| Tips and tricks about internet marketing and getting your web site listed near the top of the major search engines ! |
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| Tips and tricks about internet marketing and getting your web site listed near the top of the major search engines ! |
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Ruining Your Online Business (Part 2)By Paul Needham Last week I reported on the results of a survey completed by a major international bank. They discovered that many small businesses fail for the same - avoidable - reasons. The top reason was poor choice of location, which I discussed in the context of online businesses. That article can be found in Part 1.
Lets take another look at the results of the bank's survey. Why Businesses Fail ------------------- 1. Poor choice of location 2. Taking cash from the business too early 3. Not moving with the times 4. Under/over pricing 5. Over-optimism 6. Not pursuing accounts bad debts early enough 7. Health problems of the owner 8. Lack of research 9. Partnership problems
Today, we will look at two more common reasons for small business failure and discuss the relevance for Internet based businesses. The objective is to help you steer clear of potential pitfalls, and drive your business to long term success. Cash Flow Problems ------------------ It is common to feel a euphoria about online business success. Too often we marvel at the current month's sales figures and expect the growth to be never ending. It is at times like these that people tend to make the mistake of drawing too much cash from their business, which threatens their long term success. My first business failed for precisely this reason. Sales seemed unstoppable, and I proceeded to draw out the cash as fast as it was coming in. I was careful to not accumulate any debt, but neither did I leave much of a positive balance in my account. Month to month, I was taking out what was coming in - and spending it. Then the tables turned. It was a seasonal fluctuation that I should have foreseen. Sales dropped dramatically for a couple of months, and I did not have the resources to keep things running smoothly. Short term debts became a serious burden, and I did not have enough money to invest in future growth. The business collapsed. It was a stupid mistake. My only comfort is that I am not alone. Taking cash from the business too early is a common mistake for First time business owners. Don't let it happen to you. It isn't just a matter of saving for rainy days. It is also a Question of having enough reserves to take advantage of new opportunities when they arise. Wouldn't it be terrible to miss out on a tremendous investment opportunity just because of poor cash management? Take a close look at your monthly expenses. Figure out what it would take you to keep the business running even if your sales bottomed out. Develop a cash flow forecast sheet, and be brutally honest with yourself about the expenses. Think about which payments need to be made weekly, monthly, quarterly, etc. You should plan at least 12 months in advance, though larger operations benefit from a two to three year outlook.
Not Moving With the Times ------------------------- The Internet is a fast and furious place. New technologies regularly appear on the scene, engaging the online business person in a never ending game of catch-up. Moving with the times is probably second nature for you. As on online entrepreneur, you have already embraced the technologies that many others fear. In fact, one major mistake that "netrepreneurs" make is moving too quickly! When designing your website, it is tempting to pack it full of all the latest technologies: java, shockwave, flash, streaming video, etc. This may or may not be a good idea. Sometimes, moving with the times can be a bigger mistake than holding steady. It really depends on your target audience. If your target audience is a bunch of technophiles, then perhaps it makes sense to shock 'em, flash 'em, and java 'em to their hearts' content. But, if you want to make sure that your website is accessible to the widest possible audience, then make sure that you design you site to be backwardly compatible with older browsers that do not support such features. Nevertheless, it is extremely important to keep your ear to the ground, and stay on top of Internet developments. Subscribe to an online news service, and one or more good Internet magazines. For websites about site development, I rather like WebDeveloper.com and WebMonkey.com. A product announcement list such as the ones found at MeMail can also be helpful: Paul Needham
LinkMedia Communications Inc. |
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