Anatomy of a business failure
“So what’s your unique selling proposition?” I asked Janet, an acquaintance of mine.
“What do you mean by USP?” was the puzzled reply I got from Janet.
Janet was at this stage giving me the-deer-in-the-headlight look.
“You see every business offline and online must have a USP or unique selling proposition – an offer or benefit your competition does not have “, I explained gently to Janet.
Here is the reply I got back from Janet:
“I market my services to entrepreneurs. I have bought some sophisticated software that will help them do their admin better. I have hired some of the top graphic designer to help me build a very powerful website. I have hired on of the best telephone handling companies to answer my customers.”
Janet was defensive when I tried to explain to her, there were other important elements to building a business online before she launched her business.
The sad ending to my story… Janet lost all her severance pay to the business, the bank foreclosed her property and she had to go back to look for another job- a low paying one.
The story of Janet highlights the pitfalls of starting business, the wrong way. I have had my own share of business failure, online and offline…Thank God I have not had to file for bankruptcy but the situation was bad because of the huge loss of my money and time. This brings me to the focus of my discussion today…the common mistake entrepreneurs make online.
Why your success online has nothing to do with building a website
Most entrepreneurs starting online make the flawed assumption that starting a business on the internet is about building a websites, creating a product and traffic will follow. This is far from the truth. The truth is that your success in business online has more to do than building a website. The truth is…the internet is a medium for doing business, you still need to build a real business that provides value to your customers and serves your market.
You need to understand that business is the most important game you will ever play… because you spend more time, energy and money on your business than you’ll ever spend elsewhere. And this is the reasons you must avoid the mistakes most entrepreneurs make online. So you can grow your business and start to live the life you always wanted.
Here are some of the mistakes businesses make online….
Mistake# 1. Coming up with a great idea.Many entrepreneurs make the mistake of thinking their idea is the next big thing to hit the market. There is nothing wrong in coming up with ideas for a product; however, you must ensure that your idea for a product will serve to solve a problem in your niche.
Solution. Come up with great ideas that will serve the wants and needs of an existing market
Mistake #2. Create a product.
This faulty assumption relies on the idea that people will come knocking at your door if you build a better widget. This is far from the truth, because there are millions of products competing for your consumers’ attention.
Solution. What you need is to identify your market -a group of people with interest and desire for your product, willing to spend money. Then you provide them a better or unique way to enjoy what they already want.Steve Jobs ( Apple)created a completely new experience for the customer first with the iPod, then iphone and now the ipad. The same example you can find with Amazon.com; the company changed the buying experience for the consumer online.
Mistake #3. Selling with logic.
Most people make buying decisions on emotions. The typical buyer will buy what appeals to their core desires. It is very important to understand what your customer wants from your product when you are creating the product and marketing it. You product must appeal to your customer’s want
Solution. Always think about the benefit of your product for your customers, and then sell him these benefits.
Mistake#4.Choosing the wrong market
Another common mistake many businesses make is selling their product to the wrong market- the right message to the wrong audience.
Let me explain. For instance, you cannot be selling baby products to single people, unless they are thinking of starting families. In the same vein, you will not succeed if you want to sell single family homes to a single person who is not yet ready to settle down to start a family. Yet, this is what most marketers do… selling to the wrong crowd.
Solution. Research and find your market, see what type of marketing promotions they are responding to, listen to their frustrations and solve their problems
Mistake #5. Being opportunistic instead of being strategic
Opportunity seekers are a group of people who are always looking for the next money making ideas. They tend to chase after the next hot trends and never really settle down to build real businesses.This kind of mindset is present in most business starting out online. I am not against making money, however if the basis of starting a business is just to make money, and not to serve the customer then you destined to fail.
On the other hand, if you start your business with a focus to serve your market, deliver outstanding products and service then you stand a better chance to succeed online.In addition,when you experience the initial difficulties most start-up businesses face- you see this as part of the learning curve in your entrepreneurial adventure-and will not give up
Solution.Be strategic.Have a clear vision and purpose for starting your business. Take time to study and know your customers and market you serve. If you have this kind of mindset then you will have an unfair advantage over your competition.
Mistake# 6. Lack of knowledge and skills
According to SCORE(the service core of retired executives), an advisory arm of the the U.S Small Business administration of America SBA, one of the major reasons small businesses fail is lack of knowledge and business skills on the part of the owners of the business. The sad reality is this cause also applies to small businesses online.
Majority of entrepreneurs buy generic websites, sell products they have no knowledge of and are not passionate.
The result is failure to attract customers and business failure.
The internet is a channel for doing business…Just because it’s easy to set up a website, set up landing pages, hire copy writers to write sales letters for you does not business mean you can get away with anything. Internet users are sophisticated and can tell when you don’t understand or know your product.
Solution. you need to be in a business you know something about. Even if you don’t have a passion for the niche you have choose, you can read, research and reflect. The other option is to look for experts in the area of business you are involved and form partnerships with them. Remember you want to build your reputation and your company needs to have integrity.
Mistake #7. Not building a relationship with your customers
There is an axiom in internet marketing that says, “The money is in your list”. This means your continued survival and sales as a business depend on having a l relationship with a base of customers, who spend money on your products on a recurring basis.
The mistake most entrepreneurs make is that they focus on making sales. Brian Tracy, bestselling author “Psychology of Selling” says the primary aim of your business is to acquire customers.
Here is why: It is easier to sell to someone who has bought from you than a prospect. The other obvious reason is if you delight your customers, you can sell more of the products they want.
There is a concept in marketing called the Lifetime value LTV of a customer. This means your customers, have a net cash value from the time the transact business with you. If you are focused on only making a sale then you will not be able to take advantage of the LTV of your customers.
Your first sale that is hard, as long as you satisfy your customer subsequent sales is easy.
Solution. focus on building a list of customers. develop good follow up and customer service systems
Let me drive home the importance of this point by ending with what Mary Ellen-Tribby, expert marketer and bestselling author Changing the Channels: 12 Easy Ways to make money for your business says if you don’t have a list of customers, you are running a garage sale
Mistake# 8. Not working with a proven business model
Another common mistake, most entrepreneurs make on line is not working with a proven business model for their businesses.By not having a proven business model, youare bound to fail.