Ten Ways to Fail at Your Online Business
By: Skip McGrath
“An entrepreneur is someone who works 80-hours a week for themselves, so they dont have to work 40-hours for someone else.”
These are my Big Ten ways to fail at your online business. This article is more related to starting a business selling a unique product or service as opposed to selling on eBay or Amazon -but many of these apply to that business as well.
1. Waiting to long to get started
If you are one of those people that feels everything has to be known -and perfect, before you start your business, by the time you do it, the need for your business mat have passed.
Two of my favorite pieces of advice are:
- If you want to start your business, you have to START your business
- Perfect is the enemy of good.
There is no such thing as the perfect time to start your business -it will never arrive. And, there is no substitute to just getting started. Will you make some mistakes? Yes! Will things go wrong that you hadn’t planned on? Yes! But these are just learning experiences. Your real character is revealed when you fall -and what you do when you get up. Lastly, you need practice -and you can’t get that practice by waiting.
When it comes to getting started, remember what GERNRAL PATTON SAID: “A good plan violently executed now is better than a perfect plan executed next week.”
2. Listening to your customers and, “not” listening to your customers
There are times when you should listen to your customers and times when you shouldn’t.
Your primary task as an entrepreneur is to invent the future. If your customers are telling you about a new feature: “if your product only had this,” then it is best to ignore them.
If they were that imaginative and creative, they would have created your product before you. Now, when should you listen to your customers? If your customers point out a problem with reliability or quality -then pay attention!
I once had a customer tell me that if my product had a certain feature, he would buy it. But when I checked with my other customers, no one thought it was important enough to pay for
Be very selective in who and what you listen to. If customers are suggesting new features or a better design – you may want to ignore them -but if they are telling you about an operational shortcoming, why they want a refund, or why they would not buy the product -then you might want to pay attention.
3. Be different enough
If your product or service is just about the same as everyone else’s, then why should someone buy it? It all comes down to competition -not you’re your competitors, but competing for the customer’s dollar.
Why should a customer spend that dollar with you? Will it bring them some benefit they are not already getting? The whole point of starting a new business is to offer benefits and alternatives customers are not getting now. Ignore this and you will surely fail.
4. Solve a Problem
This relates a bit to being different -but solving a problem that someone actually has, is the key to success in any business. If you want to succeed, then it is essential that you sell your product (or service). Solving problems is what selling is all about.
It’s not enough to solve a problem -your customer must realize they have a problem. This means you must not only communicate what their problem is, you have to explain how you are going to solve their problem in a compelling way.
5. Have reasonable expectations
Starting a new business is not easy. Be sure you understand some of the challenges and expectations from the first day. There are just a few of the questions you should ask yourself and know the answers to:
- How much money will I need? Remember, you not only need money to start and run your business, you need money to live on until your business is profitable.
- How many hours a (day, week, month) will I need to do this? New business owners always underestimate this. The best solution is to calculate the number of hours you think you will need -and double it! This should get you close to a real number.
- What percentage of my time will I need? This relates to number 2 above. If you think you can keep your full-time job, or work a part-time job, while you are doing this, you are probably mistaken. Ask any successful entrepreneur and they will tell you that starting their business took 100% focus and more hours in a day than they had. There was just no time for anything else.
- Can you (and your family) handle the stress. Once you get into it, you will learn very quickly how stressful starting a new business is. So you really need to understand: Can I (we) handle this?
6. Solving a problem that no one has
This could be the most common mistake new entrepreneurs make. Just because you think something is a problem, doesn’t make it so.
Years ago, I used to work with Venture Capital firms (companies that invest in new startups). Entrepreneurs would arrive every day to present a new business idea.
You would be amazed at how many times we looked at each other with raised eyebrows thinking: “Are these guys serious?” It was quite common to receive pitches for products and services that no one needed or wanted. I think one of the stupidest ideas we were ever pitched was a cat-walking service. Another one was a take-off on Hooters -a bar and grill where the waitresses were dressed like nuns in revealing costumes.
The lesson here is to make sure the business you are about to devote your life to, solves a problem that people really have -and that problem is readily evident to anyone who looks.
How do you avoid this mistake? There are several ways -such as surveys and test marketing, but nothing beats sales. Develop the product and try selling it. If people will spend their hard-earned money on it, then you are on the right track.
7. Listening to negative people
One of the things that every entrepreneur runs into are people who try to discourage you. These are folks who come up with all the reasons new small businesses fail. If you listen closely, almost all of the reasons seem to relate to how the world is stacked against you, or you can’t beat “the Man” -and there is just no way for the little guy or gal to succeed.
I usually advise people, when you run into negative folks -just ignore them and walk away. But you can’t always do this. Sometimes these people are family members, close friends or co-workers -people we cannot afford to just blow off.
So here is what I do in those situations: Once I realize their advice is something negative and worthless, I listen attentively -nodding my head as they speak. When they are finished, I look at them sincerely and say: “Wow – you make some really good points. I will have to think about what you said.” Then, I promptly forget everything they said, and go about my plans.
Having said this -be a little careful. I once had a co-worker approach me who said: “One of the hardest things you need to do is raise money. “I started to blow him off when he next said: I have a few contacts who might be able to help you.” The lesson here is that it’s important to discriminate between real (helpful) advice -and nonsense.
8. Not doing a business plan
I am not going to tell you that researching and writing a good business plan will guarantee success -it can’t, but can definitely help. Think of a business plan as a blueprint for your business. You wouldn’t build a house without a set of plans, so why would you start a business without one.
There are several good reasons to write a business plan:
- A plan will tell you how much money -and what type resources you will need
- If you want to raise money from investors, you will need a plan
- If you want to borrow money from a bank you will need both a business plan and a cash flow projection
- A business plan forces you to think about marketing plans, financial plans and growth plans.
- A business plan keeps you from “winging it,” and forces you to think about the important stuff
Know your numbers. A good business plan can show you what numbers (Business metrics in $$$) are important -and which one to track. Not knowing (and understanding) your numbers is a sure way to fail
Just don’t fall into the trap that “If I follow my plan exactly, I can’t go wrong.” Remember what World Heavyweight fighter, Mike Tyson said: “Everybody has a plan until they get punched in the mouth.”
9. Thinking about work/life balance
You and your family need to be used to the idea that starting a new business is going to mean everyone has to sacrifice. The business is going to take most or all of your time. If you want to be successful, then you need to focus 100% on your business. You have to eat, sleep and one other thing, but that’s about it.
I would love to tell you things such as “Don’t miss your son’s Soccer games,” or make sure you take time off to see your daughter’s dance recital.” Those are very important, but the entrepreneur who is struggling just doesn’t have time. I suggest you sit your family down before you start your business and explain how busy and focused you will need to be if you are going to be successful, and the benefits that you and your family will have if you are.
10. Forget the little things – focus on what’s important
You can’t change the past but if you focus on the present you can change your future.
If you are spending your time designing a logo, creating letterhead or setting up the company coffee station -then you are wasting time on things that just don’t matter to your success.
Instead spend your time on understanding the competition, product research and development, sales and marketing, and hiring the right people. These are the things that will put money in your pocket.
There are three critical things every online business should pay attention to:
- Building relationships – awareness of your brand and values.
If you aren’t building relationships with prospects then you will never develop the trust that you need to make any sales.
- Creating products.
If you have nothing to offer your customers then you will not make sales. If you offer someone else’s product, you end up building their business not yours.
- Increasing conversions. Conversions = sales!
If you don’t bother testing your conversions and know your numbers then you will waste time and effort again and again. One small tweak could double your conversion rate.
OK – there you have it -Good luck!