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Do internet businesses fail more than offline startups?
My work is about building businesses from the inside out, but once in a while my traditional business background surfaces. That happened recently when someone quoted the frightening statistic that 97% of online businesses fail within 5 years.
Hum…is that true, I wondered? I know that the US Small Business Administration quotes a new business survival rate of 45% after five years, and 29% after ten.
That’s for all types of new business; wouldn’t online businesses have better odds since they generally have lower startup costs and overhead? Especially since one of the main causes of offline business failures is insufficient cash, which should be much less of a problem in most internet startups.
Out of curiosity, I searched for reliable statistics but didn’t find any. I did find a number of informal surveys that concluded that online businesses fail even more than off line startups. Who knows if the failure rate is as high as of 97%, but the fact that it’s higher than 71% is still a sobering fact. Why would that be?
Well, for one thing since you can start an online business for relatively little money, a large number of people are likely to try. And many of them won’t persevere either because they don’t want to keep putting in the time, they get discouraged, or they never really went about it the right way.
Unfortunately, a lot of new online entrepreneurs don’t have much of a business vision or plan. They just know they want to make money and once they learn about various internet marketing techniques through free or paid courses, they start using them somewhat out of context of the big picture.
But the basic wisdom of being in business still applies: what is your business offering and to whom? What problem does it solve?
You need to have an idea of how your operations fit together, even if it’s just you on your computer after work. Which internet marketing technique makes sense for you and why?
Yes, conducting business online is different in many ways than running a brick and mortar operation. You need to educate yourself; read and take courses from internet mentors.
But what they teach still needs to be held in the context of overall business common sense; the big picture of what your business is about. So make sure you have an answer to the basic questions about your business:
Who specifically are you serving and what’s the best way to reach them?
Which of their problems are you solving?
Where do you want to go with this business, and does what you are doing fit that vision?
Otherwise, your business might become another mortality statistic. Or you might find that you spend a lot of money randomly buying products and learning about specific techniques, being disappointed with the results.
And even if you are able to make some money, you could find it very unsatisfying or draining to your spirit. More about that in later posts.
On the subject of how to get the big picture in starting your internet business as well as how to figure out your next steps through the myriad of internet marketing tools and technology, you would be well served by checking out Connie Ragen Green. She simplifies everything and takes the time to make sure her students are able to apply what they learn.
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