Setting up an online business is an attractive venture as it’s relatively easy and requires nominal investment. However, quite astonishingly 80% of online businesses fail to generate revenue and would close up after few initial months. Therefore as an entrepreneur, you should be aware of the various factors that differentiate between a successful and failed online business.
Although every business is unique and has different demographics but they all share come common pitfalls that can be avoided. We encourage you to understand these core mistakes and avoid them to beat the statistics.
Although an online business can be set-up with just a few hundred dollars. However, to ensure its sustainability, it’s important to have multiple cash infusions into the business. You’ll also have to spend multiple hours and labor work into setting it up properly. Expanding your business online is similar to opening up of a new location and therefore it will require real investment. Retailers would spend thousands of dollars into setting up a new physical location but will be hesitant to spend a few on the online store.
No Cash Flow
Proper cash flow management is crucial in the sustenance of any business. You can’t spend your investment on inventory hoping that the customers would simply run towards your store. You needs to spend properly on marketing so the business doesn’t remain stagnant and sales rise. Spreading out expenses is recommended as it will avoid any cash flow issues. Don’t pay for the inventory up-front but rather a monthly payment plan should be chosen. Reinvest in your business based on actual sales rather than projected ones.
Poor Inventory Management
For ecommerce business, inventory management is quite a crucial aspect in determination of their success rate. With too much inventory on hold, you can literally cripple your business. Also, with too little inventory you can be missing out on sales and losing potential customers and revenue for the business.
Also, don’t order from a single vendor as it will limit your options. Therefore order at different inventory levels and at different times and manage it accordingly. Shipping costs drastically affect the profits margins therefore always account them whilst reordering a product.
Can’t Handle the Competition
With large retailers already established within the market, it’s quite impossible for startups to compete and survive while selling the very same products. As a business owner, it’s important to understand that mass-market products will be extremely difficult to sell. Therefore think of unique products with less competition and find a niche which you can profit to your benefit.
Website GUI is bad
Most businesses tend to fail as their websites aren’t appealing towards the customers. It isn’t just about the aesthetics of the website but rather the security, functionality, adaption to various platforms and speed are some of the key factors. Presently, there are multiple tools available that can allow you to build a quality website for your business. However, regular management of the site is imperative so hiring a technical guy within your company will be great as well.
Poor Product Photography
Most small business would compromise on the quality of their product photography. Customers can’t actually inspect a particular product and will only be inclined towards it visually therefore having poor product photography is a cardinal sin of retail. You need to make sure that the images clear, clean and focused so you can generate traffic towards your website
Many new online businesses expect results almost immediately and would get demotivated once their dreams get shattered. Realistically, online stores take time to build and it might even take months before you start making some significant profit.
Why Expand Business Online?
With the advent of internet, industries are paving new ways to conduct their businesses. Having a local business is prone to many uncertainties such as economic stability of the country, limited advertisement and natural disasters. Therefore it’s encouraged that businesses expand themselves online. There are multiple benefits associated with expansion of your business online as it provides you with flexibility and security. Some of the key advantages of expanding the business over the internet have been explained below.
Broader Customer Reach
With an online presence, you aren’t just limited to your local vicinity and rely upon them to generate revenue for your business. You can reach various parts of the world and tap into new markets to create a wider customer base. Your visibility will increase exponentially resulting in more sales for the company. However, it’s important to target specific markets around the globe so your customer acquisition costs is reduced.
Better Resource Management
Investment isn’t only in terms of your money but rather your time and energy are key factors as well. If you sell your product or service locally only, chances are quite high that you’ll waste your resources into selling to the wrong audience. With an online presence, you can create a specific audience for your business and have targeted communication with them.
Remain Open 24/7
The main advantage of setting up your business online is you are always in the reach of your customers. If you are setting up an ecommerce business, you’ll be selling products within your sleep. If you have a service based business, you’ll be getting bookings throughout the day which will greatly automate processes for you. Online presence ensures that you have a consistent service quality for your customers around the globe. You aren’t limited to any time-zones and anyone can stop by as they seem convenient.
Extensive Information Availability
In a physical location, you are limited to how much information you can provide. With an online presence, you can circulate authentic and useful information to your customers limitlessly. By equipping people with the right knowledge of the products, you’ll provide them with a greater insight and earn their trust. They can easily compare your products with your competitors and analyze why your products are worth it.
Low Cost Capital
Setting up or expanding a business online requires little investment. You need to acquire a web host and hire a web designer to design a website according to your budget. By investing little time and money, you can generate more sales for your business. For ecommerce business, a technical person is needed to constantly monitor and upgrade the site. You can add multiple features such as online “shopping cart” to provide ease to your customers. You can utilize payment gateway services such as PayPal for online payments. With services such as Google Analytics, you can analyze the progress of your business and improve onto your policies over the time. Therefore the return on investment with online business is quite high if you take the steps in the right direction.
Marketing budgets are drawn out to attract more potential customers towards a business. Having a local business limits your marketing options and you don’t see great results more often. With internet, any customer that purchases a product from your site, you can take their email address to notify them about further products of similar category. This email marketing technique helps business as long as it is done smartly without spamming the person. You can also utilize social media platforms to advertise about your business and generate traffic towards your website.