How to Create a Privacy Policy for Your Small Business: Step-by-Step

Growing a small business requires heart, dedication, and a strong commitment to your customers. This commitment also extends to protecting their privacy. A solid privacy policy is more than just good practice; it serves as a handshake that assures your customers that you respect their privacy. Let us grow your customer trust by creating one with this step-by-step guide on how to create a privacy policy for small businesses.

Privacy laws across the world aim to empower consumers by fostering informed decision-making. This means, even small businesses would have to be privacy-focused in this digital age. Consequently, it is best to have a privacy policy in place for all businesses including SMEs. 

A Privacy policy is a legal document that discloses an organisation’s information practices to the public. It is also called a privacy notice/privacy statement.

Several American privacy laws like the California Consumer Privacy Act (CCPA) necessitate businesses to provide a privacy policy only if they meet a certain monetary or numerical threshold. However, the Californian Online Privacy Protection Act (CalOPPA) requires all websites, applications or other online services to provide a privacy policy regardless of any threshold.

On the other hand, all businesses collecting personal data from Europeans need to have a privacy policy in place as the scope of the law governing the EU personal data- GDPR is not based on any threshold.

Considering all the factors, your small business probably needs a privacy policy to meet the legal requirements and foster trust with your customers.

The information you need to include in your privacy policy mostly depends on your information practices and relevant privacy regulations. However, some fundamental elements are common to almost all laws, which are listed below.

Introduction

Think about pitching a new product to your audience; you would not start with how a customer can place an order on your website or its technicalities upfront. Instead, you would begin with what it is about and why it matters. The same rule applies here.

Start your privacy policy with an introduction that outlines your organisation and explains the importance of the policy.

Bling keeps the introduction short like this.

This is how ABC Fitness Solutions begins its privacy policy.

What personal data do you collect?

From clicks to email addresses, every interaction with a customer brings some amount of personal data into your database. The laws require businesses to be transparent about the data collected from individuals. The best privacy practice is to inform the types of data you collect through a privacy notice/privacy policy. 

This section of your privacy policy should contain specific details like the types of data and where you collect them from. Rather than being vague and unclear, it should be specific and descriptive.

In the example provided below, The Watered Garden, a small business in the United Kingdom provides the information they collect from the individuals and how they collect it.

Why do you need the personal data?

This section explains how you use the personal data collected from users. Therefore when creating it, your goal is to clarify the purposes and legal bases of collecting the data. This can be for processing orders or payments, personalised customer experience, sending marketing emails, solving queries, or legal compliance.

While giving the details, make sure to use plain language that anybody can easily understand. For this, you would have to avoid technical jargon or complicated word usage. The key is to make it as simple as possible.

Do you share personal data with others?

Your customers might trust you with their personal data, but that does not mean you can share it with third parties without them knowing. Therefore, it is important to reveal to your customers what data you share with others and the purposes behind it. Watered Garden does it this way and informs its website visitors that they share personal data with service providers, affiliates and third parties.

If you do not share customer data with third parties, you can state in your policy that you would not share any information.

Here is an example from ShoppingTech.

What are the rights of consumers/data subjects?

Privacy rights are an unavoidable part of every data protection regulation. This is to empower people with control over their personal data. Make sure to list these rights under a separate section with guidelines on how someone can exercise these rights. 

It is also important to include an unsubscribe button in any marketing emails or promotions you send. This shows that you respect your customers’ preferences. Additionally, including this information in your privacy policy will enhance transparency between you and your customers.

The following image shows how Bling presents this information to its customers.

Contact information

A well-presented contact section is a great way to demonstrate commitment towards protecting consumer data, and how willing you are to communicate and solve any doubts they have regarding your policy.

ShoppingTech has included a contact section in its privacy policy and looks like this.

Cookies and tracking technologies

Cookies are useful for websites to perform load balancing and user optimisation. However, they come under the scope of privacy regulations as they involve personal data like IP addresses and location. 

Third-party cookies like advertisement and tracking cookies use personal data for targeted advertising. Privacy laws like GDPR and CCPA regulate this by requiring businesses to implement opt-ins or opt-outs for cookie consent.

Many businesses have started to implement cookie consent banners to comply with legal requirements like this simple one from GrymStudent.

It is equally important to provide website visitors with the details of the cookies used. You can either provide it as a separate cookie policy (see cookies in the example below) or include it within the privacy policy page and then hyperlink the relevant part conspicuously on your website.

Make sure to specify the names of the cookies used, their purposes, retention period, etc. Here is an example from Eczema clothing.

What about data security?

Trust us when we say customers care about the security and confidentiality of their personal information. So, make sure that you tell your customers about the data security measures you have implemented for your organisation. Look at this example from ABC Fitness.

Compliance

Clear communication is integral to data privacy laws as it empowers consumers to make informed decisions. Some of the laws that require businesses to provide a privacy policy include:

• General Data Protection Regulation (GDPR): The European privacy legislation mandates all organisations that collect personal data from EU residents to provide a privacy policy at the time of data collection directly from users or within 30 days if collected from other sources.
  
• California Consumer Privacy Act (CCPA): Entities that reach an annual revenue of $25 million, handle the personal data of 100,000 consumers, or earn more than 50% of their gross income from data sales are required to provide a privacy policy. While these figures may seem huge for a small business, it is important to note that a business getting just 500 website visitors a day might meet this requirement in as little as 200 days, if even a small portion of the personal data of each visitor is collected.
  
• Personal Information Protection and Electronic Documents Act (PIPEDA): Canada’s privacy regulation sets out openness as its 8th principle and requires businesses to conspicuously provide a privacy policy disclosing an organisation’s personal information management practices. 

Customer trust

Having a clear and transparent privacy policy showcases your dedication to protecting customer privacy, which in turn helps build trust in your brand.

Avoid non-compliance risks

Since privacy policies are an important requirement under most privacy regulations, not having them raises legal risks such as non-compliance fines and reputation loss.

Follow these five important steps to create a privacy policy for your small business.

#1 Understand your legal obligations

Identify the laws that apply to your business and then understand the key components to be included in your privacy policy. Furthermore, understand the policy requirements under that law. Here are some of the common requirements:

• Make the policy conspicuously available
• Avoid jargon and use plain language
• Keep the policy updated and provide the last update date
• Ensure that any links provided in the policy are not broken
• Avoid using qualifiers like may or might 
• Do not charge a fee to access the privacy policy

#2 Identify your data collection and handling practices

The main goal of your privacy policy is to inform your customers about how you collect information, the types of information you gather, the reasons for collecting it, where it is stored, whether it will be shared with third parties, etc. To include this in your policy, you should be aware of what you keep in your database and the data flows within your organisation.

Ensure that you only collect adequate and necessary data and that your data processing activities have a legal basis. Specify whether you share data with third-party services, and provide a detailed description of this in your policy.

#3 Seek legal advice

Consult a legal professional to understand the applicable laws, and legal requirements or review your policy draft. This step minimises compliance risks and helps you create a privacy policy tailored to your operations.

#4 Be descriptive and include all the components

A privacy policy should be unambiguous and contain all the essential components. This includes the types of user data collected, purposes of processing, retention period, cookies and tracking technologies, minor’s privacy, security measures, user rights, third-party sharing and contact information.

#5 Use a privacy policy generator

As a small business owner, you might have a lot on your plate including inventory management, handling customer inquiries, overseeing finances, marketing your business and coordinating with suppliers. Writing a privacy policy from scratch can feel like yet another task. Privacy policy generators can be convenient in that case. It keeps the guesswork out of compliance and saves your time. CookieYes privacy policy generator is free and effective in creating a compliant privacy policy for your website.