Shopify and notifying your mortgage lender?

Clevercloggs23 wrote: »

Hi there,

Hope someone might have an idea about this. I have recently found an existing Shopify shop that I’ve decided to buy. It operates on a dropshipping basis so I would have no stock. I work full time and the Shopify business would be an additional source of income, hopefully but might not yield much income either.
However, what I’m worried about is whether having the dropshipping shop would be classed as trading and if I should ask my mortgage provider and the company that manages my property’s lease before I even start running the shop. Would they even know what Shopify is? They might just say no if they think I’m running a shop which to an extent I would be but online only.
I was quite excited about this all and now feel like it’s a bit of a nightmare and might not bother going ahead...
Thanks for any advice if people know anything about this.

Presumably, the fact you mention your mortgage and your lease, you are already aware of terms within these that may potentially affect your new business.

You need to check the wording of these terms carefully and ensure you abide by them (or try to get them changed/waived which will be nigh on impossible)

Typically, there is a restriction on trading from a property, but carrying on a home based clerical business, that does not involve anyone else visting the property (customers or other employees) and does not hold any stock on the premisis are usually permitted.

Even so, it may be necessary to keep those required informed, so check exactly what the terms say.

It's often the insurers that want to know, and as the property is leased, presumably the building insurance is covered by a block policy. However, that does not usually cover contents, so presumably you have your own contents insurance. You need to check their terms as well, and may be required to notify them too.

Drop shipping is a very common business model, and has been for some years, so I'd be very surprised if insurance brokers, mortgage brokers, etc., didn't know about it. As others have said, doing the business admin from home is very rarely an issue - it's when you have stock, employees or customers visiting your home that it's a problem.

For me, a far more important thing to worry about and check would be the credentials of the business being sold. Drop shipping websites are often worthless and a modern day con-job. It's very easy for someone to register a domain name and "personalise" a generic website with dropshipper links in place, and sell it as some kind of genuine business for a few thousand pounds. There are hundreds/thousands out there. Before giving your hard earned cash to buy it, you need to do due-diligence, i.e. check it's past sales history, check number of visitors, check it's database for past customer purchases, check it's search engine rankings and links driving visitors to it. Any genuine business website will have a proven track record and the people selling it would be able to show you "the books", i.e. it's sales and profits. If it's a newly created website (often advertised as a clean sheet), don't pay more than the basic cost of the domain purchase and a couple of hundred pounds for the website itself - max £300 ish - you'd be able to get a web designer to do it for that, or you could even do it yourself. I've seen far too many people being conned into buying e-commerce sites that yield absolutely nothing because they're not businesses - they're just someone making them in bulk and flogging them off.