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The Biggest Risks of Doing Business Online
When we think of business in the modern day, the traditional brick-and-mortar store is no longer the most likely representation. The internet has given everyone the opportunity to start their own business from anywhere, whether you run a candle-making e-commerce shop or a growing software-as-a-service (SaaS) company.
Physical businesses certainly come with their own risks, such as much more substantial startup capital and considerable complications if your establishment goes under. Still, online businesses aren’t free from their own distinct risks either. If you consider the possibility of data breaches, the complications associated with international customers, and the dependence on technology, you’ll see how just one misstep could turn into a major business meltdown.
Cybersecurity Threats
Phishing, malware, ransomware, and more—you’ve likely heard of these cybersecurity threats and how they could harm business operations and tarnish a reputation. They are also much more of a risk for smaller businesses, as they’re often seen as vulnerable and easy targets, given their staff numbers and that they have fewer resources to invest in cybersecurity. In fact, companies with less than 100 employees account for a significant 71% of cyberattacks.
Any time an organisation chooses to rely on technology to run its business, it opens doors to a variety of threats. Maybe the company has decided to store customer data on its servers or streamline operations with third-party software. Either way, it introduces risks such as malware infections that need to be proactively dealt with.
Many large corporations have made cybersecurity awareness an integral part of their employee training and implemented high-quality cybersecurity software into their systems. These actions have proven to be a turning point in a company’s defences, where businesses of other sizes have followed suit.
Data Privacy Concerns
Naturally, technology has matured over time. The standards put in place for data privacy nowadays are strict and unyielding. Internet users can’t visit most sites without encountering a pop-up asking for their explicit consent to collect and use their data. That’s because official laws like the GDPR (General Data Protection Regulation) exist to improve privacy rights and protect consumers. For example, most UK-based businesses are required to follow the GDPR framework and comply with those requirements to make sure they’re handling personal data responsibly.
These data protection laws were developed for a purpose: to help companies understand they have a duty when it comes to handling sensitive data. Once your company is targeted and a hacker infiltrates your data, the resulting legal implications, fines, and financial and reputational damages could take years to fix.
Businesses need to do their due diligence in every aspect of data handling, internally and externally. This could take the form of multifactor authentication, only collecting and processing personal data that are necessary and using robust security techniques like data encryption.
Payment Fraud
There are two main ways a business thrives—through happy customers and a healthy and thriving bottom line. One can’t exist without the other, and payment fraud is something that affects both. Even the most flourishing online businesses can fall victim to this type of risk, especially if the right safeguards aren’t in place.
Payment fraud involves anything that has to do with making fraudulent transactions. It could involve stolen credit card information, national insurance numbers or login credentials, all of which could result in illegitimate purchases that only end in chargebacks and financial losses. Especially in particularly volatile and high-risk industries like iGaming, cryptocurrency and supplements, businesses need to be extra vigilant and proactive when it comes to fraud prevention measures.
In the iGaming sphere, for instance, transactions of many sizes are made by the minute. Players make deposits, place bets and cash out their winnings constantly, which is why having a safe and secure deposit method is so important. Not only does this approach provide better protection this way, but it also inspires confidence within your business and among customers.
Legal and Regulatory Complications
The beauty of online business is that your product or service can reach people from all around the world, almost like a store or office on wheels. But this comes with a catch—staying up to date with tax regulations, data privacy requirements and other legal requirements so that you don’t get penalised.
It’s a challenge for businesses to figure out what their tax obligations are across borders and what sorts of intellectual property measures they need to establish, not to mention the many industry-specific regulations there might be relating to their field.
Rather than let these challenges overcome your business, the rule of thumb is to be proactive. When you can set up the proper compliance strategies before issues occur, you avoid getting tangled up in a web of legal and regulatory complications later on. If you’re not an expert, investing in compliance software and legal advisors could do just the trick.
Maintaining Your Reputation
An overall commitment to staying compliant and mitigating risks for the customer is a huge part of your business’s success. Customers want to buy from businesses that show a commitment to them and dedication to the company’s reputation.
After all, there’s nothing like earning trust and loyalty from your customers through a genuine desire to run an honest-to-goodness business. When you put the effort in to legitimise your business and protect your customers, you reduce the chances of running into issues you could’ve avoided down the road.
Ultimately, you want to be able to search your business’s name online and see glowing reviews on how customers received stellar customer service, not ones on how you ruined their day because of a mishap. Evading business risks can take serious time and effort, especially as a startup or small business, but it should be the top priority on your list if you want your business to thrive for years to come.