The Top 10 Considerations for Online Start-Ups

powerretail By Powerretail | 22 Feb 2019

When starting a new online retail venture, there are a number of key operational and legal steps that need to be addressed early on.

The logistics of starting a business from scratch can appear near impossible to navigate, including for online businesses, where the delivery may seem simpler but the planning is just as demanding. The legal hurdles alone are enough to stress even the most determined online entrepreneur however with a little help, getting your business off the ground needn’t be daunting.

Here I have highlighted the crucial legal and operational steps you need to take to ensure your online business start-up is one that lasts:

Make a Business Plan

It might seem obvious, but you should never start a business without first making a business plan, even if you are planning to operate online. As well as your overall proposal and objectives, ensure you include your research of the competition, your projected profit and loss, cashflow analysis, and a thorough marketing plan. Making a business plan will not only help you launch with confidence but is necessary to pitch to investors or apply for finance.

Choose Your Advisors Carefully

Align yourself with trusted advisors for areas outside your expertise.  These should include a lawyer and an accountant. When choosing your advisors, it’s good to take recommendations, but do your research.  Most advisors specialise in particular industries or areas of practice, so identify the task you need help with and find the right person for the job.  Never rely solely on the advice of a mentor or collaborator, particularly in matters of law and tax.

Select a Business Structure

It is important that the entity behind your business is appropriately structured and that your website or app reflects the correct entity to whom orders, complaints and enquiries should be directed to.  There are many business structures to choose from and there can be duty or taxes in restructuring once a business has commenced trading. See your lawyer or accountant to set up the right structure before you launch.

Sign an Agreement With Your Business Partners

Often overlooked, this is a crucial step to minimise disputes that may arise if you are in business with others.  If you are working with collaborators it’s important to discuss and agree if they will be business partners, employees, contractors or investors. All businesses operating as a company should have a shareholders agreement in addition to their constitution, as you will likely need provisions regarding decision making, appointment of directors, buy and sell rights not usually addressed in constitutions.

Protect Your Intellectual Property

Registering and protecting assets such as your business name and logo, novel product or idea, is imperative, particularly when trading online to millions of viewers at once.  If you are engaging a contractor to develop your website or app, check their terms of engagement to make sure you are not giving away any rights to the information you provide them or the intellectual property they create for you.

Ensure Your Licences and Policies are in Place

It is important to check what licenses or policies you may require, even as an online retailer.  You will likely need at least a privacy policy and a data breach response plan.  Your privacy policy, disclaimers and other information for customers should be uploaded and available for viewing on your website.

Choose How to Finance Your Business

When choosing how to finance your business, make sure you seek legal advice regarding offering shares or crowdfunding equity, both of which are regulated activities.  You should also seek legal advice on the terms of loans and investments proposals as even standard form documents vary between providers and you should not assume that it will address everything you need.

Sign Employee Agreements

It is easy to fall into the trap of engaging employees and contractors without formal agreements when operating online.  Make sure you enter into employment agreements or contractor agreements with any collaborators you engage in that capacity. Take note that the law will class an independent contractor as an employee in certain cases. Seek legal advice if unsure of your obligations.

Have Your Lawyer Prepare Your Terms and Conditions

Avoid buying low-cost terms and conditions online as many of these providers are not Australian legal providers and the terms are unlikely to meet the individual requirements of your business.  You should also not rely solely on the terms of online point-of-sale systems like Shopify, as they won’t cover everything that you or your website does or offers.  Although legal drafting can be expensive, having your terms and conditions prepared by an Australian lawyer is the only way to ensure your terms will be legally binding and effective when you need them.

 Take out Insurance Cover

A benefit to online businesses is that you may not require premises or workers and can avoid related insurance, but there are other insurance policies that online businesses may want to consider depending on their type of business including product liability, defamation insurance, intellectual property insurance, cyber and data breach insurance.  Your lawyer can advise you on your legal insurance obligations, your litigation risks, or review a policy to advise you on its terms.

Words by Bennett & Philp’s Business Advisory Expert, Nadia Sabaini. This piece has been written by Ms Sabaini with a particular focus for online businesses and online retailers. 

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