The 9 Worst Online Business Mistakes
Every year, thousands, if not millions of people start an online business. Unfortunately for many, statistics show that ninety percent of all online businesses fail within the first 120 days.
As an experienced online entrepreneur I’ve made my share of mistakes as well. In this post I’ll explain you the worst online business mistakes one can make.
Expecting to become rich quick
Many starting entrepreneurs gravely overestimate how fast their business will grow and how quickly the money will start flowing in their direction.
Expecting that you can become rich quickly might be the number one online business mistake people make. Yes, there are a handful of people who strike gold right away but for the majority, having an online business equals hard work.
Overestimating your potential income has several downsides attached to it. The first is that it often leads to disappointment and demotivation. I often see entrepreneurs start out with great expectations but when reality doesn’t live up to their expectations they become motivated and quit before they even gave their business idea a fair chance.
A closely related issue is that people with such expectations often end up taking things too lightly as well. If you think that riches come quickly you underestimate your competition and overestimate the potential in the market.
This results in cutting corners on product, service and delivery which in turn leads to disappointing business results. If you start an online business, be critical towards your own expectations and don’t expect vast riches immediately.
Building a thriving business takes years of hard work.
Investing too much money in a non-viable model
Certain online businesses require a considerable investment to get the business started properly. If you start an e-commerce store you’re required to purchase inventory up front. If you want to run a customized recruitment platform or a cryptocurrency exchange you’ll have to invest in development.
Every business model is different and requires a different base investment to get you running. Some businesses require a large investment and other require a small investment.
If you choose a business model that requires a serious investment, you’ll want to be sure of how viable the business idea is.
Unfortunately, too many entrepreneurs starting an online business think that, the investment itself, is what differentiates them from their competition enough to make their business succeed. They just do what others do and then expect to succeed by simply pouring in more cash than their competitors.
This is a short sighted strategy and a blueprint for failure. If you start a business that requires a lot of cash you’ll want to test or prototype if the business idea is actually viable.
Investing too little up front
The total opposite of investing too much up front is investing too little up front.
As I just mentioned, there simply are business models that require a decent investment to get you running in the first place. Business models that, without a decent investment will never be able to provide enough value to their customers.
If you want an online recruitment portal with advanced functionalities, an app or perhaps a cryptocurrency exchange you’ll have to do some serious development. Development that goes further than simply signing up on Bluehost and clicking the “install WordPress” button. If you don’t have any development skills you’ll have to invest to have it developed by someone else.
You can’t simply build an advanced app or an advanced online portal in an out of the box software. You can try cutting corners and saving money but it will never give your product or service the functionalities it needs to seriously compete with other players in the market.
If you want an online business but you don’t have any cash or are hesitant to invest in it, I would advise you to consider a low-cost business model like blogging, affiliate marketing or drop shipping.
Competing in a market that has a lot of competition with a product that is of mediocre quality is simply a waste of your time.
Picking a niche that is too small
Because competition in mainstream markets is killing, many people choose to focus their efforts on a niche market. However, picking the right niche market is a somewhat challenging process.
When they start their search, a lot of starting entrepreneurs expect to find a unicorn niche. They are so confident in their selves that they think they have what it takes to find this uncharted territory full of potential riches. If you happen to find a niche that has not yet been explored by others there are two possibilities.
The possible, but also highly unlikely possibility is that you’ve really found a unicorn niche market. The perfect “blue ocean” as people in marketing often call it.
However, the much more likely possibility is that the niche is simply too small to be profitable and everybody else already noticed that, except for you.
Picking a niche that is too small leads to profitability problems. It is a costly mistake to get your entire online business up and running just to find out years later that your niche is too small.
Picking a niche that is too broad
The opposite of picking a niche that is too small is picking a niche that is too broad. A lot of starting entrepreneurs don’t even bother thinking about niches. They just go mainstream and try to compete with the big boys.
There’s nothing wrong with such confidence but you’ll need to have deep pockets and a very long breath. I sometimes meet entrepreneurs who think about starting an e-commerce store that sells all sorts of different products to a mainstream market.
Do you know who also sell all sorts of products to the mainstream market? Amazon, Ebay, Alibaba and a thousand other giants with marketing budgets large enough to finance a trip to Jupiter and retail prices lower than what you would even be able to purchase them for from the manufacturer.
Picking a broad niche can be a very costly online business mistake to make.
Not thinking about monetization up front
Not thinking about monetization up front is a mistake I’ve made myself and seen several other entrepreneurs make. I once had the idea to just start a website and build an audience and then later try to find out how to monetize it.
The idea is simple, just take care of monetization as soon as you have an audience. However, not all niches and/or business ideas are equally profitable.
I had built an informative website about bodyguards that attracted a few thousand visitors every month. One year later, when I started to think about monetization I found out that the possibilities to monetize it were severely limited.
The niche was so specific that e-commerce and affiliate sales were not possible due to lack of merchants. Selling e-content wasn’t an option as well so all that remained was advertising. However, the niche was too small to attract the amount of visitors necessary to make online advertising profitable enough.
So there I was.. market leader in a small niche with little to no opportunities to monetize it.
Not thinking about monetization up front is a silly mistake. If you’re unlucky you'll end up in the same spot as me. An online business with a decent audience after a year’s work and no way to monetize it.
Every monetization strategy has its own requirements, its own perks and downsides. A monetization strategy like advertising that yields little revenue for each conversion and hence requires a larger visitor base than a strategy that yields a larger revenue for each conversion like e-commerce.
Make sure that you think thoroughly about monetization before starting a business.
Not defining goals and deadlines
A lot of people I know who start an online business don’t define clear goals and deadlines for themselves. They start a business and just do whatever they feel like day in day out. Doing something is evidently always better than doing nothing but I can tell from experience that defining goals is what really keeps you accountable for what you do.
If you don’t define concrete goals and deadlines it’s incredibly easy to lose yourself in mundane and unimportant tasks every day. It’s like giving yourself a guilt free pass to screw around without holding yourself accountable for your results, or lack thereof.
Before I defined my goals and deadlines I could spend weeks, if not months optimizing my website portfolio. One day I felt like design X was better and the other day I felt like Y was better. I spent most of my time asking myself if I should put the call to action button on the left or right side? What shade of yellow shall I use in my designs? Should I use yellow whatsoever anyways or go for blue?
In this time I spent weeks pingponging from left to right on my designs. I felt like I was productive but I was merely busy. Being busy and productive are two entirely different things that share just one commonality: they both cost time.
If you’re not careful you’ll waste your precious time and you end up being busy instead of important. If you don’t define goals and deadlines there’s nothing that keeps you accountable for what you do.
Not tracking what happens with your online business
When you run an online business there are plenty of tools that you can use to track what happens with your online business. Google and other popular search engines like Bing offer you tools like Search Console, Google Analytics and Webmaster Tools to track how visitors find your website and engage with it.
Next to that there are tools that can track your visitor’s mouse movements that allow you to optimize use experience and so on.
If you want your online business to grow rapidly you’ll need to know where there’s potential for growth. If your visitors are having a hard time finding your website you’ll want to know which keywords you need to focus your SEO efforts on. If your visitors are having a hard time engaging with your website you’ll need to track your visitors and find out why they have engagement issues.
Tracking and measuring gives you fact based input on how you can grow your online business.
If you don’t track you’re basically projecting your own perceptions of ideal user experience on your visitors.
Not being consistent
Not being consistent on your online business is a classic mistake to make. As I mentioned in the first mistake about expecting to become rich quickly an online business is difficult to grow.
It takes years and years of hard work, experimenting, time and passion. However, there is one key thing that can make your business grow faster and that is: consistency.
When successes don’t come after a while, the thought that you’re doing something wrong starts lingering in the back of your mind. A lot of people give in to this thought too easily and change their strategy. They rebrand their online business and try different things.
Perhaps you should target a different region? Or sell different products altogether? Or stop blogging and start vlogging?
In general there is nothing wrong with experimenting in your business. I’m not advising you to keep betting on the losing horse over and over again. However, a lot of entrepreneurs I’ve seen get impatient too fast and switch strategies too fast and too often.
They try one thing and if it doesn’t work they try something else a few months later and so on. As a result of this, their value proposition and their brand become vague to potential customers.
Returning customers get confused and new customers find it hard to tell what you are actually offering. Hence, I often advise entrepreneurs to think really long and hard about their business, their brand and their value proposition.
The ideal situation is to think long and hard about what kind of business you’re going to start and then be consistent until you have solid results. Being consistent is what gives your brand and value proposition power.
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