Online Business Mistakes to Avoid

In a gush of enthusiasm, you set up an online business–a new domain name, a PayPal account, some copy on a pre-designed website, and you are open for business! There was no need to apply for a license, no bureaucracy to meander through, and the sense of everything being possible and available is intoxicating. What’s wrong with this picture? The reality is that all the rules and laws that are relevant to your bricks-and-mortar office apply to your online business. Here are the three most common mistakes committed by online entrepreneurs.

  • Getting “bit” by your web development agreement.
  • Plenty of entrepreneurs hire a web developer to build on their brilliant idea. Opening an online business without having your attorney review the web development agreement is like opening a corner cafe acute; without reviewing the lease. If the developer buys the domain name or opens the hosting account, she owns it;not you. And you’ve just let your business become her hostage if there’s a dispute. Make sure you control those issues –otherwise, [the web developer] could shutter your business in a nanosecond.

  • Not protecting your intellectual property.
  • Are you using someone else’s intellectual property such as their trademarks? In the midst of a major marketing campaign, you certainly do not want a cease-and desist letter from the lawyers for Tim Buk & Too, Tenn., saying that they were there first! Imagine the huge costs you have to incur to redo your marketing campaign! Further, have you protected your own property? You can copyright your website for a small fee of $45 by applying to the U.S. Copyright Office. By doing that, you can file a lawsuit for any infringement of your copyright, and possibly be awarded damages from $1,000 to $10,000 from any party who ignores your cease-and-desist letter. Not a bad return on investment!

  • Having a “patchwork quilt” for a privacy policy.
  • Entrepreneurs have been known to cut and paste form an assortment of website terms they find on the Internet. Not a good idea. Website terms need to tailored to your business. Otherwise, you could run into legal liability for not adhering to the policy you claim to have. Are you properly safeguarding your customers’ information? Do you disclose the privacy terms of any third-party vendors you use (like newsletters, surveys, or shopping carts)?

    Find the legal authority on these issues, and read up on his or her opinions. Be aware of the required jargon, such a “FHA guidelines” if you are in real estate, or “Safe Harbor Act” if you have a social networking site. Laws governing online businesses change frequently. Make sure you stay on top of these changes.

    Leave a Reply