Starting an online business

Consumer habits have changed dramatically. Online sales now account for 15 per cent of UK retail spending. By 2020, some experts predict that 90 per cent of transactions will take place online or be internet-influenced.

Many businesses have long used their websites to generate additional revenue. Yet in recent years there has also been significant growth in businesses that start up exclusively online, which can involve less risk, cost and effort.

First steps to creating an online business

As with any small business, the first steps to start trading online involves conducting market research to identify your target market, assess demand, competition and reaction to prices from potential punters. You also need to produce a business plan.

If sales are likely to exceed the annual threshold (currently £68,000), you must become VAT-registered. You’ll also need to pay tax, in accordance with your status as a sole trader, limited company, etc. Online traders must also observe data protection legislation, of course, when storing important information about customers.

Marketing will largely determine your business website’s success and search engine optimisation (SEO) is crucial. Basically, it means using words on your website that ensure high placing in lists on search engine results pages. You could also use paid-for advertising services such as Google Adwords, for which you’re charged on a pay-per-click basis.

Getting your site up and running

You must decide whether to create your own business website or get someone else to do it for you. Doing it yourself can save money, but the results might not be great.

There are many ready-made online solutions that allow people with little experience to create their own website. You might prefer to pay a professional website designer. This should give better results, for around £300-£400, which usually includes design and arranging hosting of your site. Read more on the Start Up Donut about creating a business website.

Information you must include

Your business website must include your address and contact details, privacy policy, terms and conditions, exchange and refund policy, quality commitment and information about delivery and payment. Stock availability and pricing should be kept up to date and you must state how much VAT and post and packaging is payable per item.

To collect payments you need to include a shopping cart function, as well as a secure means by which customers can enter their card details when paying. Most website designers provide a shopping cart function and payment facility as part of their service. Online website-building packages do, too.

You also need a merchant account to collect payments. Providers such as PayPal are popular, but you should also enquire at your bank. You pay a service charge on each transaction, a set-up and monthly service fee.

Test and protect your website before launch

Be sure to test your website site thoroughly before you launch. Ask potential customers what they think, too, and be prepared to act on their feedback.

And remember – running an online business isn’t without risk. Serious technical or security issues can have a disastrous consequence, so make sure you protect your website from online threats and back up important data.