The road to starting and building an online business is fraught with potholes.
There are so many issues that can pop up and work together to really put a crimp into your business, or in some cases, put you out of business.
In all of my years doing business online, I've identified eight critical mistakes that anyone who is interested in running an online business over the long term simply need to avoid.
While some of these will seem like common sense to you, there are all too many aspiring small business owners who simply don't pay attention to details like these eight.
While many of the mistakes I outline are geared more towards service businesses, they really do apply to just about any online business.
1.
Underestimating a project or service completion time This is #1 for a reason.
It impacts both service based companies as well as companies that sell a product.
If you offer a service for a client, but fail to properly estimate the time it's going to take you to complete the service, you'll end up losing money you'll never be able to get back again.
With a product based company, you need to be aware of the time it takes for logistic issues when determining your pricing structure.
2.
Not setting prices correctly Unfortunately, it's not all that uncommon for folks just starting out in an online business to set their prices based on what their competitors are charging.
Setting prices in this manner will most assuredly mean you won't be in business too long.
It's one thing to want to offer a better price than your competitor, but it's another thing altogether to not take your cost structure into account.
Of course you have to be competitive, but you've got to look at this issue before you enter a business to ensure you'll not only be able to compete, but so that you'll know if you can earn a decent profit as well.
3.
Failing to charge for your time and associated costs This is a common occurrence with those who offer professional services.
When many of these folks are just starting out, they will offer the farm, but not charge the full value of their time.
Some feel squeamish about asking for a significant sum, while others want to gain an edge of their competition right out of the box.
This type of thinking can paint you into a huge corner over the long term because you clients will expect you to honor your low end pricing while providing over the top value all the time going forward.
Don't fall into this trap - charge the going rate for your services from the get to.
If you want to add in some limited time specials - perhaps an additional service your competition doesn't offer, fine.
Just be sure your clients know that it's a special offer and not a permanent thing, unless your fees justify the time being spent on the extra services.
4.
Not being paid in a timely fashion Cash flow issues can be killers.
If allowed to, some clients will push you out to 90 or more days to pay you.
You can't let that happen.
Be sure to bill your clients / customers as soon as possible after delivering the goods or services.
Many small businesses don't have systems in place to handle invoicing and only get to it when they have the time.
Don't fall into this trap! Get a system in place before you get started so that all of your bills go out promptly.
Prompt billing can and does lead to prompt payment.
If you are only billing once a month, you may send the message to your clients that you don't need the money, so they will hold the bill for 30,60 or 90 days before paying.
Another way to help get people to pay more quickly is to offer a discount for speedy payment.
Heating oil companies have been doing this for decades with great success.
5.
Spending money to advertise just for the sake of saying you are advertising You'd likely be surprised at the number of small business owners that simply throw their money away on advertising methods that they have no way of tracking.
No tracking = no way to know for sure if the money spent is worth it.
When you think about it, what sense is there in spending money on an advertising campaign if you don't have a system in place that allows you to determine how well the campaign is doing? By tracking your results, you'll be able to see if the campaign is worthwhile and if it's something you'll want to do again in the future.
Many are under the mistaken idea that just because an ad campaign seemed to work well two years ago that it will do so again.
Without solid numbers at your disposal, it's next to impossible to know if the campaign was actually successful and if you've got any chance at all of making money with it in the future.
If you keep these five tips in mind as you start your business, you'll have a much higher probability of having long term success in your business.