7 Reasons Why 99% Of Online Businesses Fail

This document is of incalculable value. It will help you to UNDERSTAND why 99% of the people who undertake a business on the Internet FAIL. This document has been issued by a team of experts whom together have more than 10 years of experience in the industry. I recommend you to read it and study it and you’ll avoid committing the mistakes we made:

7 reasons why 99% of Online Businesses FAIL

1. Unreal expectations. (Thinking you will become millionaires within one month).

This is the main reason why the rate of failures is so high. It is true that the websites that promise an astronomical amount of money in a short period of time are to blame. Many times we are tempted by eye-catching statements like: “Make $2,000 per day starting today (with no experience)” and that obviously NEVER, EVER happens.

We have to learn to separate things. There’s nothing wrong in the following sentence; “You could earn a lot of money on the Internet”, but all in due course. It is almost impossible to become a millionaire in one year, and even less in one month.

You have to bear in mind that a business on the Internet is very similar to a traditional business. You have to be humble and modest to start off. If someone tells you that you will earn large amounts of money in 4 days, run terrified. That may be a scam.

2. Patience & Commitment

I could have named these two requirements separately, but I believe you, the reader, will appreciate if I do it in this way in order not to sound too redundant.

You have to reach a certain level of commitment with your business. Be aware that you will have to dedicate time, at least 6 months, if you want to make a profit. Patience is also a decisive factor… according to my experience, it is almost as important as the know-how.

Why do things, if we don’t take our time to do them properly?

3. The product/Company

You can buy and sell everything on the Internet. All you need to do is to look at the portal http://www.ebay.com and see it for yourself. Businesses, and/or the business opportunities are also for sale. According to a recent study, every 11 seconds a business is launched on the Internet. Almost 8.000 businesses are created every day on the Internet (only in USA)!

You have to know how to choose in order to avoid becoming a victim of fraud. Please always consider the following before purchasing a business opportunity:

o The Company should have a street address and visible telephone number.

o It should have a product which is easy to understand and assimilate. Many of these business opportunities promise you a large amount of money only if you invest a certain amount, but it remains unclear what you are actually buying for such amount. Make sure you know where your investment goes.

o What are the advantages of the main product? In which ways is different than the competitor’s? Is it a unique product, or is it only a collection of e-books that you can easily acquire in other places (and for free)?

o If we talk about a business opportunity like MLM or Marketing Network, are there any testimonials? How much money are they making? And how much money is your sponsor earning?

Make sure you join a winning team. It is of vital importance that your team supports and educates you on this new adventure.

4. Lack of investment

Most likely, many could now feel uncertain (the word “investment” has these effects) thinking that you have to invest millions. No worries, no large investments need to be made, but you do need to realise that your business on the Internet, just like a traditional business, will need a small investment to get on its feet.

You have many possibilities at your disposal. As in a Clint Eastwood film, the internet is also filled with the good, the bad and the ugly. Trust me, if you launch your online business, you will get to know all three… Either way, you have to invest in your business. Move away from everything you see with the word “Free”. There is no free method for promotion on Internet, well, actually there is, the “mouth to mouth method” and “Marketing Viral” but this only works once your business is established and has a high number of clients.

5. Traffic.

The Internet traffic is known as the inflow of users to our site. There is an erroneous concept, very common amongst all the Internet beginners, who believe that as soon as they publish a webpage, we’ll receive a flood of users wanting to visit our site. Unfortunately, it doesn’t work like that. It is estimated that there are one thousand million pages on Internet. Yours is only one of them. It’s a big, big world out there.

How is the traffic generated? There are plenty of ways, paying or not paying … I want to repeat what I said earlier, free advertising DOES NOT WORK.

6. Guarantees.

Do you want your investment to be guaranteed? If you find a business opportunity that guarantees a minimum income, there’s a red flag there. You may be set up for a scam or fraud. In business, there are ALWAYS risks. No business is “sort out assured”. It is obvious that there are some riskier than others, but all (I underline this once again) in ALL businesses there’s always an element of risk. Have that in mind.

7. Reinvestment and recycling

If you keep in mind all what has been said up till now, the possibility of making your business profitable is high. This is the dream of everyone who starts a business on Internet; when we receive that first email or notification (you have made your first sale), the heart starts beating really fast, your hands sweat, you can feel the blood running through your veins… If you generate profits, you should reinvest part of this money in order to generate even more profits. YOU SHOULD NEVER AIM FOR LESS… if something works, keep on doing it.

Keep your eyes open for other opportunities. Is strongly recommended that you don’t rely on just one stream of income, look for more business opportunities and diversify your income sources.

That’s it. Now print this document and use it whenever you wish. If you allow me, I will give you a few advices to finish off.

If you are looking for “fast” money (by fast money we assume that you need a large amount of money in a month), we recommend that you buy the lottery, go to the casino, play bingo… but DO not open an Internet business. We don’t want to discourage you, but those who believe that an Internet business can generate lots of money in a short period of time.

On the other hand, despite what I’ve mentioned in the previous paragraph, if you are a person who is looking for a serious business and an extra income source and is willing to do what’s necessary to succeed, Internet is an infinitive source of opportunities.

The people responsible for this document found their main source of income on the Internet and recommend you, the upright and serious user, if you wish to start a business on Internet, act now.

Get Smart Before You Start A New Business (Part-02) The Research Stage

I have already written a number of real estate and business articles covering a wide range of topics and you can access these articles by clicking article reference link at the bottom of this page. The link will take you to a menu of my articles here at EzineArticles.com, which you can scroll through for additional information related to your particular project. This article will cover the preliminary checklist you need to consider before spending or investing any money on a business. This article assumes you are starting a business from scratch and not buying an existing business or franchise.

If you are thinking of starting a business from scratch, here is a suggested order of approach:

1. Invest in at least five (5) (or more) 8.5 x 11 spiral notebooks and some pens and pencils and title them “The Business” “Management”, “Marketing”, “Finance & Legal” and “General Ideas”. You want to keep your thoughts organized by topic and write them down (all of them) as they flow into your thinking–this way you won’t lose them and this will build the data for your business plan. This is a very important step.

2. Gather as much information as possible from the Internet or the local library about the general industry sector you intend to operate. (E.g. manufacturing, distribution, retail or service). Are there sources of raw supplies for your business? Make notes on everything good and bad.

3. Search the net for businesses like the one you are thinking about to determine if there are similar businesses and what the level of competition is. Also check the Thomas Register at http://www.thomasnet.com/ for businesses, products and services. From information gleamed from research, request information packages from the competition in order to perform a competitive study (see my article on professional competition analysis). Make notes on everything good and bad.

4. As you research, take note of the things you see that you think are innovative and you could use in your business. Make a determination of the things you will need to compete on a level playing ground. Will you need a website? Will you need a storefront? An office? Will you be based at home? Is there a place that is quiet that you take and receive phone calls without being disturbed? Make notes on everything good and bad.

5. Start to make a list of all the tools, equipment and supplies you will need for your business. Price these products and estimate how much they will cost. Do you have enough money to support these acquisitions? Can you borrow the money (not a good idea) what other ways can you get the supplies that you need (try Ebay). The key: itemize everything, get price estimates and think about this over the short term. Make notes on everything.

6. Carefully consider the systems you will need to run your business including office equipment (phones, computer, printer, fax machine, scanner, software, production equipment, tools, etc. Further consider letterhead, business cards, stationary, and how you will handle inbound/outbound communications. Make notes on everything.

7. From your notes, begin to outline your business plan. This is a rough draft and cover areas like the business, management, the market, sales pro forma projections, etc. You can go to the SBA online and download business plan outlines or you can get business planing ebooks at our website. In either case, get references for creating a business plan. Start to develop a business plan whether you are ready or not. A business plan will take on a life of its own as soon as you begin to develop one. You may run into snags and roadblocks but as you gather more information the plan will start to come together… eventually, you will see the business more clearly over time.

8. Read books about business from authors whom are in business. Typically, those who teach can’t. In other words, if college professors were so knowledgeable about business, they would be out making a million bucks and not teaching, right? A book that I highly recommend to anybody contemplating setting up a business is Think and Grow Rich, By Napoleon Hill. (See my article Think & Grow Rich, What Every Entrepreneur Should Know) The book is a great read and will blow you away with excitement. It costs like $5 for a paper back version and it’s well worth it, trust me on this one….

The key here is to get educated about the business you are thinking about. The chance that you have originated at absolutely unique idea is highly unlikely. That’s why you want to research EVERYTHING before doing ANYTHING. You want to think as clearly as possible about what you are doing (see my article The Power of the 5WH Formula) it shows you how to ask the questions you need to ask to get the answers you need for effective decision making.

Does this article sound like a lot of work? Aha! You haven’t seen anything yet! Many people dream about owning their own business but have no idea of the sacrifice that is paid to just begin intelligently. And really, your business will be built on the foundation of your mind and knowledge base. If you lack business intelligence now, and you refuse to gather intelligence, your business will be retarded and it will fail. Give your business a fighting chance and get Smart before you start!

To your success!

Copyright © 2006 James W. Hart, IV

Taking the Helm – A Dinghy Sailor’s View of Business Startup


Sailing involves passion! You have to be impelled to do it. It is not even like riding a bicycle, which may be fun but will also enable you to get from A to B. Dinghy sailing is not a practical pursuit. You will only do it if you really love it. Just like starting a business.

Dinghy sailing may not immediately seem to have lessons for starting a business. However, my experience with both convinces me that it offers some valuable learning for entrepreneurs. Read why I think this is so.

Watching the wind

Before you go for a day’s sailing in a dinghy, there is a lot to be prepared. It may look like the sailor is fiddling around, looking at the sky, scanning the horizon and seeming to hesitate before getting launched. He is probably going back and forth to the clubhouse, clutching bits and bobs, as well as looking around at pennants fluttering in the breeze, or burgees swivelling at mast heads. He may change his clothes and life jacket. All this has a purpose. Before leaving the shore, he needs to assure himself about the weather conditions, the wind direction and force. It is almost as though he has a checklist in mind.

Watching the wind: business startup version

It is not possible to decide to set up in business without making a careful assessment of the opportunity, the product, and your capacity to meet an identified need. But there is no point in taking the trouble to prepare a business plan if you are not passionate about what you are doing. Even so, you may have to test some things out and a false start is not beyond question.

You will focus on success, and you will know what you are doing. You will surely have identified the downside risks. Just like the sailor who needs to decide if he has the skill to sail in the prevailing wind conditions and how he is going to get back to shore, you will want to consider how you will cope if things don not work out as planned.

Above all, you will need a deep sense of purpose. Now is the time to feel what it is like to be in business-your business. Right here, on dry land before you launch your startup.

Rigging the boat

There is the jib to rig, the mainsail to raise, the kicking strap to adjust, the tiller to slot in and the rudder to fix. Are the halyards taught? Is the Cunningham cleated, the outhaul stretched and the clew tied down in a reef knot? Is there a figure of eight knot at the inboard end of the main sheet? This all takes time. The sailor may have announced that he was only going to sail for a couple of hours and since arriving at the club he has already been preparing to set sail for half an hour or more.

Rigging the boat: business startup version

What business model will you use? You will want to be clear about the value that your customers will get from your products and the most effective way to deliver them. No doubt you will know what resources and equipment you will need to set up shop. What business structure is right for you? Are you going to be a sole proprietor or do you need to incorporate? If the latter, which is right form for your business? You will be deciding how to get sales and orders filled.

The business plan is great, but it is only a plan. Now you have to put all the pieces in place. It is more than walking down Main Street with a bag of samples on your arm. You cannot do any of this unless you have already cleared the decks for action.

Setting sail and leaving the shore

The sailor is finally ready. The boat needs to be pointing into the wind with the sails flapping freely so that it does not suddenly take off before the he is ready. He is probably by now knee-deep in the water and and jostling the hull. If he is setting off from the jetty, the method will be different and he may prefer to have the painter held by someone onshore till he has pushed off. Of course, he will have to determine how he is going to leave the shore, depending upon the wind direction. Then he sets off in a frenzy of activity, with eyes everywhere: sails, rudder, centreboard, other boats…

Setting sail and leaving the shore: business startup version

For the business startup, setting sail is getting the first sale! Now that you have achieved your first bit of revenue, you will also probably get some customer feedback. This is vital information; what is good about the product; how is the price; what does it lack? Just like the sailor who gets feedback from the boat’s reaction to the wind. He can adjust the trim and sail more sweetly. At this early stage the startup entrepreneur’s attention needs to be unwavering.

This is the point where economy is vital. Keep cash in the business by avoiding spending too lavishly and making sure that invoices are settled on time.

You will need to make many early adjustments to the business. Reality will be very different to the plan. That is OK and only to be expected. Keep your focus, but be prepared to change the forecast, seek more funding, delay hiring-taking the actions necessary to stay afloat.

Positioning the helmsman and crew

The helmsman always sits on the windward side of the boat. The crew sits towards the bow and has the job of trimming the jib and counterbalancing the helmsman. The two must work together, both reacting to shifts in the wind, especially gusts, and the set of the sails. Both also pay attention to the boat’s trim by adjusting their positions fore and aft, as well as pulling in or letting out the sails. The purpose of all this is to improve the boat’s performance, sailing more comfortably and faster. It is the helmsman who directs and he uses the tiller to steer an effective course, combined with the set of the sail and the position of the crew.

Positioning the helmsman and crew: business startup version

Now that you are actually in business (sailing) and the planning stage is over, you need to start thinking about growing the business and expanding your horizons. It is more than just staying afloat. The advantage of a small boat or a small business is that you can tweak things easily, but you need to be aware that the business climate can change abruptly, just like the winds on the water.

Your pre-launch expectations will prove to have been wide of the mark. You will find you have probably too many resources in one area and not enough in another. Products that fared well in tests may flop in the market or the prices that looked right on paper will not wash with customers.

When you launch and for a while you will be keeping your hands firmly on the tiller, but soon it will be important to let your crew take a hand on it. They watch you for a while and then you need to get out of the way and let them feel what it’s like to take the helm. You are not handing over control, for you remain the skipper, but they get to share responsibility and learn the ropes.

Points of sailing

Reaching involves the wind blowing at right angles to the boat from behind the helmsman’s back and is generally a good steady state. The secret of it is to keep the sail trimmed to sail a straight course. A dinghy cannot go straight into the wind, so you use beating, with the sails forming a kind of wedge to the wind at about a 45º angle to the wind to propel the boat forward-tacking from one side to the other.

Going about can be hazardous because the boat has to have good speed to effect the change of direction. There is a dead point when facing directly into the wind, where you can lose momentum and direction, making the boat is unstable. When the bow has swung around, both helmsman and crew have to change sides, readjust the sails and their balance to pick up speed again in the new direction.

Running is sailing with the wind directly behind you and the mainsail fully out to one side or the other. You pull up the centreboard and for me, this is the scariest, though often the fastest kind of sailing. The boat becomes very skittish.

It is very exciting, but it is at these moments that you risk uncontrolled gybing – i.e., when the sail flips over from one side to the other and the boom travels almost 180º. Even a controlled gybe I find hard. You are traveling fast and need to pull in the mainsheet quickly to avoid the boom hitting you on the head.

Points of sailing: business startup version

Of course, the business will not be plain sailing, either. Marketing campaigns will not only change according to available budget, but the focus and type of promotional activity will need to be adapted. If you are picking up speed, you should not assume that sales volume will get rid of all your problems.

Chances are that hikes in sales will require more finance in the short term, rather than less. Bear in mind that if revenue is, say, $50,000 a month, for example, with an average settlement of 45 days you will need cash of $75K in the business, just to cover those sales. If settlement stretches to 60 days because you are so busy chasing other things, you will need $100K. If your sales double at the same time, so will the cash need-to $200,000.

Seasonality or the business cycle may mean sometimes sailing as near to the wind as possible, cutting variable costs and maintaining fixed costs at a minimum. In periods of rapid expansion, you may need more hands on deck. It could be wise to subcontract rather than adding to the permanent payroll that could sink you when things slack off.

Dealing with surprise-the capsize

Everyone capsizes. If you don not, you not really trying. You get wet and you may panic, and even with your life jacket on you will be flapping around in the water with lots of decisions to make. The water is cold and you will tire quickly.

Experienced sailors do not have to think about capsizing, but the nervous newbie tends to develop mental pictures of flipping over. This is a mistake. A positive image of successful sailing will most likely have you returning to shore exhilarated and dry. The inner game plan will have a strong effect on the real outcome. If you picture capsize, that is what you will surely get. I know this from experience.

It is most important to stay with the boat, not attempt to swim ashore. You will have some uncomfortable actions to get the boat upright and to scramble back aboard. You may scrape your limbs and find that your ropes are in a tangle.

Dealing with surprise-the capsize: business startup version

Small business survival rates are notoriously low. Most startups fail and some capsize very quickly. Even good ones can keel over, which is why it is wise to consider downside risks and have back-up plans. What if the sales do not come in as quickly as hoped, what if it takes longer than expected to get into full production? Having a fall-back position is not to be pessimistic. It is rather to be prudent.

There are very few startups whose business plans work out to the letter. That is why, when you are learning to sail, it pays to stay near the shore, where getting help is easier than in open water. If you grow too fast, you may get out of your depth. Having a life jacket makes sense; it does not mean you are a greenhorn. Organize a line of credit at the bank before you need it; if you wait till you are on the verge of capsizing, it will probably be too late.

If you sense you are getting into trouble, take early action. Like the sailor who can luff up (point the boat into the wind) to relieve wind pressure while he makes alterations, the entrepreneur can rein in expenditure and focus on the essentials while he figures out the best course of action.


I have a friend who built his own 40ft yacht, launched it and started sailing away from the quayside without ever having sailed before. He had picked up the rudiments of navigation from a book, but had overlooked the docking procedure. Getting back ashore was very tricky!

The difficulty is that you will be dealing with the wind and wanting to bring the boat to a stop at the right place. If you are aiming at a jetty, you may have some maneuvers to accomplish before coming along side. It is not at all like stopping the car; it is more like stopping the car with the gears engaged, or if you drive an automatic, stopping with the car in drive!

Landing: business startup version

Setting up the business in such a way that you can work towards less than ten-hour days is very important. A startup will produce an adrenalin rush. Maintaining those high adrenalin levels will be bad for the business and your own health.

This is the time to be sure that your management controls are giving you the information you need. Maybe it is the end of the quarter, or the year. Of course you will have been monitoring performance as you navigated the shoals during the period, but now you will be wanting to compare out-turn to what you would put in the business plan. You want to finish the quarter or the year in a way that bodes well for the future, even if the variances are considerable. Like with feedback from customers, as you prepare to land, you will be evaluating all the figures to see how you can better come ashore next time around.

Most startups don not make profits from the start. Early on, a positive cash flow is the vital measure of success-survival. In the second phase volume will probably matter more and only in a third phase will profitability will be key.