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Why Do Most Online Businesses Fail? Here’s How to Avoid It

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Entrepreneurs usually love the perspective of giving advice and sharing experiences — after all, that’s how we all manage to learn, evolve as business people and elevate our expertise levels. The biggest part of this so-called shared education is going into great detail in terms of good practices, working ideas and know-how that could skyrocket any small or big-level enterprise. However, equally as important is for entrepreneurs to spread the word about all things failure-related.

Because the truth is 90% of online businesses fail after about four months, and it’s worth exploring why. These days almost every enterprise has its established online space, if not entirely working online. So it’s definitely worth discovering what some of the main obstacles online businesses need to handle are.

Both my entrepreneurial experience and that of other successful individuals have helped me realize several important aspects of online businesses that could potentially be troublesome to some. That being said, some of the challenges are avoidable. After all, prevention is proven to be one of the best go-to strategies in virtually every aspect of life.

Let’s get down to a few reasons why online businesses fail and how to make sure yours doesn’t.

Related: 10 Reasons Why 7 Out of 10 Businesses Fail Within 10 Years

Online businesses meet specific obstacles along the way

Before we dive deeper into the subject of different reasons for failure, let’s first dedicate a minute or two to explaining what are some of the obstacles that lay ahead of online businesses in particular.

Online businesses rely on their internet presence as well as aspects such as brand awareness, relevance and reaching the right potential audience. That said, it’s not merely enough to just go ahead and grant your brand a website — furthermore, marketing teams have a lot of digging to do when it comes to reaching out, social media engagement, customer support, high-quality content, getting to know the potential customers and coming with successful marketing strategies.

Essentially, owning an online business requires an entirely different approach when compared to a physical one in terms of structure – the entrepreneur should focus a huge chunk of their time and energy focusing on precise web development when it comes to safety, scalability and stability, along with impeccable support and content customization. That said, it’s only logical for online businesses to also stumble upon different kinds of failure-related situations.

Related: The True Failure Rate of Small Businesses

1. More competition

In online businesses, there is the constant popping up of more and more competitors in the same niche. The more competition there is, the harder it is for enterprises to keep their customers and win the race of offering the best service. Since no one could stop the competition from developing, companies could opt for different kinds of competition-related strategies.

Simply knowing your customers’ preferences is not always enough; rather, trying to predict what they would need in the future is also a winning strategy. Try featuring as many additional products to the already existing portfolio as possible in order to offer a full service — this could potentially decrease people’s need to search for better alternatives elsewhere. Featuring personalized discounts and promotions certainly helps customers feel treasured and taken care of.

2. Lack of research into the target audience

One of the biggest problems online businesses face is the lack of relevance when it comes to their target customers and the items in stock. Part of the marketing strategy is carefully investigating your business’s clients in order to fulfill their needs and solve their problems.

Opting for the ideal buyer’s persona is a must. Engage in conversations with your potential customers and research statistics trying to get to know them better. What do they need? Where do they live? What is their average income? Would they be willing to buy your products? All those questions require thorough research but once a business knows well its potential customers, it would be able to fully provide for them in terms of services, products and adequate support.

3. The lack of high-quality customer support

When we refer to online businesses, customers also prefer to reach out via chat, email or even phone. What’s important is for the business to ensure proper customer support at all times — be it chatbots or actual people who are specialized in targeting issues and fixing bugs. A weak customer support experience can lead to a decrease in profits.

Invest in hiring customer support experts who will successfully target all customers’ pains and be able to offer quick problem-solving fixes. This could potentially increase your business’s trust and authority among potential audiences.

4. Poor web development

Since the business is situated online, it’s absolutely crucial for the platform to be working properly and entirely functional. Stumbling upon any obstacle (links or buttons that don’t work, website freezing or timeouts) is perhaps the fastest way for an online business to lose customers to the competition.

Make sure you invest in building a successful, scalable and fully functional platform that is capable of withstanding huge volumes of traffic. Pay extra attention to your website being mobile-friendly since many people prefer online shopping via their mobile devices — and security is a must. Ecommerce platforms should rely on trustworthy and secure payment integrations due to the shared personal and financial data of customers.

Related: Why Embracing Failure Is Good for Business

Of course, there are numerous other reasons when it comes to why online businesses fail. While we certainly didn’t cover everything, we surely mentioned at least the very basics.

Deciding upon the above-mentioned issues and reaching smart solutions is, I believe, a business’s first thing on any to-do list. Once we’ve managed to clear the path toward accessibility, scalability, functionality and marketing, we’ve got every chance to position the brand successfully in the ever-dynamic business landscape and reach for success.


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