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8 More Mistakes to Avoid in Your Online Business Startup

It’s a huge mistake to think that starting an online business is easier than any brick-and-mortar business. The basics are still the same. And, just as with brick-and-mortar enterprises, the Small Business Administration tells us that 50 percent of all new businesses fall flat within the first five years of operation — and usually for the same reasons — whether they are traditional or online.

Don’t become a statistic.

In a recent post I’ve talked about the most common pitfalls new online businesses make during and shortly after the launch. Today, I’d like to add some extra words of caution for those geared towards success.


1. Being Unrealistic About Your Level of Passion

It’s fun to think of being your own boss and growing a business. But if “fun” is all it is to you, then take up skydiving or some other hobby.

Starting a business is exciting, but it is such hard work. People don’t make it as entrepreneurs if their passion is not at an all-consuming level. You have to want this more than anything else at this point in your life, and you have to be excited about working on it day and night. And if you have a “day job” while you are engaged in a startup, plan for some real exhaustion.

You will know if you have that passion if you are willing to work through that exhaustion and stay excited and motivated.


2. Not Evaluating the Demand for the Product or Service You Will Offer

You may think that the product/service you plan to offer is just great. But how many people really want sweaters for pet pot-bellied pigs? And who is your competition? How will you be different so that people want your product and service rather than theirs?


The second biggest mistake that entrepreneurs make is not doing the research to answer these questions. No matter how much you love your product or service, it only translates into a profitable business if others feel the same way.

Before you launch full-scale, test its viability. Who is your typical customer? Is there a demand?


While working as part-time website developers, the three founders of Etsy discovered, quite by accident, that crafters were angry and frustrated by eBay. The fees were too high, and they received no customer service to speak of — they were on their own. Etsy was born to satisfy the needs of these people. Today, it is worth $2 billion.

One of the most innovative ideas for “testing” your market viability is to go to a crowd-funding source, and see what kind of a response you get. If potential investors seem to want “in” on the action, then you probably have a viable product or service.


3. Not Hiring the Right People

Often, an entrepreneur will believe that they can do it all. Big mistake.

Not getting enthusiastic team members early on can be a killer for any early startup. Looking in unusual places can be very effective. One business startup discovered, for example, that the best expert in customer relations was actually an acquaintance who had a master’s in public administration, because she had such great PR skills that could be applied to business.


Reach out to the local university and colleges. Speak directly to the professors as they are always in search for new good internship opportunities for their students.

Looking for a Web developer? Host a hackathon via TopCoder — the pool of local talents is mighty impressive.


4. Failing to Have a Competitive Edge Dooms You

Unless you have invented something entirely new, you have competition. Identify that competition, get on their sites and really study what and how they are offering what they do. How can you be different?


So, Etsy founders listened to the complaints of eBay sellers and took action — they cut the fees, and they provided an actual mini-website to each seller; they gave sellers advice and training on marketing and on showcasing their products.

Again, do the research. Read the reviews of the products and services offered by the competition. Locate related blogs and read what customers are asking and what issues they have. If you can resolve those issues and complaints, then you will have a better product.


Sometimes all it takes is taking up a cause. Suppose your product is comparable but not significantly better than the competition. Can you support a cause with your sales?

Headbands of Hope was launched by a college student as a for-profit business and remains so today. To get that competitive edge, however, the founder decided that for every headband sold, one would be donated to a child with cancer and $1 would be donated to childhood cancer research. Huge success.


Takeaway: Don’t even think about a launch until you know exactly how you will be better or more unique than your competition.

5. Not Having a Plan

Unless you are attempting to get a business loan through traditional channels, you will not need to have a lengthy business plan. But if you don’t have a plan that addresses the basics of your startup, then you will fail. Here are the things that most failed entrepreneurs do wrong:

They Underestimate the Cost of Staying in Business Until It Is Profitable

This means developing a budget that includes launch costs, a reasonable amount for meeting living expenses until profits begin to come in, marketing expenses, and expertise that will have to be hired.


For example, marketing an online business means an entire strategy to “spread the word” all over the Web in many different ways. Many entrepreneurs will have to contract out these services, not to mention website design and maintenance. Then, there are the legal expenses of a business startup, and the entire purchasing process. The best method of developing a budget is to study the budgets of other entrepreneurs who have had success. Find those who are willing to share and take their advice.

They Fail to Develop a Profit Model

This means accurately accounting for how much a product or service will cost to produce, what the profit margin should be on each unit sold, and how many units must be sold in a specific period of time to make the business profitable, after all operational expenses are accounted for. This is not rocket science and an entrepreneur should be able to put this together with some careful thought and a calculator.


6. Failing to Set an Appropriate Price for Products or Services

One of the “traps” that entrepreneurs fall into early on is not charging enough. They know what their competition is charging and they believe that the best way to get a good market share is to go far cheaper.


There are two problems with this strategy.

  • It takes many more sales to realize a decent profit, and in the early stages, you can’t count on high numbers of sales. And, you have to be realistic about your overhead costs.
  • If pricing is too low, potential customers are suspicious. How can you offer a comparable product or service at such a low cost?

7. Avoiding Customer Service — It’s Critical

It’s very easy to put customer service on the back burner. After all, you don’t see your customers face-to-face, and, when they are not happy, they won’t walk into your store to get their issues resolved. Customers who have a bad online experience with a business will do several things:

  • They’ll trash the business on social media
  • They’ll get on Yelp and post bad stuff
  • They’ll never return

To have a customer service strategy that works well, online entrepreneurs must do the following:

There must be multiple and publicized ways for customers to contact you. At first, you may be the only face of the company, and you will have to ensure that they can find you by phone, email, chat, and via a contact page on your website.


Every comment, complaint, question, or issue must be resolved/answered quickly. You want customers spreading the word that you are available and responsive.

Consistently monitor social media for any comments or complaints and reach out to those customers. Some will simply voice their complaints without ever having come to you first. This is especially important if your target market is millennials. They use social media as the single place to make recommendations to others about products and services as well as to voice their displeasure with a business. If they are looking for products and/or services, they will ask each other where to go.


8. Not Developing a Well-Planned Content Marketing Strategy

Online businesses rely solely on online marketing. Failure to do this right means failure to get traffic and conversions. This has become a science now, based upon careful research, and involves many facets:

Create a business blog. Its purpose is to educate, answer questions, solve problems, develop a reputation for expertise, to inspire, and sometimes just to entertain. Driving potential customers to that blog is another aspect of this “science,” and it involves methods by which readers can share the posts with their friends on social media and methods by which the business owner can interact with readers right then and there. It also involves advertising that blog and specific posts in many ways.


Have a social media presence. Using the right social media will depend upon the target customer. You have to find out where they are and what time of day and week they are on their social media sites. There are lots of free sources for this information, and the smart entrepreneur who wants to keep visitors and potential customers coming to his/her site, social media pages, and blog will know when and how to reach them. One mistake that early entrepreneurs make is trying to master all of social media when their target audience is only using one or two sites. This is wasted time and money.

Develop a base of customers and potential customers. This means getting them to register and/or sign-up for things on your site. From these, an email list can be developed and targeted information and offers can be disseminated.


Use your social media presence to provide offers; discounts; chances to participate in quizzes, surveys, contests, and free trials; free webinars, podcasts, and more. Things that bring not only participation but shares too will all spread the brand and develop trusting relationships.

Obviously, as a new entrepreneur, you may not have the time and/or expertise to develop and implement a content marketing strategy. So, you find those who can do it for you, and you make certain that you have planned for this expense in your budget.

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