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Starting an online business in the UK can be exciting and thrilling. However, many new business owners learn that the most significant challenges can include getting their online business off the ground. This article will explore four hurdles you must tackle when starting an online business in the UK. As you will see, successfully tackling these hurdles can help increase the chances of your online business venture succeeding.
How Many Online Businesses are Launched in the UK?
A recent survey estimated that over 100,000 e-commerce businesses launch annually in the UK. This figure may be higher due to the COVID-19 pandemic leading to an online shopping boom. For example, many individuals now shop at online stores when previously (before 2020) they would have visited a physical store.
There are some apparent benefits to launching your business online. If you establish an online-only business, you save yourself the cost of renting or purchasing retail premises. Instead, you will likely only need to cover warehousing costs.
Let us explore strategies you can implement to give your online business a competitive edge.
1. Identify Your Target Audience
One of the biggest mistakes new online business owners make is not identifying the correct demographic of potential customers.
For example, targeting teenagers alone is useless if your business focuses on delivering coffee pods. Whilst a few may purchase coffee pods for their parents or family members, most potential consumers will be older individuals with higher disposable income and coffee consumption levels.
Once your e-commerce store has picked a target market (for example, individuals between 18 and 40 years old), it can identify the best ways to attract those potential consumers. So, a campaign focused on email and social media marketing and an up-to-date smartphone app may be more suitable than radio advertising.
One of the most critical tasks in the modern age is ensuring that your website is compatible with smartphones, as many shoppers visit websites on their tablets and smartphones. Therefore, new customers must have a great shopping experience and experience high levels of customer service on smart devices.
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2. Choose Your Business Structure
There are various types of business structures in the UK. Some of the most common types of online business include:
- limited companies;
- sole trader businesses; and
- limited liability partnerships.
Limited companies are the most popular type of UK online business. Upon visiting most UK e-commerce websites, you will notice that the business name contains a ‘Limited’ or ‘Ltd. You can also check whether a limited company runs the website by searching for them on the Companies House website.
Some business owners view the main disadvantage of a limited company as the requirement to provide public details of the directors of the business.
The alternative for individual business owners is to trade as a sole trader. However, this is relatively uncommon within UK online businesses, as most sole traders perform physical work or through physical retail premises.
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3. Pick a Strong Brand Name
A good brand name can be the difference between success and failure. This is because a great brand name will instantly inform consumers of the product on offer, whilst a poor one will need clarification.
This is why so many betting companies have the word ‘bet’ in their title, and various airlines have the word ‘air’ or ‘jet’ in their name. Modern customer expectations include branding that sets out the primary purpose of e-commerce companies.
For example, if your online business sells teabags, a good brand name, such as ‘terrific tea limited’, could reference that fact. However, a vague or confusing brand name, such as ‘drink supply solutions UK Ltd, will not attract many consumers.
4. Utilise a Website Terms of Use and Privacy Policy
Most UK online businesses will display two vital documents on their website:
- a website terms of use document; and
- a privacy policy.
A website terms of use document acts as a rulebook for your website. So, for example, the document can ban users from copying content without permission and confirm your ability to ban web users from future website access.
In contrast, a privacy policy ensures your business complies with the General Data Protection Regulation (GDPR). All UK online businesses must fully comply with GDPR rules. Any failure to do so can risk a fine of up to £17.5m from the Information Commissioner’s Office (ICO).
Due to their importance, many UK online business owners ask an expert lawyer to draft these documents.
Key Takeaways
Like most hurdles, the ones described above are not impossible but need concentration and effort. Many new UK online business owners obtain legal advice and document drafting assistance to meet these hurdles and market their wares online.
If you need help launching and creating a UK online business, our experienced e-commerce and online business lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
Your company must focus on delivering a great user experience through its website and any associated app. A simple, easy-to-use interface will likely result in better customer loyalty from most online shoppers.
Most UK online businesses strongly consider obtaining a trade mark for any unique brand name or logos to ensure rival companies do not seek to copy or closely imitate them.
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