When you’re starting a new online business, the last thing you want to focus on is failure. But if you address the common reasons for failure up front, you will be much less likely to fall victim to them yourself.
I’ve always been a big fan of learning from failure, so while most of my high-tech brethren like to talk up their successes, I try to help entrepreneurs avoid catastrophic failure and get to the next stage.
Their entrepreneurs live in a vacuum. It’s easy for startups to become so focused, so wrapped up in their own vision, that they lose perspective. In addition, That’s one of the key benefits to seeking venture capital from firms that know your target market: they give you feedback and validate your strategy.
Here are the top 6 biggest reasons why online businesses fail
1.Wrong idea
When you think about the sort of people who start an online business that 90% failure rate of new online businesses really is not surprising. Most people seem to think that being a successful internet marketer is as easy as getting a website built and getting their own domain name and they could not be farther from reality.
The idea doesn’t uniquely solve a big problem.It’s got to be a big problem and a way better solution than what’s already out there.
Contrary to the old line, Everything that might be invented has been invented, the more complex the world becomes, the more problems there are to solve.
2.Run out of cash
For every founder that manages to bootstrap a startup, there are dozens that run out of cash for any number of reasons: they don’t budget properly, they don’t want to give up a piece of the pie, their burn rate is too high, they don’t plan for how long it takes to raise rounds of funding, or some combination thereof.
They invent concepts, not complete products. Ideas and inventions are nice, but clients and online businesses generally buy complete products they might actually use. There is a world of difference.
3.Wrong strategy
There are very huge gaps in the strategy. Some gaps are to be expected, but oftentimes, what entrepreneurs leave to be fleshed out later , somethings like low-cost materials, availability of components and infrastructure, end up becoming showstoppers.
The team does not have what it takes. Some founders just can’t get along. Others fall apart when the initial strategy fails, as it often does. Still others are out to make a quick buck and aren’t committed to working day and night over the long haul.
4.Wrong Mindset
Most of us have heard the phrase – He has an attitude! And it is often a derogatory remark made about a person with a negative attitude.
The word attitude is crucial when thinking about marketing start-ups. A good attitude or a good mind set will not guarantee success but a bad attitude or a bad mind set can guarantee failure.
5.Wrong Advice
They listen to bad advice from the wrong people. With all the hype over entrepreneurs, the quantity of information has gone way up while the quality has gone way down. That means startups are getting lots of bad advice from unqualified sources. The worst thing about it is, when they actually get good advice that conflicts with what they’ve been told, they don’t recognize it for what it is.
Perhaps the most crucial advice I might give you is this: If your startups fails, it’s worth spending time to understand what went wrong. That’s the only way you’re going to improve the odds of making it next time. And, yes, there will be a next time.
6. Do Not Have an Online Business Background
All online businesses whether large or small, Online or “brick and mortar” have two things in common: they are a business and must be operated like a business! Business people must understand accepted business practices.
There are simple and basic concepts like “acceptable over-head expenses in relation to projected income”. All startups need to understand profit and loss and what constitutes each.
It is not a requirement to have a college degree in online business to be successful but it wouldn’t hurt. On the other hand some basic business knowledge is an absolute necessity.
If it is difficult to balance your check book, then it might be a nice idea to keep your day job and forget about being in your online business.
