When most people think about starting an online business, they often believe that they simply need a good idea and a strong marketing campaign, and the customers will come. While these are crucial factors, they are not the whole story and often beginners make mistakes which then seem obvious when they look back.
Building a successful online business that stands the test of time is not as straightforward as many people assume. It requires careful planning and patience, but even the best online businesses will experience plenty of bumps in the road. To give your online business the best chance of success, here are 6 common mistakes to avoid.
Mistake 1: Launching without a plan
While a formal plan may not be necessary for an online business, this does not mean that you shouldn’t conduct market research and plan your marketing and sales strategy. Creating a plan enables you to prioritize what is important (such as your budget) and to ensure your time and money is spent where it will deliver benefits for the business.
Mistake 2: Getting lost in the detail
When launching an online business, it can be easy to get lost in the minute details that don’t actually impact your ability to start trading. For example, lots of start-up entrepreneurs will obsess about the intricacies of their website’s aesthetic design and logo when they should be more concerned with usability.
Your company logo reflects what you stand for, your values, i.e., your brand image. Getting it right is important. However, remember that the best logos are the simplest ones. Look at how simple Apple’s and Amazon’s logos are.
Mistake 3: Overestimating cash flow and profits
It’s important to have a positive attitude in business, but it’s best to be realistic or even pessimistic about your profits. There may be a period of loss before you manage to make money but this is not the end of the world. It’s best to overestimate your outgoings and be modest with profit projections. Your financial plan should be detailed and a great place to start is to use a profit margin calculator to earn money online.
One common mistake that online entrepreneurs often make is overestimating their cash flow and profits. While it’s important to have a positive attitude in business, it’s best to be realistic or even pessimistic about your profits. There may be a period of loss before you manage to make money, but this is not the end of the world. To mitigate financial challenges and maintain a healthy cash flow, consider leveraging innovative financial solutions such as open banking and revenue based loans.
Open banking provides you with real-time access to your financial data, allowing you to gain valuable insights into your enterprise’s performance and make data driven decisions, while revenue based loans offer a flexible financing option that aligns with your revenue streams, ensuring manageable repayments based on your business’s actual income. Utilised correctly, these tools can help you through cash flow dips while giving you peace of mind over your online business’s monetary health.
Mistake 4: Setting prices too low
Unfortunately, a lot of start-ups try to break into the market by setting their prices too low to try and undercut their more established competition. Set your product prices at profitable levels and make sure you have covered the costs of labor and shipping. If you are running a consultancy or service, don’t devalue your worth.
Mistake 5: Underestimating the importance of customer service
While online businesses don’t have face to face contact with their customers, this does not mean that customer service is any less vital. A simple and positive buying experience for your customers will increase the likelihood that they will return in the future. Your communication should be prompt and friendly but also professional. It’s often a good idea to offer multiple communication options such as email, phone, social media or live chat.
Mistake 6: Trying to do too much on social media
While social media is a fantastic marketing and customer service tool for online businesses, it’s best not to spread your activity too thin. There are plenty of social media platforms but not all of them will be suitable for your business. Research social media options to work out where your audience is most active and test advertising with a small budget before you commit large amounts of money.
Interesting related article: What is E-Commerce?