It’s said that nearly 95 percent of all online businesses fail and close up shop within their first four months. That’s it. Most internet-based businesses have a maximum life span of four months from the grand opening to the grand closing.
The question then becomes ‘why’?
What separates this 95% of businesses that fail from the 5% that succeed?
Here we’re going to go over the most common reasons why so many online businesses and internet entrepreneurs fail. And we’re going to break down what you need to do differently in order to succeed.
Absence of Basic Business Knowledge
Advancements in modern technology and online solutions have made it very easy for almost any individual to start a company online. There is a large selection of systems that allow you to offer products from your website, with setup taking as little as a couple of hours.
It’s gotten so easy to start an online business that if you wanted to, you could have a store up and running before the end of the average workday for minimal start-up costs (maybe even 0 initial start-up costs if you do it through a service like Shopify as they regularly offer promotions that give users the first two weeks or more free).
To start an online store or blog, you don’t even need to know any coding. Whether you’re starting a website with Bluehost or Wix or Shopify, the technical skill needed is extremely minimal, and free tutorial videos on YouTube can take you to step by step through the setup process.
The ease at which an individual can start their own business today is unique; in no other era in history has it been this easy to start a business. Before the internet, you have to find a physical location to open up a shop and probably needed thousands of dollars to invest in your business just to get it started on the most basic level.
This has created a situation where people are starting businesses despite having no real understanding of how to run them. And not having a general understanding of basic business terms or exactly how companies run could be your failure.
If you have a successful eCommerce store that is making a couple of thousand bucks a week, but you don’t recognize what your real operating costs are, you might end up facing a situation where all the money you’re bringing in isn’t enough to cover the basic business costs once your various ‘free trials’ end.
At the same time, if you’re not tracking the profit margin on the products you are marketing or tracking the costs of the advertisements you are running, you might be marketing items for more than what you make off them in profit. If your ad is costing you about $10 for every 1 sale, but you only make a $5 profit per sale – you’re on your way out of business in no time.
Beyond that, running an organization isn’t as simple as subtracting your costs from your revenue. Many other aspects affect whether or not you are operating at a profit, and not recognizing them – or being mindful of “hidden” costs – can rapidly lead to your failure.
Prior to starting your company online, or opening an eCommerce web site, make sure you have a full understanding of exactly how to run a service. You can look for a business training course to take at a local university or find an online course.
Either way, you should learn about all the potential expenses you could be facing while running a business and have a strong strategy for success.
Not Analyzing The Needs & Demands Of Your Target Customers
Not analyzing the demands & demands of target consumers is another reason why so few start-ups are unsuccessful. Bear in mind; you need enough customers to acquire your organization’s services or products to succeed.
The best method to comprehend your prospective customers’ needs is to put yourself in their shoes and check out your product or services with their point of view in mind.
From there, you can customize your products, solutions, and your advertising efforts to match those clients. There are many incentives to understand your clients: you get to strengthen brand loyalty and trigger favorable word-of-mouth referrals for your products and services.
Not Ready To Put In The Work Needed
Many would-be entrepreneurs are simply not willing to totally dedicate themselves to the business. There’s a lot of work that needs to be done when launching and running a business, and most of it isn’t glamorous Instagram-ready work. No, most of the work needed to be done when you launch a business is nose-to-the-grindstone work. That’s why a whole lot of people do not achieve success – they’re simply not prepared to actually do the job.
Many people want to say they are ‘entrepreneurs,’ but when it comes to the actual work needed to build a business from the ground up, they have no interest in doing any of it. Before embarking on your business journey, make sure you’re ready to put in the long hours needed to make it work.
Trying To Reinvent The Wheel
There are a lot of people that have already done what you’re trying to do. Unless your business idea is completely one-of-a-kind with nothing like it before (it’s not), then there is someone successful out there that you can model your business after.
Take the time to listen to podcasts with entrepreneurs and business owners who’ve accomplished what you want to accomplish. Learn from them and follow a similar path as them to the best of your ability.
If you were going to build a house, you wouldn’t just start randomly nailing boards together; you’d probably look into how other houses were built – what tools and materials were used? How were they designed? Why were they designed that way? Etc.
When starting as an entrepreneur, it’s not uncommon to feel a bit lost; after all, most of your family and friends are all sticking with day jobs while you’re attempting to strike it out on your own and build something yourself. But that doesn’t mean you have to make things up as you go.
Whatever you’re trying to accomplish, it’s safe to say someone out there has already done it and left a path for you to follow.
Lack Of Commitment
Among the most in-demand ingredients to run any type of company, particularly on the internet, is dedication. It’s important to stay committed to your work; if you lose interest and don’t do anything with that new blog or eCommerce store you launched, it will never be successful. Success takes consistent effort and dedication.
To recover your commitment, make sure that you maintain a high degree of energy and passion for what you are doing. Take aid of knowledgeable people whenever you face troubles. Listen to motivational audio each morning. Do whatever you can to keep yourself motivated and committed to your goal because if you lose sight of it, you’ll be more likely to give up.
Ensure you have the mindset needed for success.
How To Ensure Success
What can you do to mitigate these common reasons that people fail at online business?
Create a Business Plan
A business plan is vital. What’s the minimum you will require to earn in order to survive? Just how can you ensure you attain this? What’s the perfect amount you intend to make so you can thrive? The number of customers will you need/units will you need to sell to achieve this? What software will you require? What advertising and marketing programs will you use? How much will they cost?
How large does your target market need to be for you to achieve your goals? Online purchase conversion rates are commonly as low as 1%, depending on the product or service you are offering. How many sales do you need to make in order to meet your financial goals?
Great Plan Ray offers a business plan writing service, click here to learn more.
Know What You’re Doing
Seek specialist guidance and assistance with anything you are having trouble with. Sometimes money can be limited when you’re in your initial business year, so in that instance, shop around. You do not need to break the bank and drop 20 grand on a University course to figure out how to run a business, but you also can’t rely on just “figuring it out as you go along.”
Put a Strong Focus on Customer Service
Get clear on who specifically you want to help. Tailor your website, Facebook page, and any other kind of advertising to mirror the excellent customer you are trying to bring in. You might have the ability to help a vast array of individuals, yet this muddles your message and puzzles individuals as to what you do. Who is your perfect customer? Where can you find them? What problem are you attempting to address for them?
Learn from your mistakes, attempt new techniques, and most significantly, keep leveling up your knowledge. In some cases, obstacles can slow your progression and sometimes throw you completely off track. However, you’ve simply got to deal with each problem as it comes, keep coming back, and you can make your brand-new online business a success.
Audrey Hepburn once said;
“Nothing is impossible, the word itself says I’m possible”
You can become successful in business, even a business you start on your own and build from scratch. In order to do so you need to make sure that you have strong business knowledge, understand the needs of your target customers, follow proven paths to success that have worked for others before you, and are committed to getting it done.
Check out our business launch guide for more help.