Setting up and running an online business: steps for startups

Setting up and running an online business involves a series of practical steps that blend strategy, legal considerations, and operational execution. Following a roadmap in the early stages will ensure that entrepreneurs possess the necessary digital tools and legal protections to avoid the potential pitfalls that can lead to operational difficulties, financial loss, or legal disputes.

1.   Choose Your Business Structure

Your first decision is selecting a legal structure that aligns with your goals. Here’s a breakdown of options and factors to weigh:

• Sole Trader: You’re the sole owner, making all decisions. It’s simple to set up with minimal costs, but you’re personally liable for debts, and profits are taxed as personal income.
• General Partnership: You share control and liability with partners. It’s easy to start, but disagreements can complicate decisions, and you’re jointly responsible for losses.
• Limited Partnership: Includes general partners (fully liable) and limited partners (liable only for their investment). Offers flexibility but requires more paperwork.
• Limited Company: A separate legal entity, limiting your personal liability. Setup and compliance (e.g. annual accounts) are more complex, but it’s attractive for growth or investment.
• Limited Liability Partnership (LLP): Combines partnership flexibility with limited liability. Good for professionals, though tax and reporting obligations apply.

Key Considerations: Who owns the business? How much risk can you handle? Will you need funding? How will profits be taxed? For example, a sole trader works for a small, low-risk startup, while a limited company suits a scalable venture. Consult an accountant or lawyer to match your needs.

2. Create and Protect Your Brand

Your brand sets you apart in a crowded digital market.

Steps include:

• Research Your Niche: Identify competitors and customer needs to carve out a unique space.
• Build Your Brand: Design a name and logo, and create messaging that resonates.
• Check Availability: Via trademark searches (e.g. UK Intellectual Property Office).
• Protect Intellectual Property (IP): You may wish to register names or logos to prevent others from using similar marks that could confuse consumers or dilute your brand identity. You may also wish to copyright any original content you create, or apply for a patent if you have developed a unique technology, process or product.

Skipping IP protection risks losing your brand to imitators, so prioritise this early.

3. Establish an Online Presence

A robust digital footprint is non-negotiable. Here’s how to get started:

• Domain Name: Buy one that matches your brand (e.g. via GoDaddy).
• Hosting: Choose a reliable provider (e.g. Bluehost,) for uptime and speed.
• Website/App Development: Hire a developer (e.g. freelancers on Upwork) or use platforms like Wix if you are confident of doing it yourself.
• Social Media: Pick platforms your audience uses (e.g. Instagram for visuals, LinkedIn for B2B). Post consistently to build trust (e.g. 3–5 times weekly).
• Specialist Legal Advice: Take advice on drafting your online terms and conditions and privacy policy.

4. Protect Your Data

Data breaches can sink a startup. Focus on:

• Security Strategy: Such as using SSL certificates) for your site and strong passwords everywhere.
• Cybersecurity Basics: Install antivirus software and a firewall.
• Staff Training: Teach employees to spot phishing scams – human error is a top risk.
• Backups: Schedule daily backups.
• Audits: Check vulnerabilities yearly – hire a professional, if your budget allows.
• Breach Plan: Outline steps (e.g. identify extent of breach, notify customers, report to ICO).

Non-compliance with data laws can cripple you, so prioritise meeting your obligations.

5. Engage and Transact with Customers

Turning traffic into sales requires trust and efficiency:

• Advertise: Advertise in a small way initially via Google Ads or other social media ads to test what works.
• Set Out Clear T&Cs: e.g. seamless returns policy, delivery times, customer service contacts.
• Offer Secure Payments: Look for a provider which covers the major payment methods.
• Ensure a User-friendly Checkout: Test it yourself or get friends and family to help.
• Offer Support Via Chat/Email: Review competitive helpdesk providers like Zendesk.
• Offer Transparent Shipping: State timelines and costs clearly and upfront.
• For Suppliers or Manufacturers: Draft comprehensive agreements covering delivery, quality, and payment terms.
• Include a Solid Dispute Process: e.g. 24-hour response time, refunds if needed in order to keep customers happy and avoid legal headaches.

6. Decide on a Physical Presence

Not all online businesses need one, but consider:

• Storefront: Boosts visibility or trust (e.g. pop-up shops).
• Warehouse: For inventory (But also consider drop-shipping).

Weigh costs vs. benefits – many thrive online-only.

7. Seek Specialist Help

Specialist lawyers can help and protect you with:

• Structure Setup.
• IP Protection.
• Contract Drafting.
• Compliance.
• Tax Planning.

Investing in high-quality advice here reduces risks and boosts efficiency.

Start lean, focus on the structure, brand, and a basic online presence first. Scale with advertisements, staff, physical space as required and as revenue grows. But don’t forget to take advice early and throughout. By following some simple steps you can maximise the value of your online presence and mitigate potential risks at the same time, so you can scale with confidence.

If you have questions or concerns about setting up and running a digital business, please contact Jaan Larner.