We have all heard of the high failure rates of new businesses and in my opinion online businesses are even more at risk of failure than many traditional ones.
There seem to be plenty of articles talking about why new businesses fail so I have made this article about what new online businesses need to do in order to succeed. I have formed these views after being involved in strategies and online marketing activities for a number of start-up businesses, a bit of a passion of mine.
1. Have a Differentiated Offering
With a staggering amount of websites and online businesses out there, your business needs to be supported by a strong idea that hasn’t been implemented in exactly the same way before. Unfortunately too many people want to create something too similar to what already exists (and often without the funding and support that their competitor has). Make sure that your business idea is either unique, or has some clear, easy to communicate competitive advantage.
2. Be Clear On How You Will Make Money
It is very tempting with the opportunities provided by the internet to implement a great idea that has loads of target audience value, but no defined revenue stream. Make sure that you know from the get go how you will charge for your services and ensure that this revenue is ultimately enough to support your anticipated costs.
3. Understand the Real Costs
I have met many business owners who have budgeted for a website to support their new business but have only allowed a nominal amount to promote their site. Do some research and be realistic about what it will cost you to get a regular, repeat audience to your website and to have your brand known and respected. Often you will need to use a number of tactics and ideally should look at having a professional put together a plan for you to have implemented.
4. Have A Business Plan
This is super logical, but make sure you document how your business will work, what your expenses and revenue will be and how you will make your money. Make sure you research your competitors, understand the best approach for your business and think about strategic partners who can help you to get some traction. Needless to say, with an online business your business plan should include how to leverage all the opportunities that online provides.
5. Get Expertise
Running a business is going to b a whole of a lot easier for you if you have strong expertise in either the sector that you are targeting or the leveraging online medium. Going into an online business without either will be a lot harder so make sure you have support and expertise around you which you can draw on.
6. Be Flexible
One of the great things about the online space is the measurability and accountability that is available, however these things are useless to you unless your business is flexible enough to be able to adjust and optimise activity based on this information. Make sure your business is built on a flexible platform. Ideally you should have access to change your website, switch between tactics and even tweak your product/service offering depending on the feedback and success that you have.
7. Don’t Try To be Everything to Everybody
This one is a hard one and you need to find the right balance between being too niche and being too broad with your offering. Often being niche will allow you to grow your offering without setting expectations too high. On the other hand, being too niche may present some issues with promoting and getting traction with your product. Do the research, look at the market situation and pick a starting point that makes sense to your business whilst allowing expansion when the time is right.
8. Be Realistic About Response Rates
Whilst online response rates are often a lot higher than offline mediums, it will still take a lot of work, time and effort in order for a website to have the engaged visitors it will require. Be realistic about what type of response rates you can expect for various activity. Don’t assume because you are contacting 10,000 people that you will have a 100% response rate. Get across the industry standards and factor in a unknown brand and new product.
Whilst this isn’t a definitive list, I hope that you find this helpful. Follow these steps and you will have a better chance than many at running a successful online business.
When I was researching for this article, I found that there are many, many blog authors stating their beliefs in reasons for business failure. Interestingly enough, after reading these blogs very few had a list that matched mine. Therefore, do read far and wide, there is a lot of information out there which will help you if you are considering a new online business.