Contributed By:
Research
Editor
Source: Entrepreneur
Starting an online business begins
with filling a need and building credibility, but the factors that go into
making your online business a smashing success don’t stop there. While the
barriers for setting up a company are low, the majority of people starting an
online business fail largely due to mistakes that seem obvious in hindsight --
such as overestimating profits or trying to be too many things to customers
from the onset. But there are many more mishaps business owners experience.
To enhance your shot at success, try and avoid these 10 common mistakes when
starting an online business.
1. Not having a plan of attack.
You
don’t need to have a formal business plan -- but you still need a plan. “People
regard the business plan as homework they don’t want to do but planning helps
me -- whatever my success is,” says Tim Berry, chairman of Palo Alto
Software, which produces business-planning software and author of The Plan-As-You-Go Business Plan.
While
the big-format business plan is growing obsolete, Sujan Patel, vice-president of marketing at the software
company When I Work and the founder of several SaaS startups,
says, “You don’t need a formal 20-page business plan to successfully plan a
business. You need to know who your customers are, what you are selling and
what people are willing to pay for your product or service.”
In
addition, work out how much cash you’ve got and how long it will last.
2. Focusing too much on the
little stuff.
“First,
you need to get your business off the ground,” says Steve Tobak, founder of Invisor Consulting, a
business strategy firm, and author of Real Leaders Don’t Follow: Being Extraordinary in the Age
of the Entrepreneur. While this directive may seem obvious, new
business owners can get really bogged down by the details. Don’t do this.
By
getting sidetracked focusing on things like how your business cards look or the
design of your logo, founders are wasting valuable time. Instead, concentrate
on tasks that will help propel your business to the next level.
3. Not
worrying about money.
Be
optimistic -- just not about money. “There’s a very good chance that your
company will run out of money before it makes any,” cautions Tobak. “Know how
much cash you’ve got to run your business, what your burn rate is and make sure
that you have a plan to try to get more before you run out.”
Too
often business owners scramble to raise funds when it’s already too late.
Instead, founders from the get-go should create a financial plan, detailing
milestones and how much money it will take to reach these goals.
Related: Do you desire to know how to buy an established business with very little capital and start making money right away? Then, see details here!
4. Undervaluing
what you’re selling.
Whether
you’re selling a product or service, set the price at what it needs to be to
make a worthwhile profit.
Cynthia
Salim, the founder and CEO of Citizen’s Mark,
a line of ethically-sourced professional blazers for women, set the starting
price for her product at $425 after considering the labor and material costs
for her line. “The price is what it needs to be,” Salim says.
Patel
also points out that “as your business evolves continue to adjust your price
points.”
5. Ignoring
customer service.
With
so many of our business transactions happening over the Internet, it’s easy to
forget that customers are people who are way more likely to return to your
website if they have a good experience.
“Make
sure you have some way of interacting with the people visiting your site,”
Tobak says. “Whatever domain -- through live chat, survey, email or phone.”
Also,
monitor social-media sites for brand sentiment and check out review sites like Yelp to see who
isn’t happy with his or her experience and reach out.
6. Giving
away too much and getting nothing in return.
Before
you’ve established credibility as a seller or an expert, offering something for
free can turn into a conversion and long-term customer, especially for those
entrepreneurs focused on offering services. However, the cost of free product
can add up, so think of offering something useful and intangible in exchange
for a customer’s email address, such as a free ebook, recipe, instructions,
webinar, guide or checklist, advises Joel Widmer, the founder of Fluxe Digital Marketing, a content-strategy firm.
Related: Do you desire to know how to buy an established business with very little capital and start making money right away? Then, see details here!
7. Spreading
yourself too thin on social media.
When
you’re starting off with marketing and building your brand, test out one or two
main social audiences where you know your audience is and can build a
customized audience with a small budget. Don’t blow your advertising budget at
the start.
As
a general rule, Facebook and Pinterest tend
to be better for product sales. LinkedIn is a
better field for a business personality trying to build his or her own brand,
explains Widmer. LinkedIn is also a good place for repurposing content.
8. Skimping
on early hires.
Entrepreneurs
rush the hiring process to quickly fill positions in order to scale their
business. But by going down this route, founders run the risk of issues down
the road, including a mismatch in skillset and business needs, a personality
that doesn’t bode well with the culture or a lack of commitment to the
company’s mission.
So,
when hiring look for people who have the skills you don’t and embody the
qualities you respect. “The first five hires will set your company’s
temperature for the rest of its existence,” Patel emphasizes.
9. Underestimating the
obsession and drive it takes to succeed.
You’ve
read a lot about the importance of work/life balance -- forget about it. (At
least for the first year or two.)
“Don’t
worry about time,” Tobak says. “Big ideas do not come when you are trying to
manage every minute of your time. They don’t come when you are multitasking.
They come when you are focused on one thing. Let everything else fade to
black.”
10. Thinking that everything is one
size fits all.
Just
because a product or strategy has worked for one company doesn’t mean it will
work for you. Have a healthy degree of skepticism about what you read and see
successful elsewhere, Patel recommends. If you can test your product using
minimum financial and resource risk, then do so.
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