10 Reasons Why Most Online Business Startups Fail?

Last updated on February 6th, 2024

An article published at Fortune.com reveals that nine out of ten startups fail to survive in the market. Shocking isn’t it! But it’s the brutal truth.Most of the business owners find selling products or services online convenient as the operating costs are very less. Still, many online business startups fail to draw the attention of customers. They are unable to stay in the competitive market and close their business abruptly in a few months. But if they take some timely steps they can survive and grow.

You’ll agree that it’s often exciting to own your own hours and be your own boss. Levelling the playing field in the ever-so-competitive market, though, might not be.

”A report issued by CB Insights reveals that 42% startups fail because they fail to analyze the needs and demands of target customers beforehand, and 29% startups fail as they end up burning all their cash and collapse financially.

Okay, so now you know the cracks that may lead to the failure of a promising startup.

But here’s the big question:-

How would you identify such cracks, avoid making mistakes and save your business aspirations from falling flat?

Well today I’m going to make it easy for you.

All you need to do is spare a few minutes of your valuable time.

Here Are 10 Reasons Why Most Online Business Startups Fail

Reason #01: Not Analysing The Needs & Demands Of Target Customers Beforehand

Not analysing the needs & demands of target customers is yet another reason why 42% startups fail to succeed. Remember, you need enough customers to buy your products or service, for your business to succeed. And that’s why it makes sense to evaluate your potential customer base before launching your new business.

You’ll need to present yourself attractive option to lure customers to your business. The best way to understand the needs and demands of your potential customers is to put yourself in their shoes and look at your products and services with their point of view.

Then tailor your products, services and your marketing efforts to those customers. There are manifold rewards of understanding your customers: you get to strengthen the brand loyalty and trigger positive word-of-mouth recommendation for your products and services.

Reason #02: Not Having A User-Friendly Website

A basic ingredient to run an online business is to have a well-designed website. You need to put everything regarding your business in your web pages. People will come across your business through your website. When they will visit your website, it should make a good first impression on them. This means that each color, font, image, symbols, text, etc, elements you pick to create your website should impress the visitors.

Your website must hold all the information that your target customers want. It must have pages such as About Us that tells all about what your company and business does. Tell how your business stands out in your niche market. There should be details about the products or services you sell.

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Also, mention the specific solutions that your business provides to the customers. Makes sure that your website has other pages like Contact Us that has your company’s physical address or any other address.

Pages such as Terms and Conditions, Privacy Policy, etc. must also be there as part of your website. But most importantly, your website design should stand out in its use of design concept, colors, typeface and various other elements.

Reason #03: Not Having A Memorable Logo

If you take a good look at the logos of the online business startups, you will find that their logos are mostly nothing more than a casual drawing. Remember that a logo is not just a symbolic representation of a company in a market. It is, in fact, a tool to engage your potential customers with your business. A uniquely designed business logo draws people’s attention quickly, which becomes the starting point for engaging them with a business.

[Source: View Case Study On Designhill]

The fact is that a memorable logo design can help you build a brand identity. If people like the logo, they will keep it in memory. Whenever they see the logo, it will immediately remind them of your business.

Reason #04 : Not Having A Good Social Media Presence

Another reason for the failure of many online business startups is that they simply ignore the power of social channels in promoting a business. In the modern world, people use social channels to get updated information. They communicate with the world using a variety of these channels including Facebook, Twitter, YouTube, Instagram, Google+, and many others.

[Source: Designhill’s Gallery]

Your potential customers of startup are mostly present on different social media. Make sure that your business has a dedicated social media page on most of these channels. Then, post content regarding your company, business, products or services regularly. The content should be such that they can interact with your business.

Reason #05 : Not Effectively Managing Company Cash Flow

Besides inadequate understanding of customer preferences, 29% startups often struggle to keep their finances uptight. Addressing this issue is perhaps the first step in helping startups achieve success. Unfortunately, even the most promising of entrepreneurs fail to set up a stable flow of cash.

In order to succeed, startups must try to keep their costs low and try to ensure a smooth inflow and outflow of the company cash. It makes sense to utilize the vast ocean of free and easily available resources to keep the operating costs low.

Reason #06: Not Having The Right Team

Yet another reason why 23% startups fail is not having the right team. An article published at Entrepreneur.com reveals that forming the right team is perhaps the first critical step to building a sustainable company. No matter you’ve spent through your nose for a creative logo design, a fancy website and an extra-luxe office space, nothing can save your startup company from falling flat if you don’t have a great team.

Remember, only an effective team can quickly make adjustments and quickly pivot to the ever-changing market conditions. A right team can bring large rewards to startup founders. Therefore, it makes sense to invest in a good team to steer your startup towards success.

Reason #07: Not Being Prepared To Beat The Competition Hands Down

Despite the fact that most experts and industry veterans suggest startups to not be careful of the competition, the reality is that around 19% of the startups fail as they aren’t really prepared to combat their competition.

It makes sense to do a thorough competitor analysis to understand what your competitors are doing and why. You must be well aware of the strengths and weaknesses of your competition in order to make well-informed decisions and strategically plan your marketing activities.

Reason #08: Not Being Careful Of The Product Pricing & Cost

One of the most critical reasons why startups fail is the pricing and cost issue. Remember, pricing remains a critical component that defines the fine line between startup success and failure. You’ll need to find the perfect balance for the price of your products.

[Source: Designhill’s Gallery]

Neither should your product price be too high nor should it be too low. It makes sense to carefully analyse the market conditions and the total manufacturing, packaging and distribution cost to name a selling price for your products.

Reason #09: Not Having A Powerful Internet Marketing Strategy

If you are running a business on the web, it still requires an aggressive and effective marketing strategy. Do not forget that there is an internet marketing plan that successful businesses always have in their store. They evaluate their marketing plans periodically and make timely improvements.

So, if your online business website is not ranking high up in the search results when customers type some search words on Google, you will not get the customers. Your business website must come up at the top search results for different keywords. So, are you equipped with a sound internet marketing plan?

Do you have an email marketing plan for instance? If your email design speaks a lot about your business values and personality, it will bring more customers. Your email marketing campaign will entice your potential customers. Similarly, make sure that your SEO strategy is also in place to improve your search rankings.

Reason #10: Lack Of Commitment

One of the most sought-after ingredients to run any business, especially online business, is the commitment. But many business owners do not maintain the initial level of high commitment. They start well but lose their focus and determination to succeed for different reasons. Many of them are left with no enthusiasm if they face some failures. For example, if they do not get the customers’ response, they get dejected and lose patience and interest.

To restore your commitment, make sure that you maintain high level of energy and interest in what you are doing. Take help of experienced people whenever you face problems. That will enable you to understand a problem, which keeps the interest going.

How To Ensure Success

First, make sure that you have an effective business plan in place for your online business. Such a plan will save you from deviating too much from your original plan. It is important that you have a plan for success. Each step that you must take should be mentioned in the plan. The plan should also include an estimated cost of your business.

Secondly, be prepared to work hard to realize your business goals. Do not expect that everything will fall in place automatically. You will have to work your way hard to clear the hurdles. You will require to make extra efforts. Also, be prepared to give more time towards daily issues of your online business.

Another key point to ensure success is that you should not expect quick results. You should think of getting the results only after many months, even years.

So there you have it – 10 reasons why most online business startups fail. We are hopeful that these tips will help you avoid the pitfalls.

If your online business startup needs graphic designs services such as logos, brochures, website, and business card design, you can crowdsource it to Designhill. An advantage of crowdsourcing is that you get access to dozens of graphic designs at an affordable cost. They send you their unique design concepts and you can pick one winning logo etc. designs at one affordable price.

Conclusion

Many online business startups fail and abruptly close because they do not plan many things. They have very little information about target market and customers. They do not make marketing efforts to make a meaningful visual communication with their potential customers. Also, they do not take care of their financial aspects of business.

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