Success exists just beyond where most people give up. This is not to say that you should never quit. Quitting is often times a really important part of building a business. What I am saying is, most people quit for the wrong reasons.
This past week, I had the pleasure of interviewing Andrea Lake, serial entrepreneur, and during our conversation she mentioned three reasons why most people fail in their online businesses. True, there are nuances to individual businesses, but these three reasons do a great job of simply allowing you to determine if you should push forth, or call it quits on an idea.
These three reasons are ordered in the sequence that they should be tested against your business and by the end of this short list, you will be able to make a confident decision about the fate of your business idea.
1. Not enough traffic.
Test, test, and test again. This is the beauty of online businesses and also can be their demise. With tools like Google Analytics, we can test every step that visitors take on our websites. This allows us to both test and optimize for conversions, but we need to ensure that we are testing properly.
The problem is that decisions and changes are made long before there is adequate data to back up these changes. This happens because we become impatient. We become impatient because we have so few visitors to our sites that it takes way too long to see the proper results.
With only a trickle of visitors, your tests are invalid. It is not that your sales copy is badly written or your landing pages are no good, it’s that you need more visitors. Simply stated, you cannot know if your idea is valid or if your sales copy is effective without a substantial amount of traffic.
It’s easier to make some irrational changes and then move onto another project than it is to work on building up a solid traffic source. Both content marketing and paid traffic take the time to implement and see results, but they can both be essential to your businesses success.
Don’t fall victim to believing that your idea is a failure, when all it really needed was to be seen by more people.
2. Wrong revenue model.
The best idea in the world will still fail with the wrong revenue model. Not all forms of revenue are created equally, therefore you need to choose wisely.
Online business owners selling digital products have a tendency to under-value their products. Due to the seemingly infinite scalability allowed to us online, it can seem that our costs are at or near zero, once our product is created. This obviously neglects to take into account the costs of running a business, such as customer support, development, servers, marketing, etc. Thankfully, even low prices can be helped sometimes with one simple tweak.
Recurring revenue is the most consistent and often necessary form of monetization that your business can achieve. Every business, in every market, can and should come up with a recurring revenue model. Yes, some businesses and markets will be harder to find a recurring model, but it is your job as that savvy entrepreneur, to do so. If you are looking to attract venture capital, it is essential that you develop a predictable and recurring revenue stream.
Failing to find the proper revenue model has been and will continue to be the death of many great ideas and businesses online.
3. Your idea sucks.
If you have lots of traffic for testing, and you are sure you have found the right revenue model for your business, yet you are still struggling to pay your server bills – your business idea might suck.
Not all ideas are created equally and many of them are simply not able to survive. Whether it’s a bad market fit or that your business is simply not providing more value than you are asking for in return. Bad business ideas need to be admitted, learned from and then left behind. Fail fast and fail forward.
As an entrepreneur, you need to objectively assess your idea with the data you are given, and determine if you should push forth or quit. Failure is not something to be avoided or embarrassed by, but not admitting failure is. You need to learn to deal with failure as a necessary part of your growth as an entrepreneur.
Quitting is a great thing to do when the data tells you that your idea is no good. And being self-aware enough to admit that your idea is wrong, is a skill held by the most successful entrepreneurs.
If you choose to test your business against these three reasons, you will be able to determine why your online business is failing to get traction. Don’t give up on your idea too quickly and add to the ever-growing pile of smart business ideas that are abandoned right before they see success.