Why Small Businesses Fail

The reasons why small businesses fail online are almost universal across the business community. I’m a firm believer that you can learn a lot about success, by understanding why those before you have failed.  Although the web has been a great equalizer in business by giving small business owners  a level playing field with the “big boys”, it can be a very complicated medium to understand.

For the first time small businesses have direct access and control of their marketing without the aid of a middle man or a staff  that guides them  in the right direction. However, this new found control means that you now have to learn how to use it.

There are a whole host of technical and marketing issues to learn all at once, which completely overwhelms the average business owner and many times buries them before they can even get off the ground.

For all of the successes online, the graveyard of dead business websites that have fallen by the wayside number in the millions.  But why do so many businesses find it so hard to have any success online? I’ve been observing this for the last 6 years and have watched the same issues repeat themselves on almost a daily basis.

The Top Reasons Why Small Businesses Fail Online

#5.  Lack of knowledge

Reason #5 that Small Businesses Fail online is lack of Knowledge.

True enough, business owners come to people like me because they expect me to know for them. And I do. However, most times businesses only hire a web designer or consultant for a short period of time. To get a website done, or to solve one specific problem and that’s it.  When that consultant’s contract is up or the project done, the owners are right back to not knowing what to do with it next month or next year. On top of that many businesses put all their eggs in one basket, and when that doesn’t work magic, they are clueless of what to do next.baby

On the one hand they may not have the budget to keep a full or part time consultant, but on the other they don’t have the time to learn it for themselves. Too many think  that the web and marketing on it is something that they are going to pick up as they go,  like learning Quickbooks or MS Office.

Additionally, business owners get discouraged when results aren’t immediate, they don’t know enough to adjust and think on the fly, and don’t have the drive to continue forward when they make a mistake or spend money that doesn’t result in an immediate ROI.  So they give up, or put it on the back burner indefinitely.

Worse than having no knowledge, is having only some knowledge but  are unaware that you only have some knowledge.  Nothing ruins web success faster than a client who hasn’t learned anything new since 2005 and is insistent that you develop according to those standards that they have locked in their head.

#4.  Underfunded / Low Budgets

Reason #4 that Small Businesses Fail online is lack of money.

Just like all other marketing, success online costs money. There are no 2 ways about it. You can do quite a bit with free resources, open source programs and trolling forums and blogs for free information, but that should be enough to just get you up to speed. If you want to have a successful No Money Againweb program like the big kids do…one that converts into an increase in sales….you’re going to have to invest some money into it.

The trick is to spend your money wisely, not risk everything on promises and  magic beans, and to not get discouraged if every dollar you spend doesn’t yield you immediate results. It takes time. You will need to tweak and  adjust things along the way. You may even waste a dollar or two on the wrong thing. It happens.

Professional web design, Search Engine Optimization, Social Media profiles and management, graphics, logos, images, copy writing, advertising…all of that stuff costs time and or money. You can learn how to do quite a bit of it on your own, but many businesses try to do everything on their own because they don’t want to spend any money. There are some things online, and in your business in general that you just cannot do on the cheap and expect any success .

Add to that, that many Small Business Owners see the completion of their website as the end.  An accomplishment. When in reality, it’s just the beginning. A website on its own is not a life form. It doesn’t go out and bring people to it anymore than your business cards jump out of your wallet and into people’s hands when they walk by.

So they rarely budget to spend any money on marketing the site after it is built.  So it just sits there. Idle.

Like the old saying goes, if you want to run with the big dogs, sooner or later you’re going to have to pee in the high grass.

#3.  Lack of  Focus/Targeting

Reason #3 that Small Businesses Fail online is lack of focus.

With so much information out there shouting at you, it’s easy to get misdirected by every new product, website, or article that comes out almost every day that promises that this is the one you need to be successful on the web.

You can waste a lot of time and money jumping from one new program and throwing everything you can at the wall to see what sticks, while never fully developing any of them enough to have  fighting chance of success.

Also, most small business websites and Ecommerce businesses target broad demographics, general search terms, and keywords that have high bounce rates. They don’t target their  market properly, and get swamped by massive competition that they don’t have the budget or resources to compete against.

On top of that many website owners waste time targeting their market at the wrong stage of buying or decision making. Remember this, information seekers are not buyers. At least not that day. You will need to find the right balance between providing enough information to make the sale, yet not so much that it only attracts window shoppers looking for free stuff. Better to have 10 people a day coming to your site who are ready to buy, than 100 a day who are just looking for information under the premise that maybe they’ll come back one day and purchase or hire you. When people are ready to purchase, they use different search terms. Target those.

#2. No Patience

Reason #2 that Small Businesses Fail online is lack of Patience.

It goes without saying that in this drive through, instant gratification world  that many people have trouble waiting for anything. They equate every action with immediate gratification. When that doesn’t happen they make excuses that it doesn’t work and they move on.

However, when it comes to marketing on the web, it’s a process that takes time, knowledge, tweaking, adjustments, rinse and repeat before you strike the formula that nets you the best ROI. A lot of business owners can’t deal with that. They want to know that if they spend a certain amount of money, that it will definitely result in a certain amount of sales. Well, it takes practice to get that formula. You aren’t going to hit it out of the park on the first pitch.  So they bail and start making all kinds of excuses about how it doesn’t work.

Also, many can’t deal with the realization that there are no guarantees.  Nothing online is promised. That you could feasibly spend a ton of money and never realize the results that you envisioned.  In some ways Internet Marketing is a shot in the dark. However, the more you learn,  the better the professionals you will hire to help , which gives you a better chance at success.

Lack of patience and understanding will cost you more time and money than anything else you do for your business.

#1. Unrealistic Expectations

The #1 reason that Small Businesses Fail online is unrealistic expectations.

Believe it or not, there are still a lot of grown people that think the web is the gateway to instant riches. That all you need is a good idea, and the pray_worry-computerrest will magically take care of itself. People all over the world are just standing by with their credit cards in their hands waiting patiently for your business to come online and then the flood gates will open.

Right now someone, somewhere is writing a business plan that lists online sales as a significant portion of revenue. They are even going as far as to pull completely arbitrary numbers out of their butts and adding them to their sales projections. However, rarely do they ever detail how they plan to acheive such numbers. It’s as if it is somehow just promised by the internet Gods that Google charitably directs targeted traffic to all new websites.

Many people still believe that today’s internet billionaires all started on a shoe string budget in a garage and “Yada, yada, yada” they made it big.  They fail to realize that the “yada, yada” is the most important part. You can’t “yada, yada” the web.

Yada Yada” is from the 153rd episode of the NBC sitcom Seinfeld.

This extreme ignorance of how the web works, is compounded by their belief that everything online is built and runs the same way. That Facebook cost about $2k to build and they run it on Zuckerberg’s personal computer on a $12 a month,  shared hosting account. Plenty of business start ups literally believe that they are just going to find some starving college student (because apparently all college students know web design and development)  to build their website for cheap, and in the process get all kinds of free web advice and knowledge via osmosis.

Consequently, many business fail to plan and budget properly to have things done professionally or build the web program that they see working for other businesses. They bounce from cheap solution to cheap solution under the guise of saving money.  However,  inevitably what they are doing is losing money and hindering their own success. They actually end up spending more money and time constantly fixing , updating, and redoing mistakes that are the result of using the cheapest possible solution on everything.

If I had a nickel for every person that told me “I just want to see if it makes any money first, before I really invest in it“, I could retire. Those types of people NEVER see any success and they never make any money. Why? Because you can’t half ass business. Web or not. Either you are committed to it and in it to win it, or you are just dreaming and hoping to get lucky, and in that case what you are doing is really just a hobby.

The name of the game on the web is “get in where you fit in”. Once you find the areas that you want to concentrate on, learn as much as you can about them, and their strategies while still using your own creativity, and don’t expect to take any shortcuts and still be successful.

Online marketing is not much different than offline marketing. It takes Creativity. Commitment. Money. Professionalism. Patience.

But most of all, it takes a plan.