5 Reasons Why Online Businesses Fail {And How to Avoid Them}

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5 Reasons Why Online Businesses Fail {And How to Avoid Them}
Statistics say that more than 90% of all internet startups fail in the first year.

Isn’t that a sobering thought?

The truth is, just starting an online business will not guarantee its success.

Like Colin Powell said,

“There are no secrets to success. It is the result of preparation, hard work, and learning from failure.”

Let’s take a look at why online businesses fail, and how we can avoid the same plight!

5 Reasons Why Online Businesses Fail

1. Starting with the Wrong Idea

A lot of online entrepreneurs get started with the wrong idea. Most of them believe that just purchasing a domain, getting their website professionally designed, and launching a blog will make them a success overnight.

We are inundated with flashing ads, emails and even eBooks that tell us we can make money by working for just a couple of hours a day. They give us a wrong picture of what it takes to launch a successful online business.

The hard truth is that there is no magic button you can press to become successful. It takes a lot of hard work, determination, and consistent effort to keep going till you make it.

2. Chasing Rabbit Trails

Some of us are like rabbits constantly reaching for a new carrot. Even before we can achieve something we’ve got our eyes fixed on, we see another new opportunity and hop towards it. We never follow just one trail until we reach our destination. (At least I didn’t when I first started.)

When we start off by chasing multiple opportunities, and try to generate various streams of income right at the beginning, we are bound to go nowhere. It’s best to find one trail that will work for you, and stick with it until it becomes stable. Then you are free to experiment with something else.

3. Lack of Networking

The blessing of online business is that you can start off on your own, working from home. But if you really want to see the business grow, you need to build relationships with others. Networking is critical for business success.

It is essential that you start building strong online relationships by being genuine and helpful. Then you can take those relationships further (through emails, chats, or video calls) and get to personally know people who can help your business grow.

4. Not Being Business Savvy

I did not have a business background when I first started out online – I was a school teacher! That was a huge disadvantage because I did not understand how the dynamics of business worked. I often got discouraged and even quit when I didn’t see the results I expected.

The way I viewed business reached a turning point when I read Rich Dad Poor Dad by Robert Kiyosaki. I learnt that we are all stuck in a rat race working for the money. We need to get to the point in our business where our money starts working for us. We invest money, do the work, and the investment pays off, generating more money.

There are certain qualities an entrepreneur should have, even if you don’t have a business diploma. One is the ability to take risks and go outside your comfort zone. Another is understanding that your business will not yield a profit right away. It is a gradual process where you make the initial investment, work to break even, and then the profit starts trickling in.

5. Not Getting Mentored

There are many who have trod the same path you are treading in your online business now. If at any time you hit a roadblock or your business feels stagnant, it’s best to invest in a coaching session with someone who is more knowledgeable and experienced in that area.

We might be blind to our own inadequacies and things we’re doing wrong. A fresh set of eyes will be able to identify the problem and give us action steps to move forward. If you have the budget for it, invest in a consulting session. Reach out to people (online and offline) who can mentor you and be willing to learn from them.

Now that we’ve seen why online businesses fail, let’s look at what we can do about it.

4 Ways to Avoid Failure

1. Proper Planning

You can increase the possibility of succeeding in your online business but having a proper plan in place. Here are some free resources to help you with that:

2. Realistic Goals

Set some realistic goals for your business to measure its reach, growth and profit. Your goals should neither be so low that they are not challenging, nor so lofty that they are impossible to attain. I share more on how to define your business goals and a free goal setting worksheet here.

3. Income Generation

Even if you’re just starting out, focus on some activities that will help you generate an income right away. Even if those tasks do not fit into your core business plan, they will help you get enough capital to keep your business going until it can stand on its own. You can check out our ultimate guide to make money online for more information.

4. Learn. Learn. Learn,

Never stop learning. My quest for learning helped me immensely with my business growth. Whether it is through books, blogs or videos, look for resources that will help you grow. Constant learning will help you hone your talents, learn new skills, and master new techniques to grow your online business.

If you have already experienced an online business failure, don’t give up. Pick yourself up, learn from your mistakes and keep moving forward. You are on your way to success!

Today’s Challenge: Identify one cause that may be sabotaging your online business. What action can you take to rectify it?

Don’t forget to leave a comment below with your answers! One person who comments on all the posts in this series will get to win a $25 Amazon gift card!

Click on the image below to access all the posts in this series!

Get Intentional with Your Online Business blog series

About the Author:

School teacher turned internet marketing consultant, Sunu Philip is a Certified SEO Specialist. She founded “Clothed in Scarlet” to help women discover their unique God-given strengths and turn their talents into profits online. She offers subscribers a Free Online Business Startup Kit to help them start their online business from scratch.


  1. Chantel January 21, 2015 at 9:50 pm - Reply

    Im excited to have your information as a resource for my journey.

    What do you suggest when using a site like bonanza or shopify to start your online business?

  2. Kristina January 22, 2015 at 9:56 pm - Reply

    My mistake was right there on the list, Chasing Rabbit Trails! Thank you for all your insight and education. I am still working on finding out what I love and a direction I can go in.

  3. Shannon M. January 29, 2015 at 5:47 am - Reply

    I am not really sure how to get more readers as my blog has to deal with only a certain target audience (immigrating to the US). I know if I google questions on that there are no current answers so I think many would benefit from my site but we have just started.

  4. Deanna February 4, 2015 at 8:51 pm - Reply

    The networking is my biggest downfall! I had not considered that it would be an important part of my online business. This is an area where I’ll need to focus some additional time…

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