Last year eCommerce sales reached over $501 billion in the US alone. By 2023 that number should reach $740 billion. With so much potential in the digital world, it makes sense that more people than ever are eager to jump into the eCommerce universe.
Yet, despite the enormous profit potential of online businesses and the low barriers to entry, many online businesses fail. For the most part, it happens because of mistakes that business owners could avoid. Thus, to increase your odds for success, work to prevent these costly rookie mistakes.
1. Not Having a Solid Plan
You can’t have a good idea for a product or service and expect it to just take off. You need a plan of attack. Concentrate on these fundamentals:
- How are you going to reach and grow your audience?
- How do you set prices?
- What are your sales channels?
- What are your staffing, distribution, and other fixed costs?
- How can you scale your businesses?
- Who are your competitors?
- What are the ways you can collaborate with peers and relevant industries?
2. Not Having Enough Cash
You don’t necessarily need a lot of cash to start an online business. Drop shipping or affiliate marketing are classic ways of doing business online with reduced outgoings. Alternatively if you’re launching a full-on eCommerce operation you will need to invest in and manage inventory.
Whatever route you take you will need a budget for marketing, website design, domain and hosting costs as an absolute minimum. It is essential that you prepare a budget and put in place and update an ongoing cashflow forecast.
It takes time to make money online. You need to have enough cash and credit on hand to cover your needs. Look at your projected costs and give yourself a timeline for the business to grow.
3. Spreading Yourself Across Too Many Channels
Unlike Kylie Jenner and other celebrities, most people don’t have an instant audience to tap into. There are now more channels than ever to reach vast numbers of customers. Facebook, Instagram, LinkedIn, Google, Twitter, Pinterest — to name a few.
New businesses don’t have the time or capital to broadcast themselves on each channel. Research to see which platforms are the best fit for you. Then focus on one or two of them. Learn about your audience and grow it on a small budget.
4. Expecting to Make Millions Overnight
Businesses are rarely profitable in the first year. Online companies have an advantage over their brick-and-mortar counterparts as they don’t have as much overhead. But, don’t trust the books and YouTube videos that say you can strike it rich in the world of eCommerce overnight. So called passive income is only achieved after a lot of initial effort, energy, and planning.
5. Not Taking Cybersecurity Seriously
Cybersecurity to online businesses is what doors, locks, and security systems are to homes or shops. At this point, it’s not only important; it’s common sense. The average cost of a data breach in 2018 was $3.8 million, with each stolen record costing $148 per attack.
Contrary to popular belief, even the smallest online businesses can suffer at the hands of hackers. They knock down your website, steal data of your customers, or plant malware on your network. Companies cannot afford to take their security for granted.
Every business, new or old, needs to implement digital “hygiene” strategies, such as securing internet connection with a VPN service, putting in place password security policies, and using antivirus. Only following best cybersecurity and being aware of cyber risks can keep your new business secure.
6. Not Embracing Opportunities to Pivot
Market demands change. One reason online businesses fail is they don’t adapt to these changes. You may have crafted a good idea, but it may not be keeping up with market changes. Then you need to change something fundamental in your business. This move is called a pivot.
It takes you into the direction of growth and profit potential. Some of the most successful companies in the world have managed to do this. For example, PayPal began as a company that facilitated payments across PDAs like the PalmPilot. Do you even remember those? After recognising a different opportunity, PayPal shifted into becoming a global online payment system. Only then it became the giant we know today.
Avoid Key Mistakes to Achieve Business Success
Being a founder is an incredible opportunity. It gives you the chance to create your own business and design a path to profitability. And, there is so much growth potential in the online world that anybody can try it too. But not everyone achieves success.
It takes a little humility. If you want to avoid failure, then be ready to learn from others and recognise your weaknesses. Keep in mind these rookie mistakes, and avoid making them. They don’t cover everything, but it’s a good start.