Software

Top 10 reasons why online businesses fail

Most pundits accept that the high fatality rate amongst online businesses is a direct result of corporate ignorance on the part of the business owners. ZDNet Australia details the most common mistakes.

It is widely accepted that a lot of small to medium size business owners venture on to the Web without really knowing what to expect.

It comes as no surprise then to learn that there is a high fatality rate amongst these types of businesses.

But as with any aspect of business, adequate preparation, the right mental attitude, and a systematic approach to what needs to be done, can make a significant difference to the outcome.

Of course, it's also vital to know the top 10 reasons why online businesses fail. Here they are:

1. Failure to acknowledge differences

To be successful with a Net-based business, it's important to understand the differences between online and conventional businesses. For instance, many business owners venturing on to the Net simply convert an existing sales brochure into some form of online content, publish it, and then wonder why they're not attracting customers to their site. The textual content of Web sites needs to be expertly written (short and to the point since visitors won't hang around), be easily navigated, and be backed up with high quality graphics that have been professionally designed.

2. Lack of promotion

No matter how well-designed and presented a site is, it won't just magically start to attract visitors (a "build it and they will come" mentality). Instead, a site has to be vigorously promoted, and that takes time, money and persistent effort.

3. Stale content

The content of a Web site has to be updated regularly with new material to ensure that visitors will return, and to also tell their friends and work mates about the site. Even loyal people who have come back a number of times will soon tire of seeing the same old material.

4. Lack of incentives

Business owners have to give potential customers an incentive for doing business online with them. It could be the convenience of being open 24 hours a day, 7 days a week, all year round. Or it could be that buying online is cheaper than from a conventional outlet. Before venturing on to the Web, a business needs to work out what tangible benefits they are offering to their customers, and what differentiates their Net business from a bricks-and-mortar store.

5. Not easily contactable

If it proves too difficult for customers to contact a business online, they'll soon go elsewhere. For example, not everyone wants to fill out a detailed or longish online form. A better approach is to set up personalised email addresses for each of the employees responsible for a specific part of the business. But there's little point in providing email addresses like this if staff members don't respond quickly. Or worse still, not at all. It seems that the business culture of some companies is that it's OK to ignore email. Unbelievably, some sites don't provide even a single email contact address.

6. No visitor analysis

Unless you know what's wrong, it's impossible to fix it. But business owners who ignore the statistics for their site are putting themselves in that situation. By not analyzing visitor statistics, there's no way of knowing what does and what doesn't work on a site. There are plenty of software packages available, as well as companies, that can provide up to date and comprehensive statistics. The sorts of statistics that can be gathered, for a specified time period, include total visitors, number of first time visitors, total page views, page views per hour within the period, types of browsers used by visitors, and so on.

7. Not reaching out

When running any type of business - conventional or online - it's easy to slip into a state of being reactive, that is, "flying by the seat of your pants", instead of being proactive. By adopting the latter approach, a Net-based business owner can use the available technology to reach out to both existing and potential customers with new information and offers. An excellent example of how this can be achieved is by publishing an email newsletter. Don't just patiently wait for customers to visit your online business. Excite them with what you've got to offer by regularly telling them about what's happening on your site.

8. Hit and miss

In their enthusiasm to get their Web site up and running, a large percentage of owners don't take into account the bigger picture, that is, where they want their online business to be situated in six months time (or a year or even 5 years time). How an online business starts out is not necessarily where it will finish up, and there needs to be a definite plan in place for how the online business is to evolve.

9. Failure to delegate

Small business owners are notorious for trying to do everything themselves, or trying to do it on the cheap. An online business site is an investment, and money must be spent in making it look good, easy to use and protecting confidential information. Owners should make it a policy to hire the "right" professional people for the different tasks that are involved in setting up an online business. For example, the securing of online transactions is best left to an expert in that particular field.

10. Going it alone

A much too common reason for an online business going under is the failure of the business owner to forge partnerships or agreements with other non-competing online businesses. A better, more productive approach is to enact the old maxim of "strength in numbers" and to learn collectively. For example, a site that caters for seniors could join forces with an online bookshop to showcase books that are relevant to that age group.

Tony Stevenson is the author of the two best selling Internet books, "The Australian Guide to the Internet" and "The Australian Guide to Online Business". His company also publishes the two popular, free email newsletters, "Internet Update" and "Sites of the Day". These newsletters are distributed to readers in more than a dozen countries.

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