12 mistakes new online businesses must avoid
Setting up a new business is an exciting undertaking. But did you know that more than 18% of new businesses fail within their first two years of operations? This data point from the U.S. Bureau of Labor Statistics can be quite concerning for aspiring entrepreneurs. To ensure that your business is well-settled on the path to success, here are 12 mistakes you should avoid making when setting up an online business:
Not making a business plan
Without a business plan, you’re setting your new enterprise up for failure. Every new business must have a plan, even if it’s only one page long. This plan details the cost of operations, anticipated sales, and your product’s unique selling point (USP). Having a plan of action will help you build your business consistently.
A well-made business plan includes the following:
- Background information
- Confidentiality
- Products and services offered
- Industry status
- Market analysis
- Production and quality control strategies
- Financial projections
- Executive summary
Taking too long to launch
Once your business plan is ready, do not wait too long to launch. Your timing is everything. If you’ve noticed a niche in the market that is not being catered to yet, it’s time to do your research and get ready to launch. Taking too long may cause you to miss your window of opportunity with other players entering the market. This can reduce your profits significantly.
In no way does this mean that you must rush to launch. Take ample amounts of time to study the market and build a strong business plan. But don’t spend too much time contemplating – strike while the metal’s still hot!
Being disorganized
When running an online business, it is important to be organized. Businesses often have several things happening simultaneously – from strategizing and marketing to completing orders and addressing customer queries. Setting a task list for yourself can help you stay organized and complete your tasks promptly.
Failing to define your market/target audience
Another common mistake new entrepreneurs make is failing to identify their target market. A great product or service alone is not enough to make sales. It requires marketing efforts to establish its presence in the market and make it a success. Therefore, it is crucial to do an in-depth market analysis before launching. This includes identifying your target demographic.
Many entrepreneurial advisors recommend creating a persona for your ideal customer – identify factors such as their age, gender, financial status, marital status, interests, hobbies, career paths, family systems, goals, motivations, behavioral traits, pain points, and more. Give this persona a name as well. This will help you create more specific marketing plans to attract customers without spending a fortune.
Working without a proper legal structure
One of the biggest mistakes you could make is failing to register your business. Not only could this put you at legal risk for financial fraud, but it could also leave your intellectual property vulnerable to your competitors. Register your business, pick the right business entity, and protect your intellectual property from the start.
Underestimating capital requirements
When creating your business plan, leave some space to factor in unforeseen circumstances or expenses. This will help you maneuver your business smoothly in case of any contingencies. Failing to do so can cause you to downscale your business or even put you out of business. Before starting a new business, arranging for more capital than you think you will need is ideal.
Trying to expand too quickly
Once you have established your business and started to turn over a profit, you may be excited at the prospect of expanding using your current formula. However, expanding your business too quickly can cost you money and resources in the long run. You may be left with too much inventory or staff but not enough sales. Take a slow and steady approach to expansion, and be sure to do your research before dipping your toes in new waters.
Underdelivering on your promises
Don’t make unrealistic promises to your customers, as this can hurt your reputation in the long run. If you cannot take on a project or deliver a quality product at any given time, communicate this with your buyers. This will help establish a relationship of trust with them and also make them believe you are in high demand.
Ignoring the competition
When launching a new online business, it is also important to keep an eye on what your competitors are up to. Make a note of their strengths and weaknesses when setting up your business, so you can make a better impact with your product or service. It will also help you price your products better, attract more customers, and increase sales.
Lacking customer service
Setting up a business isn’t only about making sales. To establish credibility in the market and create a returning customer base, it is also important to offer quality customer service. Failing to do so can cost you business in the form of unhappy customers.
Dismissing negative feedback
As a business owner, your customers are bound to leave reviews. Whether positive or negative, it is important to establish a feedback mechanism for these reviews. For happy reviews, thank the customer for taking the time to share their feedback. In case of disgruntled customers, reach out and ask them what went wrong and how you can improve their experience in the future. Work on these suggestions to keep transforming your business and enhancing customer satisfaction.
Poor website optimization
For online sellers, having a website optimized for access across various devices is key for a positive customer experience. Even the best-stocked stores struggle to make sales on a website that has poor aesthetics or is slow to load. Before launching your business, prepare a high-quality website and take its performance metrics into account for a realistic business plan.
