• Lack of key marketing basics
Internet marketing does not run on auto-pilot. Period.
So marketing calls for some hard work from you. The best way to ensure that your effort does not go to waste is to know why others before you had failed. Here are the 18 reasons why:
Reason #40: No market awareness
A factor which makes online start-ups fail from the beginning is when the owners do not investigate a market before going in. So they may not only plunge into a down market but also find themselves in an area already saturated with well-established companies, making it impossible for them to break in.
Successful businesses do not try to force their product or service in. They rather look for an opening or unmet need within a market and then fill it. Why not when they know that it’s a lot easier to satisfy an existing need rather than create one and convince people that they must spend their hard-earned money on it?
Reason # 41: Poor Marketing
What kills a small business going into a market is poor marketing.
Its brand being new to the market and since there are established products out there, a small business has no alternative but to market well. If it wants the target market to know that it can really satisfy its needs, the business will have to commit enough resources into promotion through the right channels.
Dotcoms eager to succeed mix both online marketing with traditional marketing methods such as brochures, business cards and flyers.
Reason #42: No profitable business model with proven revenue streams
If some businesspeople fail online it is because they fail to accurately determine product/market fit while that is what makes the money roll in.
Successful start-ups however make swift moves to figure out if there is a market for their product/service by running a quick test. This enables them to quickly ascertain whether their idea could be the basis of a potentially viable business.
You can also nail your business model using tools and methodologies such as Minimum Viable Products, Lean Marketing and Experimentation.
Reason #43: Entering Industry blindly
One reason some business owners fail is that they start their businesses before fully investigating the industry. This leaping before you look attitude is what one writer aptly referred to as entering a “sunset industry”.
But those who succeeded took the time to find out the trends in their industry, such as:
– whether the industry was growing or declining
– what the opportunities and the threats were
– where they could position their business in the industry so that it may succeed
– if new technologies will have an impact on the industry.
In short, they picked a market they could win.
Reason #44: Entrepreneur falls in love with the product/business
Consumers’ tastes and the business environment are continually changing. This means that your lead product may no longer be moving the market tomorrow; or that the business that you are in may be declining maybe due to the introduction of new technology.
Business owners bent on succeeding know that it is suicidal not to change with the times. Imagine the outcome if you doggedly wanted to sell the good old vinyl records while the trend was on CDs or if you were still manufacturing record players while what people are buying are CD players.
Reason #45: Rigidity
We already know from Dun & Bradstreet and INC. magazine that 33% of all new businesses fail within the first six months of creation, fifty percent do so within the first two years of operation and 75% within the first three. What can account for some of the latter failure rates is rigidity.
Successful people therefore learn not to get complacent once the planning is done, the business established and a customer base gained. The market is always evolving and the initial need you identified and eagerly fulfilling may no longer hold. Through monitoring you can know when to alter your business plan to suit the new circumstances.
Big internet boys learn to be on top of key trends which allow them lots of time to adjust their strategy so that they can remain successful.
Reason #46: Not Understanding the Target Customer
Some business owners open their doors for business without finding out anything about their target customers such as buyer demographics and psychographics, how they buy, what they buy, when they buy, what motivates them to buy and where they buy.
Do not expect that just because you are now in business, customers will flock to your door. If you do not understand your target customer, how do you expect to effectively reach them?
Reason #47: Segmentation and Targeting
To effectively get to your target customer, you need to find your niche. Selling online is all about targeting well-defined, niche audiences.
However, internet businesses which want to succeed know that some niches are easier to target than others. So they learn to define their potential customers with precision.
Reason #48: Not handling the Offer well
What kills new entrepreneurs straight from the beginning is a weak offer.
However companies aiming to succeed on the web give customers an “irresistible offer,” letting them know why they should become their customer by outlining the benefits they will obtain from the business; how unique those benefits are; and how they outweigh the risk of trying their products or services instead of what they have been using.
On the other hand a complicated offer may also make new businesspeople lose from the beginning. Businesses seeking success do not overdo it by creating a virtual “courtroom brief” telling customers why they should give them their custom; they rather seek to simplify the offers.
Reason #49: Poor customer care
The French have an expression le client est roi – the client is king.
Despite that a common mistake usually made by unsuccessful businesses is failure to understand and listen to customers.
But successful companies know that the person who counts most in any marketing consideration is the customer and therefore offer them excellent customer service.
Reason #50: Lack of deep dialogue with customers
What do companies destined to fail do when they see a potential opportunity in the market or come up with a new idea for a product/service? They coil into themselves.
But businesses which succeed know that complete understanding of the customer holds the trump cards for their success. So they engage in real dialogue with the customer. They don’t forget the axiom: Markets are conversations.
Reason #51: No differentiation – Just Another “Me Too” Business
Many businesses have failed because they have no unique identity in the market. They are just another “me too” business.
Yet customers need a strong reason to give their custom to you. If your products or services are the same quality and prices as the company from whom they are already buying, why should they abandon “the devil that they know” and embrace “the angel that they don’t know”?
If, on the contrary, you can offer a different or a better product or service in terms of better location, better quality, broader selection, extended warranty, faster delivery, lower prices, etc., then prospective customers can be expected to do business with your company.
To find at least two good qualities that make them unique in the market, every business owner must objectively ask themselves “If I were a customer, why would I want to do business with this (my) company?”
A tool which can help you figure out the true value (which is unique and different from others in the marketplace) you bring to customers is Alex Osterwalder’s ‘Value Proposition Canvas’.
Reason #52: Failure to communicate value propositions clearly, concisely and compellingly
Now you have found your point of differentiation, so what next? Businesses attacked by the “virus” called ‘failure to communicate’ blow it by failing to communicate their message in a clear, concise and compelling manner.
On the other hand, businesses with a success streak learn to use the language (words) their customers use to better communicate with them by:
• Being clear as to who they are and what value they bring to them
• Being concise and not going on and on and on in their messaging
• Being compelling by using words which persuade their customers to take the action they want them to.
Reason #53: Expanding too fast
If your business is succeeding beyond your expectations, which businessperson wouldn’t want to expand?
But what novice businesspeople may not know is that expanding an established and successful business requires the same care as the one being founded.
Expanding the reach of your business calls for an understanding of the areas and markets into which you’re venturing. However if the expansion concerns the scope and focus of your business, then you must pay particular attention to your new products, service and intended consumer.
Knowledgeable businesses don’t expand too fast and they exercise the same caution with research, strategy and planning. For they know that should the strategy fail, the accompanying financial cyclone can devastate the whole enterprise.
Reason #54: Jumping from one internet program to another
People who fail in web business are those who embrace too many internet programs before they even know how to market.
This is the proverbial Jack of all trades and master of none.
On the contrary, successful people learn to market, then get to master one program, have it fully under their belt before moving on to another one.
Reason #55: Lack of knowledge of self
Maybe you know the ancient Greek saying Know yourself. Unsuccessful companies fail to know themselves through testing because they equate it with weakness.
But companies which succeed do not suffer from the “Phobia of Testing.” They recognize that strong, successful companies do not know all the answers in advance. So they continually test themselves and their assumptions.
To be able to do so adequately, at least 10-20% of the company’s budget should be continuously spent on testing.
Reason #56: Lack of a clearly defined exit strategy
Right from the start of the business, owners must know their exit strategy by defining how and when investors (family members, friends, angels, venture capitalists and such) will get their money out of the business.
We saw in the statistics in part one concerning the personal qualities which make companies fail that they do so at various stages. A badly-conceived dot.com with no clear, or even realist, exit strategy can at a certain moment of the company’s life cycle have anxious investors insistently asking when they might cash out.
However well-conceived businesses start their operations with an exit strategy showing how and when investors will see a return on their investment. Even if you are a founder with hands-on roles in the business, you should also have a plan for getting out (selling the business, passing it on to your next-of-kin, etc.).
Three possible exit strategies could be:
- Being bought out by a bigger fish
- New investors taking the place of old ones
- Going public (many dotcoms prefer this option of floating shares)
Reason # 57: Uncontrolled Growth
Growth is every business owner’s dream. But like stagnation, growth can bankrupt a business if left unbridled. This happens when the income you generate is inadequate to support your expansion programme.
When successful businesses experience great success, they keep euphoria in check and do not rush into buying more equipment or opening up new stores. They stick to the strategies outlined in the business plan and grow according to the plan.
Like uncontrolled growth, unchecked competition is also a threat to the survival of a small business. The next piece will touch on this.
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 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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