Are you starting a new business online? Are you a one-person business, or maybe it’s you and your spouse? Whatever it is, creating an information-based business online is much easier than a product-based one. But in the long run, both are as strong as the base they stand on.
For a strong business base, you, as its founder, have a crucial role to play. There are stories of unicorns that larger enterprises acquired and the business owner became a billionaire. You may want to raise funds, maybe even plan an IPO later. Perhaps your eyes are on raising venture capital? Well, if that’s your route, you need a firm base and a full-fledged legal team to guide you. You will also need to register your company correctly. But if you are planning a minimalist business model, that’s possible too.
But with the way the world has changed over the last 5 years and specifically in the last 18 months, e-commerce is the way to reach to larger consumer base. I was thrilled to note that wow shampoo, a brand from India is one of the top 3 shampoo brands in the US market and Indian linens are among the top 2 beach throwaway purchases in the Europe.
Starting a new business online-why it’s easier now with Digital India and push for MSME
The Indian economy is slated to overtake the USA as the second largest e-commerce market in the next decade. Population numbers make sense when you are selling a mass-market product. But as an online business, if you want your products to sell, you need a platform. Sure, you can have your website shop. But you need to have your shop where your customers are. That’s where the e-commerce giants have made it easier for many businesses to sell online.
If it’s a sole proprietorship, you are the Brand. Scary? Yes, but it’s a golden opportunity, and India’s Startup India and Digital India initiatives are giving the right signals. Business loans are easier once you are registered on the MSME portals. You also get a slew of benefits as a business owner.
How can one start a new business?
Focus on who is your customer.
Create a customer avatar and make it as detailed as possible. The more accurate your customer avatar is, the better product-market fit is possible.
What problem are you going to solve?
When you are starting a new business online, you need to know what your ideal customer likes doing, what are her hobbies, what makes her happy and what troubles her. You can conduct a survey to know the pain points. Surveys can be conducted through your social media or your newsletter. But what if you are just starting out? Don’t worry; you can still get your data. Try Facebook (now Meta) groups and forums where your target customer hangs out. Then find out what they are cribbing about. It will take time, but you will get a gold mine of information.
How will you deliver the solution?
This will depend on whether it’s a digital product, service, or a physical product. Are you going to make something easier to do, teach them something, create more value from everyday objects used differently or something else? The delivery of the solution is crucial to making your business profitable.
How to keep it within a budget?
You can leverage your social media or a free platform like the wordpress.com website for a digital product or service. It won’t cost you anything except control. If you have a budget, a custom domain and hosting will help you set up the right way. It also helps in building authority in your niche.
Most e-commerce platforms charge a commission for helping you sell your products. The registration process is simple, and you will also need GST registration in most cases.
Own website or e-commerce site?
Pros of own Website
Having your website is always a good idea when starting a new business online. In the long run, it’s brand building. Getting footfall to your website requires a combination of SEO (search engine optimization) and paid advertisements.
You get paid as soon as you make a sale.
Your terms and conditions change only when you want.
It’s perfect for digital products and online services.
For creating a website, you need your domain name. The domain name should ideally have your business name in it. Avoid too long, wrong spellings and domains which are difficult to spell or have dashes in them.
Then it would be best if you had good hosting, preferably from a reliable company with good back-end support. Since online business requires a robust platform, a fast-loading website is crucial.
When you buy a domain name, go for a dot com. You may keep a few other variations in your kitty until you get your company registered.
You can buy domains for one, two, or five years. Buying for a longer duration ensures a better price and removes the headache of annual renewals. You cannot buy it forever in one go. Check out these resources I used (some free and a few paid) to start my website.
So now you have a website, but how do you collect money? For this, you need a trusted payment gateway: You can choose between Razor pay, Instamojo, or PayPal for accepting online payments on your websites. Alternatively, you can redirect them to an e-commerce site that hosts your products.
Cons of own website
A high learning curve.
Making people buy is a whole different ball game.
The logistics of storing physical products and delivering them can increase your starting cost.
Pros of e-commerce site
E-commerce platforms have a high footfall for products and a great recall from the consumers. The chances of discoverability are higher on e-commerce site by working out right keywords and product categorization. Having a broader presence in e-commerce sites is crucial when just starting.
E-commerce sites have targeted traffic. Plus, the traffic already has a transactional intent or intent to buy. That makes closing sales easier on an e-commerce site.
An e-commerce site takes away the headache of storing, packing, delivery, and other logistics for physical products.
It’s great for physical products.
Starting a new business online gets easier and hassle-free if you choose to sell through an e-commerce platform.
Cons of E-commerce site
You are at the mercy of e-commerce platforms.
Terms you should know while planning expansion
Contracts: Why you need them
Even when you work with friends in your first online business, making and signing a contract keeps everyone on the right side of safety. You want to clearly define responsibility, liability, profit-sharing (if any), shares, assets, and exit strategy for each party. Keeping all this neat and clean before you make money prevents many issues when you make money, and when there’s trouble.
If you plan to grow your company with multiple directors, shareholders, a contract is even more critical. Your business partners’ ethical and moral characters will affect your company, and directors have a fiduciary role towards the shareholders. Their decisions about loans, mergers, expansions will affect the minority stakeholders. This is where the founder(s) vision is necessary.
As a founder, you must remember the sanctity of contracts. It’s better to think before signing on the dotted lines. It’s essential to do business with companies with fair trade practices.
The Amazon and Future group’s tussle are a case in point. Reliance is a domestic biggie, and the third wheel in the problem is hardly coming off smelling of roses. Suppose you don’t like a clause in the contract. In that case, it’s okay to say no, talk about it, change the conditions, or have a mutually agreed exit condition for both parties. But losing trust is not acceptable. That’s why contracts are crucial.
About intellectual property
Intellectual property, in simple terms, is something you made yourself using your intellect. It can be inventions, artistic work, literature, design, names, nomenclature, concepts created using your brain, and has commercial value.
We are constantly overwhelmed by ads; when your inspiration duplicates another’s hard work, intellectual property protection is in the twilight zone. Starting an online business is easy today. Doing it properly ensures your intellectual property rights to some extent.
As an online business owner, you need to know a few legal terms and safeguard your intellectual property and digital assets right from the start.
But what exactly is this intellectual property?
Online intellectual property protection can get tricky if you haven’t registered your company. It’s a good idea to register your business name and any other assets you plan to display online publicly. Showing a copyright notice at the footer and disabling right click and copy helps deter many.
It’s difficult to enforce laws about intellectual property in India. It’s still very early days. Suppose you sell digital products like I sell eBooks through Kindle Direct Publishing. In that case, you need a robust method of safeguarding intellectual property. Watermarking your work, properly enabling metadata on your PDFs, having a canonical URL, preventing right click on websites can protect digital content to some extent.
India being a signatory of the international arbitration gives peace of mind to foreign entities doing business in India. If as a small business owner, you want to collaborate with a foreign entity, it might be easier due to high trust in the legal processes.
Except for ‘fly in the ointment’ issues like that between Future and Amazon where the CCI has stepped in and passed an order revoking a 2019 contract between Future Coupons and Amazon, the legal redressal mechanism is strong in India.
The only thing is, for a business to grow, it needs trust and stability on both sides.
Types of Registration for your online business
Sole proprietor? Partnership? Company or LLC? This depends on your requirements. For sole proprietorship, liability is unlimited, but it’s easier to get started. If you are an MSME (Micro, Small, and Medium Enterprises), you can register here in India. It’s voluntary and free to get started with. Read about the different registrations available to Indian companies here.
GST registration
It is needed if your business has more than forty lakh annual turnover and more than 10 lakhs in the northeast. In addition, all e-commerce and specific other categories may need GST registration.
Disclosures:
Suppose you have affiliate links on your website or blog post. In that case, an upfront disclosure is needed, telling your readers about that fact. You can read all about what content creators must follow in more detail here.
Disclaimers:
Very important if you are sharing information content, which should not be considered professional advice. Much needed in Health and Financial websites and any site where expertise, authority, and trust are part of the relationship with the website visitor.
GDPR (General Data Protection Regulation) compliance:
Do Indian companies need to be GDPR compliant?
The Indian companies must comply with the GDPR for conducting transactions with the European Union. India does not have a national regulatory authority to protect personal data. The customer privacy policy is still a good practice if you open a business online.
Cookie policy:
How you use your cookies to track website visitors. How long you keep your cookies is essential and helps build trust online.
COPPA: Children’s Online Privacy Protection Act
COPPA is child safety adherence. This law applies to US businesses mainly. But any foreign companies collecting personal information from children under 13 who live in the US can fall under this act.I interviewed Noor about children’s online rights in India with rampant social media exposure, and her answer surprised me.
Cyber insurance policy:
In India, cyber insurance is nascent, and the Bajaj Alliance is one of the first. They protect against loss due to phishing, malware, and identity theft. You can check for insurance to suit your business.
International Arbitration:
If you enter a business deal with a foreign entity, you will have to know the international arbitration mechanism. In brief, this is how disputes between domestic corporates and foreign companies are resolved. India is a member of the New York Convention, keeping you safe as a player, even in international markets.
Conclusion:
The Indian Government now has several initiatives; there are also enablers like eCommerce platforms to help make an online business profitable and sustainable. Upholding the sanctity of contracts will help strengthen the entire ecosystem.
Resources/References:
https://www.legalserviceindia.com/article/l406-Does-India-have-a-Data-Protection-law.html
Additionally,
https://ipindiaonline.gov.in/epatentfiling/goForLogin/doLogin
https://www.firstpost.com/business/supreme-court-defers-hearing-in-amazon-future-group-case-to-8-december-over-bulky-documents-10158171.html
https://m.economictimes.com/wealth/insure/irdais-new-norms-on-cyber-insurance-for-individuals-cover-online-theft-of-funds-identity-social-media/articleshow/86067769.cms
I am not an expert on financial asset management. This is an opinion piece. I am not a qualified Financial Advisor and this is not to be taken as professional financial advice. Mutual funds are subject to market risk, read all scheme-related documents carefully. All investments should be done after consultation with a financial suitable expert, according to own financial risk appetite.