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Dos and don’ts for online-only businesses

These days our mobile phones are an extension of ourselves – we access them for almost everything. With so much time dedicated to the small screen in our hands, it makes sense for start-ups and entrepreneurs to consider launching online-only businesses. There are a number of benefits of being solely an e-commerce operation, particularly from a financial stand point, with less overheads than a bricks and mortar shop front.

It can appear to be the path of least resistance, but don’t let that fool you. There are still a number of considerations at play that start-ups and entrepreneurs need to be aware of before diving head first into the world of online business.

From a legal standpoint, there are a number of factors including different rules and laws, domestic and international differences, privacy as well as tricky issues with new media trends and social media. This needs to be a top priority to properly protect your rights, your business’ rights and the rights of users coming to your site.

Key considerations and tips for those looking to kick-start their online business in the near future include:

Intellectual Property (IP):

If a patent or design is available for your product or service, register it. Once you have decided on your name (and logo), and after checking that they are both available and not likely to infringe upon someone else’s IP, register these trademarks too. Registered IP provides you with exclusive rights to your business or product that are generally not able to be infringed or challenged. Registration will also generally protect you from any claims of infringement by third parties.

Some conceptual ideas will not be capable of registration. In order to remain competitive in those cases, businesses need to look to other means of protection including a contract or non-disclosure agreement, and their digital and other marketing strategies.

Other assets you might not typically consider IP should be secured and exploited early too. Examples include domain names, business names and the registration of an entity you wish to use with the name you desire.

Images and Content on the website:

Copyright applies to images and content taken from websites without permission. Images and content should be created by you or a hired photographer to keep your business out of trouble. Alternatively, you can license or purchase images and other content.

Social Media Channels:

The same general principles apply here as they do to registering your IP – check to see if the name you want is available, then secure it and exploit it. The earlier and the more you use this commercially, the stronger your basis will be to defend your use of it against others claiming rights in relation to it.

Privacy policies and data:

The most common business structure these days is the company. Companies are regulated by a vast amount of legislation, regulations and other rules (including that surrounding privacy, spam and data collection, storage, use and distribution). For starters, every company needs a compliant privacy policy while ensuring their marketing strategy does not breach the provisions of the spam legislation. The issue of data is more dynamic and evolving in a legal sense, so compliance will depend on the particular circumstances of each business.

Payments returns/refunds:

These days, the issue of payments or refunds (among other things) are not governed solely by your agreement with the customer. The Australian Consumer Law, in addition to other legislation and regulations, can operate to prohibit some of the terms you may wish to impose and to impose penalties for doing so. In addition, there may be other terms that are mandatory that you cannot contract out of.

User terms and conditions:

Businesses should be concerned with a great number of issues other than just payments and refunds. For example, minimising liability for damage caused by their product or service, controlling the means of dispute resolution prior to litigation, again protecting IP, governing the use of their products and services, are just a few. A good set of user terms and conditions provides a business with ample opportunity to set the trading framework they want, and to add additional rules of contractual force that may not otherwise operate to the benefit of the business. See a competent, commercially-minded and strategic lawyer about these.

Domestic vs. International regulations:

Even for legal issues that seem to be generalised because of international treaties and the laws that govern them (such as the area of IP), legal parameters still differ from country to country, and some countries are not party to international conventions. Every new business needs to be conscious of the fact that their sales may be derived from any country in the world, and their agreements or contracts with customers may therefore be taken to have been made in those countries, not the home country, bringing them under the jurisdiction of a different legal system. Consumer law, for example, may differ vastly in that country. Therefore, it is important to ensure that the terms and conditions of sale provide for these scenarios.

Licensing and Regulations:

Some question you need to ask yourself include – is your product or service legally permitted to be delivered online in the absence of face-to-face contact? Are there rules surrounding the qualifications people must have to provide those goods and services, or the means by or through which they are delivered or provided?

If you’re not sure, seek legal advice. For a small business, Court is a place you want to avoid. Good legal advice and work at the outset can well and truly pay for itself.

About the author

Dominic Green is the founder and principal of Sydney’s Green & Associates

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Dominic Green

Dominic Green

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