Top 10 Reasons Why Online Businesses Fail

Why Online Businesses Fail

You dream of being your own boss, working your own hours, and happily fulfilling the thousands of orders you’re receiving -  just like all of those influencers on Instagram.


Sadly, this rosy picture is not reality

Statistics show that more than 90% of online startups fail within 120 days

That’s an astounding 9 out of 10!

Although this figure is quite disturbing, don’t let it put you off. 

Find the pot of gold at the end of this rainbow and learn from the misfortunes of those who came before you.

This article will reveal the top 10 reasons and factors why most online businesses fail.

Hopefully, by reading where so many went wrong, you can learn what not to do.

Let's jump right in.

1. Lack of visibility (search and online)

Affiliate sales funnels

Having an online presence and being visible on search engines is absolutely necessary and probably the most important aspect to focus on as an online entrepreneur.

Before you launch you have to make 100% sure that you have a top-notch online marketing plan and a robust search visibility strategy in place.

At least 80 percent of customers begin researching products and services using a search engine. 

This is why SEO is key and why you should school yourself on it.

Ignoring this strategy is the reason why so many startups take a tumble.

Google alone, processes billions of searches per day so using SEO to increase visibility and traffic is a no-brainer.

2. No digital marketing strategy

digital marketing strategy

Just because Netflix has a large audience, People magazine is widely circulated or Pepsi has a billboard that is in a great location doesn’t necessarily mean it’s right for your business.

Quality always favors quantity with regards to the effectiveness of advertising.

The key to boosting sales? 

Get your message to the right people using the right tools.

If you aren’t putting effort into ensuring prospective clients are aware of your brand or more importantly, can find you - you might as well call it a day. 

Not using a digital marketing strategy is like opening up a brick and mortar store without any branding, logo, or address. Pretty useless.

Focus your time on developing a robust digital marketing strategy and get a software package to help you along the way.

A strategic and targeted approach to digital marketing is crucial to the success of online businesses in this day and age.

Especially if you are a small business just starting.

Make use of the tools that are at your disposal. 

Increase brand awareness and search visibility in the beginning stages where consumer trust and loyalty hasn’t yet been established.

Customers are more likely to do business with you if they are aware of your existence and can identify you from the competition.

3. Clueless as to who to target

Many failures occur because this step is overlooked.

If you don’t know your target audience are you even ready to start a business?

Use research and create identities or imaginary representations of your perfect customer.  

In doing so you’ll know their potential interests, job roles or title, wants, and pain points.

Failing to understand your target market is like shooting a double barrel blindfolded. You'd have a better chance of catching a fish without bait.

Between Generation X, millennials, and Gen Y, marketers are getting pulled in every direction to know thy customer. 

Yes, there are different segments that you ought to be aware of, but consumer behavior should be key.

5 no-no’s when targeting a market:

  • Being too vague or broad. “Everyone” can’t be your target market.
  • Being too confined
  • Forgetting about demographics
  • Targeting non-buyers
  • Trying too hard to convince your target to purchase 

You have to ensure that your product is wanted and you need to know more about your customers. 

What do they want? 

What are their pain points, how do you help them solve a problem? These types of questions will determine whether or not your product will be successful in a specific market.

You can’t expect to run a successful business if your product offering isn’t what consumers want.

4. Bad timing

Good Timing

Launching a product or service is the defining moment for any company. 

It’s safe to say that timing is one of the startup’s most critical success factors.

You have a lot to consider...

If you launch too early customers may not be ready. If you launch late, you may not be able to break into a market crowded with competitors

Although there’s no scientific process for determining timing. It should be front of mind.

Yes, running an online business is stressful and the pressures of getting your product ready is a real thing. 

Don’t launch something prematurely. EVER! 

You should only launch a product that is 100% working and has been tested thoroughly.

Here’s a perfect example of a notorious timing fail: 

Remember the Samsung Galaxy note 7? 

Well if you do, it’s because of all the bad press it got for its exploding batteries, overheating problems, and injuries it caused.

Notoriously known as one of the biggest product failures ever, time pressure caused the mega-brand to rush to market with a less than perfect product.

$14.3 billion in investments went up in flames (pun intended) and Samsungs efforts at damage control didn’t work out as well as they’d hoped.

Today the incident still has a lasting impact on the brand.

Test and inspect every aspect of your product before you even think of launching. 

Don’t feel compelled to rush through crucial steps to meet a deadline. 

You won't want it blowing up in your face. (pun unintended)

5. Not wanting to spend money

 Mr. Crabs

You could need to get a logo and labels done. You could have to ship the product. 

It's going to cost you some money before you start making some money. 

Yes, even Mr. Crabs had to pump money into the Krusty Krab at some point.

You want to build a publishing business, you're going to have to order the book and get a book written.

 You're going to have to get the images. 

You have to spend some money to market it. 

You might have to hire an employee, someone that can help you build your business. You get the gist of it.

Just because you're online doesn’t mean that your business runs on fresh air.

Sure, there are loads of benefits to running an online business but you are going to have to prepare to fork out some cash.

Spend money wisely and choose products and platforms that will help automate tasks. 

Good business platforms are an investment in your business and you’ll soon make a great ROI using the right products.

6. Not using social media correctly (or at all)

social media

If you don’t use social media to promote your brand you are setting yourself up for failure.

If the thought intimidates you, don’t let it because it’s not as difficult as you might think.

One of the biggest fallacies about social media is that you need a huge social following to increase sales and brand awareness

In all likelihood, this was the case ten years ago but today it’s the complete opposite. 

Organic reach is losing traction with ad revenue becoming the cash generator of choice.

In today’s time marketing power has evolved to user-generated content and influencers

So, instead of needing thousands of followers, social media is now best used to attract visitors to your website.

With that said, businesses who use social platforms to entice their prospects and leverage user-generated content are headed in the right direction.

7. Unrealistic expectations

Unrealistic expectations

Another reason for failure is that most startup business owners have crazy, unrealistic expectations

Many chase instant gratification which is just not how it happens. 

Like anything good in life, hard work is a cornerstone of success, and the get rich quick mentality is not going to help you.

If it was that easy, then everybody would be rich and successful. An online business should be a long term goal

Something sustainable that you can grow and improve over time. 

It takes loads of work and long hours to be successful in this game.

8. No Business Plan

No Business Plan

Do you need a business plan? 

Can’t you just wing it and skip the whole process?

No! Even in the 21st century, you absolutely need a business plan if you want to achieve your goals.

You’ll not only make wise spending decisions and identify critical issues immediately but will also minimize your business risk.

Be sure to draft a business proposal that outlines your plans and objectives before you start and if you haven't done one yet, hop to it!

9. Cutting corners and finding loopholes

Another huge factor as to why individuals fail at business is because they cut corners and try to find loopholes.

Again, it may make you some short-term money but it’s not going to last. 

Seek long-term sustainable strategies, not short-term loopholes. 

Starting an online business is by no means a fly-by-night, get rich quick scheme.

Like any business, it’s there to provide you with a sustainable income.

10. Lacking agility and adaptability

not agile

The Internet and the world are changing at a rapid pace

If you don’t think outside of the box and anticipate changes you'll be left behind and inevitably fail.

You will get thrown a curve-ball here and there and will have competitors doing their utmost to overtake you. 

If you don't prepare for them now already then you're going to suffer the consequences.

Make sure that your business is agile and can bounce back no matter what gets thrown your way.

11. Conclusion

being resourceful

Starting a successful business has more to do with being resourceful rather than the resources (although these do play a role).

Psychology and mindset determine your successes right off the bat. 

You need to want your business to succeed and you’ll need drive, ambition, and stamina to see it through

Once you get this fundamental right, success is sure to follow. 

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