As an internet entrepreneur you cannot expect to succeed without having some key basic business skills.
Incompetence has aptly been determined by a study conducted by ISBDC using U.S. Census Bureau and University of Tennessee statistics as the leading cause of business failure, responsible for a whopping 46% of the rate.
Now let’s look at the 8 different manifestations of incompetence which often acts as a gravitational pull hurtling dotcom businesses down the precipice:
Reason #20: Lack of planning
This point is so cardinal that I will start it off with three citations:
– “If you fail to plan then you plan to fail,” Benjamin Franklin.
– or the old saying: “If you don’t know where you are going, how will you get there?”
– or even “If you don’t know where you want to go, any road will take you there.” The Cheshire Cat in ‘Alice in Wonderland.’
Yet it is surprising that far too many beginning online workers have no business plan for their business. This shows a lack of a clear focus. These people simply “open their doors” for business thinking success will follow. Failure however is the obvious outcome when they ignore that time must be taken to develop a business plan BEFORE starting their online business.
On the contrary, those who succeed online make a solid and realistic business plan as the basis of their successful business. They know that having a blueprint that outlines every detail of their new business will guide them along the right path to success.
Reason #21: No Operating Goals and Objectives
If your dotcom needs a Business Plan, it is even more imperative for it to have specific goals and objectives set for it during the first twelve months of operations. In the plan, the goals and objectives should be broken down by quarter, noting down everything that must be done in the first quarter, the second, the third, and the fourth.
Successful online businesses also have specific goals set for each month; revenue objectives, profit objectives, numbers of new customers, specific marketing and operational activities, etc.
Reason #22: Taking an emotional approach to pricing
The third element of an offer is pricing and packaging. It is a mistake for a business to ask its clients to buy too much or offer them too comprehensive a package. It is equally bad to undersell yourself. What successful companies do is identify their sweet spot.
Reason #23: Problems with taxes (Especially Non-payment of taxes)
Paying taxes is an obligation for everybody engaged in income-generating activities.
Newly-created dotcoms which do not have accounting systems in place may create unwarranted losses for themselves when they overpay their taxes or have problems with the tax authorities if they underpaid.
But the biggest problem companies created to succeed avoid is non-payment of taxes. They make sure to pay all taxes to the appropriate authorities on time to avoid interest, penalties and even imprisonment.
Reason #24: No knowledge of industry pricing conventions
If you don’t know how your peers fix their prices, you will fail. You can be the cheapest or you can be the best, but don’t ever try to be both. You’ll fail.
Successful companies clearly define their pricing strategy and learn to price their product or service correctly.
Reason #25: No knowledge of financing requirements and conventions
Many small business owners failed because they did not know what was required of them to fulfil the need for finance for their small online business. The lack of a business plan often leads to this problem. The lack of knowledge of the generally accepted rules or practice of financing also adversely affected new dotcoms.
But small businesses which succeeded took the trouble to find out what they needed or depended on for success or laid down as an imperative or required by law. They also learnt and integrated generally accepted rules or practice.
Another major problem of financing requirements is concerns financial management. Some 71% of firms fail for lack of financial planning. Three particular contributing factors an inability to manage working capital, an unbalanced capital structure, and undercapitalization.
Reason #26: No experience in record-keeping
What many new online businesses ignore is that financial information is not only key to their success but also these financial records are paramount to their long-term success and survival.
Why not when even a basic record-keeping system (on paper or on a computer software program) would be enough to give you the financial image of your company such as:
- How much money you are you making, how much you have on hand, and how much is tied up in inventory and in accounts receivable
- How much you owe for merchandise, rent, utilities, etc.
- What your expenses, such as payroll, income taxes, and advertising, are, and when they are due.
- Which of your product lines or services are profitable, which are just breaking even, and which are incurring you losses
- What your gross and net profits are.
You seeing the picture? So if you can’t handle your company’s paperwork yourself, it’s worth it hiring someone else to do it. What you will pay for this service is far less than what you will lose without it.
Reason #27: Living beyond the means of the business (or, Failure to plough the initial profits back into the business)
Some online businesspeople start to live off their businesses before the businesses could support them, especially their extravagant lifestyles. This is the proverbial killing of the hen that lays the golden eggs. For it is really as simple as this: if you spend more money than comes in, you will soon be out of money and logically out of business too.
However if something is working for a successful online worker, they fully invest early profits into growing the business quicker and keep reinvesting in it until the returns are enough for the business to be self-sustaining.
Now does avoiding these pitfalls of the incompetence of a business manager save your company? Yes and no. This is because his unbalanced experience or even a total lack of managerial experience can also kill a company. And that is what we will consider in the next piece.
While the web can offer immediate success for some, for most of us it will take some time and hard work on our part to build a successful online business. The secret is to avoid the pitfalls discussed above and others to follow and you will have a better chance of figuring among the elite online one day.
But, now that you have an idea of why people fail online, aren’t you tempted to learn how you can be part of those who succeed on the web?
“It’s never too late to be who you might have been,” – George Elliot
Sure, you can become part of the 3% successful online workers. By joining Wealthy Affiliate.
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