you'll be starting out with and where you intend to take your business before choosing your hosting company. You do not want to have to move your business a few months down the road because of poor service, reliability or you've outgrown your current host. Think about what you might need, ask questions and look at both your business plan and budget before choosing a home for your business.

Tip: Never use a free host for business.

Free hosting accounts are for personal use where reliability and extra banners or limited bandwidth aren't that big of an issue.

Step Three: Your Website Design

You can find professional templates on some hosting services but you will be putting up a page that looks like a lot of other sites using the same template. These templates are often inflexible and you'll often find them difficult to optimize for the search engines.

It is true that these templates can give your website a professional polish without the expense of hiring a web designer but the hidden costs might not surface until it is too difficult or expensive to change.

If you are planning on a simple 5 or 6 page site, you might consider getting an open source HTML editor and using what you like from other websites to create your own look without stealing what they have. Nvu.com is a free editor you should be able to use if you can use a word processor.

You might consider a Content Management System like joomla or postnuke if you will be creating many pages of content and will be consistently adding to it over time.

Using a blog like WordPress is an alternative many beginners are choosing these days because programming knowledge isn't required. Plugins are available that let you monetize your WordPress site, make it more search engine friendly and allow visitors to leave comments.

Spending money wisely is important when starting any business, but some free services will cost you in reliability or image. On the other hand there are some cheap deals you may not hear about so don't give your hard earned money (or worse - your credit) for a service you can pay less for and get the same results.

Your business plan and budget should be big players when you consider your domain, web hosting service and web site design. Know where your starting point is and where you are headed so you can find a web host and website design that's flexible and can grow with you without creating huge headaches.