Don't let your business fall into one of these ten common online traps.
The internet offers some great opportunities to start a new business venture or develop an existing business. Unfortunately, while many think it's foolproof, like any business there's still risk and the possibility of failure.The digital age has brought with it a new wave of entrepreneurs with unique ways of achieving business success. We're spending more time online, which has given rise to apps, online shopping and other e-business services. The accessibility of the internet has given opportunities to entrepreneurs that were not always available, but this has also meant there's now a growing mindset that starting a successful e-business is easy.
In this digital age a good idea is never enough - experimentation is key to success. You need to recognise strategies which will thrive in your chosen market and also strategies which you may have to abandon. A good entrepreneur can spot a 'flop' a mile away and knows when to separate passion from making profit.
If you want to succeed in the digital world, then take a look at our top ten e-business traps and how to avoid them.
- You expect it to go viral.
We see viral campaigns all the time and they have the potential to gain massive exposure for the business who organised it. But viral campaigns are no accident, they are the result of an integrated marketing strategy from a well-positioned company. The most successful viral campaigns we see are from brands that have an existing following. Another thing to remember is that viral campaigns drive brand awareness - not sales. They should support a core marketing strategy and should not be the basis for your business. Relying on a campaign to go viral is extremely risky, not to mention difficult.
- Your idea is an add-on.
A product that adds value to another successful idea is a great way to boost business, especially online. Often, in the beginning these products thrive, but if the existing product fails or you decide they can create an add-on that is even better, this business will become redundant. Ensure that every idea you decide to run with adds value to the business and works towards building your brand.
- Charging for something which could be a free service.
This happens too often in the online world. Businesses come in and offer a service for a price, only to lose business from larger companies offering the same or similar service for free. It is also common for some businesses to try and establish a paid service for something which is already available for free to consumers. The internet has put the power back in the hands of consumers and this means that if a service is available for free, people will find it and choose it over yours. An example is Evernote, an application which lures customers with free basic packages but then charges for upgrades. As a result users are turning to websites that offer the same tools for free, such as Apple Notes or Google Docs.
- It's a faceless business.
The internet has opened up the doors to all kinds of businesses and this includes dodgy ones. Consumers have learnt to be wary online and are becoming adept at recognising businesses that don't appear to be reputable. When choosing to engage with online businesses, customers look for details about the company, including an 'about us' section on the website and details of a person they can associate with the brand. Brands that are non-personable scream out to customers that they are money making schemes. Customers want to feel confident they will have someone to talk to when things go wrong, otherwise frustrations can damage a good reputation. So many business owners think that being online gives them the right to be faceless, when in fact, it requires extra effort to communicate that you're a real business.
- You try to establish a business in a failing category.
This can happen when entrepreneurs don't do their homework, or naively think they will be the ones who can save an idea that many other people have tried and failed to execute. Group buying is a great example of an idea which many businesses have tried to get going, but one which almost always fails. You need to recognise that some ideas, no matter how good they appear to be, may be part of a dying market and are therefore not worth your time. Too often there are business owners who are too proud to change an idea or enter a different market. Sometimes you have to go back to the drawing board.
- There is no differentiation to well-established competitors.
Some online businesses completely dominate their market - think realestate.com.au or Seek.com.au. Trying to set up a business in direct competition with these providers is going to be a struggle. If you think you have a distinct differentiation that will see your business succeed and be competitive, you need to think how long it will be before your competitor will incorporate this idea. They have a monopoly on the market and know what they are doing, they also have the following and funding to take your idea and make it bigger and better.
- The idea is too complicated.
If your business can't be explained to a 12-year-old, then it may be too complex. The internet is about simplicity, functionality and convenience. Consumers expect to access products and services quickly with no hassle, or they will simply click off your site. Over-complicated ideas result in users switching off completely. Your idea needs to be marketable in order for it to succeed. If you cannot explain the idea quickly to someone, or if they do not grasp the concept, then it may be time to think it over or don't bother taking it any further.
- The idea has too small a scope.
Having an idea which is for a niche market may have a chance to be successful, but these business ideas are difficult to get off the ground and even more difficult to maintain. Australia is already a small market to operate in and business with a niche idea are narrowing their success even further. When an idea becomes too specific consumers feel alienated and lose interest. The internet is designed to be accessed by broad audiences and so if you plan to offer niche products or services you need to consider add-ons or how you might open the business up to a wider audience.
- You're thinking social.
The success of Facebook and Twitter has led to thousands of entrepreneurs thinking they will be the next Mark Zuckerberg. It seems easy doesn't it? Create a social platform, wait for users to opt in and then watch the advertising money roll in. What you need to recognise is that the success of social media platforms rely on their widespread use, nobody would use social media if their friends aren't on it. The majority of people's social media needs have been met by the platforms which already exist and so unless you have an idea which completely differentiates from those already available, you may need to move on.
- You are creating problems to solve.
This is a common mistake committed by businesses. Entrepreneurs try to make a product or service that solves a problem which doesn't exist. Think of those infomercials which offer devices to open milk containers or rotating ice cream cones. If a product doesn't solve an obvious problem or make a customer have an 'Aha!' moment then it shouldn't exist. If there are existing solutions to problems that an entrepreneur is trying to compete with then they need to innovate in a whole new way to get audiences on board.
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Starting a business - any kind of business - is hard work. For more tips and tricks for business start-ups then take a look at one of your business guides, compare small business loans and insurance and take a look at small business credit card options.