• Unbalanced experience or lack of managerial experience
An internet entrepreneur cannot succeed if they don’t have the right mix of managerial experience and worse if they lack this experience all together.
This factor comes next to incompetence as a primary contributor to business failure, representing up to a full 30% of small business failures. It is manifested primarily by:
Reason #28: Poor credit-granting decisions
Knowing that giving credit facilities to a customer is one of the means of grabbing their custom, some new internet entrepreneurs do not take the necessary precautions and have accounts receivable pile up.
Companies created with success in mind know that a customer’s creditworthiness must be checked with their banks, former suppliers and so on so as not to cripple their business with bad debts.
The other 11 factors responsible for lack of experience are:
Reason #29: Inefficient or inexperienced management
Managers of bankrupt firms begin their enterprises usually with little or no knowledge, experience or vision of how to handle the multiple facets of a business such as advertising, employee relations, financial management and other essential tasks. Even as the firm grows and management experience increases, knowledge and vision still remain critical factors that still cripple businesses.
The ones who succeed in their businesses are those that get education through short business and finance courses, or even hire experienced managers to complement them.
An expert attributed 11% of business failures to “Lack of experience”. Under this term, he included the shortcomings such as:
Reason #30: Inadequate inventory management
Inventories can deprive a business of cash, but lack of knowledge of it makes some entrepreneurs not give it the needed attention.
Excess inventory, slow moving or obsolete ones equate to tying up your money in products of little or no value at all to your business.
So successful businesspeople learn not to buy too much inventory as it could cripple cash flow; they don’t buy too little inventory as they might miss out on sales or even disappoint customers.
Reason #31: No knowledge of suppliers
Why some new companies ignore the saying that The devil you know is better than the angel you don’t know when it comes to working with suppliers is surprising indeed.
On the other hand companies which want to last in the market try to know their suppliers well before working with them. Matters such as their trustworthiness, respect of deadlines, adherence to regular supplies, quality supplies, financial standing, checking with their existing clients, terms of payments, modalities of payment, credit facilities, etc. are thoroughly checked before committing with them.
Reason #32: Poor or Non-existent Marketing Programs to entice Customers
Have you heard the saying ‘If you build it, they won’t come — until they hear about it’? It’s true: prospective customers will not find you automatically just because you have created a company. You must reach out to them right from creation through understanding of their demographics and psychographics. Instead of that, new entrepreneurs all too often devote all their resources to building the product thus making collapse at the “second-round funding” stage inevitable since money is no longer available for that.
Successful new online initiatives however allocate about half of their resources (time, labour, cash) to building a customer base. That is when they let their target know that they exist and explain why the customer should do business with them by appealing to their needs.
The most common of some of the numerous ways in which successful companies market their business are through:
– Advertisements (magazines, newspapers, radio, television, value
packs, yellow pages)
– brochures (electronic and printed)
– cross marketing / cross promotions
– direct mail
– fax (broadcast or personalized)
– promotional items
– public speaking
– sales calls (cold calls, scheduled calls)
– sales letters
– seminars & workshops
– signs (interior and exterior)
– targeted e-mail
– telephone on hold messages
– trade shows
Reason #33: Wasted advertising budgets
Any advertising which does not bring the desired results is a waste of your efforts and advertising budget. Sending your message to the wrong target is like a novice hunter shooting blindly into the bush in the hope of hitting game. Besides, if you’re sending promotions to people who aren’t interested in your offers, you’d be labelled as a spammer.
How can you avoid this?
If you don’t know what, where, how and when to advertise, then you better entrust this task to a specialist.
Reason #34: Fraud, natural disasters and neglect
Like anything else, ignoring, disregarding or leaving tasks uncared for can only make your business suffer. As for fraud I once translated a document for a client detailing how Nigerian 419 scammers had milked a businessman’s family business dry. If those two events can be avoided, disaster however, often strikes unannounced.
When in doubt of a business proposition, seek advice. Also take out insurance to cover your business against certain risks.
Reason #35: Poor Human Resource Management Skills
Your most important asset is your employees. And it is known that some customers do business with a particular company because of the people that they deal with there.
An employee who is not well treated may decide to leave. Do you think customers who miss them may feel good still doing business with your company? Worse, if more and more employees quit your employment, that may make your buyers who love them take their custom elsewhere. Worst, if your business requires employees with unique skill sets, it may become difficult to replace them with people having identical skills. Quality and output therefore suffer, leading to customer dissatisfaction and a decline in your business.
On the contrary, successful businesses know that treating their employees with due consideration will keep them motivated and they enthusiastically will help grow the business.
Reason #36: Not Measuring Goals and Objectives
Success often breeds success. But ironically success can also bring failure for a small business.
As the business begins to grow rapidly, the owner gets caught up in the humdrum routine of meeting demand, and devoting time to keeping good records may simply slip their minds.
However operational goals and objectives are only useful for your business if you measure how well your business is performing against them.
But internet businesses that succeeded had taken the time to measure against the identified goals and objectives. This enabled them to know whether modifications and alternate strategies were required or not.
Reason # 37: Lacklustre execution of goals and objectives
But in case you cannot track the goals and objectives yourself, entrust the task to an employee. Yet just giving this duty to an employee doesn’t mean it will be effective if not handled well.
Employees who are square pegs in round holes will cut down on productivity, impact the work environment negatively and destroy customer/client relations. So recruit the right calibre employees from the beginning and let them go through rigorous training and retraining to ensure quality output from them all the time.
Reason # 38: Wrong Reasons
Some small business owners started their business simply with the idea to get rich. This can lead to huge disappointment making the person to be caught up in the addiction of always looking for get-rich-quick schemes.
But successful businesspeople consider first their own interests and passions and then how to share them with people at large. They also prepare themselves to overcome the obstacles which will inevitably cross their paths.
Reason #39: Fast and dangerous
You know the expression ‘Slow but sure’ but maybe not the one above. Yet that is the problem of many new online businesses which underestimate the time requirements for their business.
Just as on the road, speed kills in business. At best, it gets the entrepreneur worn-out. So instead of failing at the speed of lightning, it would be better for you to grow at a tortoise’s pace.
One of the business strategies which can make the difference between failure and success for the online business owner is marketing which will be the topic of discussion in the following piece.
Do you want to succeed online?
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 managerial pitfalls discussed above 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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