Welcome to our first article in our Preparing Yourself to Do Business Online series. Perhaps the greatest contributor to our failure in business; on or offline is our lack of proper personal preparation to do business. Offline business usually starts with you, your passion, interest or perhaps a hobby. Offline, it is easy fairly to recognize many of the elements that you need to get started: and idea, money or capital, home or rental/lease location, licenses, business cards, signage, business risks, etc. However, when it comes to online business; it looks so easy and cheap to start, a computer, internet access and a website. Soon you find it is not!
So what about me? Entrepreneurs are not always business minded; many have little or no actual business experience. Both off and online businesses owners suffer the same problem. Few consider personal development as a measure of suitability or need for business success. It is reasonable to say that starting an online scam site is probably easier than a legitimate site. All you have to sell to get paid is satisfaction to someone’s need, whether you can deliver or not.
All legitimate business off or online, can run into problems with cash flow, management and other business ailments, so just because they fail does not mean that they were a scam.
With that said this is the first in a series of articles that focus on your personal capability to run a business. These assessments work fine for both off and online businesses. You will be given the opportunity to assess your strengths and weaknesses, assess your business potential and facilitate a personal plan of action. Your business will not grow, or you will lose most of the potential growth or your business, unless you realize how important your personal preparation is.
Be fair and honest with your assessments! Take notes to help you develop your personal Plan of Action for starting or growing a successful business.
Are You Planning to Do Business Online?
If so, keep in mind that too many new users (newbies) think that doing business online is easy, and will solve their financial problem. According to the hype It Is! Just look, the start-up costs for doing offline as compared to starting online.
However, if you think you can jump into any business without being personally prepared, without a plan and a without a proper mindset to treat your online experience as a BUSINESS, instead of a HOBBY; then you are destined to join and be one of the 95% +/- failure rate statistics that may be found for both offline as well as online businesses. The statistics for Forex failures is even higher at 98%.
However, according to a Dr Jeff Cornwall of Belmont University “Ask an average group of people what the survival rate is for entrepreneurial ventures and the figures you usually get are 10-20%. The truth is much rosier than common wisdom assumes.
As reported by the National Dialogue on Entrepreneurship, a new study from the Bureau of Labor Statistics "examines the survival rates of new businesses started between 1998 and 2002. It finds that 66% of new establishments started in 1998 were still operating two years after they started; forty-four percent were still operating in 2002."
The only sector that showed significantly lower rates was the dot.com group, which crashed during this time. Factoring that group out and we are getting closer to the 50% figure that most experts believe to be an accurate estimate. Studies that examine entrepreneurs who have had training and/or education in entrepreneurial skills consistently show a much higher success rate (as high as 80-90%).
Doing business online not only requires that you learn how to recognize and avoid scams online, but additional skills that you need to succeed. Again, it looks so easy and cheap to start, a computer, internet access and a website. Soon you find it is not!
We will use this series to help you determine your needs and to develop your personal plan of action. With proper planning, learning, mindset and treating your business as a business, you can significantly increase your potential for success. In following sections, we will help you to identify, understand and avoid the Scams. Avoiding Scams will further increase your opportunity for success, but using your resources where they can help you instead of filling the scammer’s pockets.
Business failures are difficult to track because the facts vary with the source and the way the numbers are gathered. For example, we can measure the number of Offline Businesses that start within a year or two and deduct those that do not renew their business license. However, no license is required for an Online Business.
While we can document the change in the number of bankruptcies, but just because a business did not renew their license does not mean the business went bankrupt. All we know is that the business may have closed for some reason; wrong business, wrong or obsolete product, timing, lost motivation, divorce and for that matter any reason will do. Online hobbies can be ceased at any time – no paper trail.
Some General Assumptions
Keep it simple and let us just accept the general numbers of 90% +/- failure rate and accept that that is after 5 years. Of these, the failure rate for online business is 50% within the first 6 months to a year, while offline the percentage is say 50% after 2 years.
Most of us understand that offline businesses require a greater investment to set up the business, licenses, location, furniture and equipment, etc. Offline businesses are lucky if they breakeven in months to a year, while most take longer, if at all.
These entrepreneurs must concern themselves about matters of government regulations, policies and politics, brick and motor location, capitalization, payrolls, risks, etc. Most of the offline business failures are a result of undercapitalization and miss-management., no plan.
Your capital investment for an online business is much less; but that does not mean or guarantee that you can or will be an overnight success, as others would have you believe. Unlike offline business, you are not so concerned about matters of government regulations, policies and politics, brick and motor location, capitalization, payrolls, etc.
As said before, those that have some basic business skills or background, training and an entrepreneur spirit have a much greater chance of success and are better suited for business. Add to that, those that have a plan; i.e., business, financial, and marketing plans have a significantly better chance of success.
Offline entrepreneurs may have a Passion, interest or idea, a product or service that they feel can be marketed online. Those that start online may also have an idea, product or service, but the majorities are just looking for extra money. They most likely become an affiliate of someone else’s product or service.
A fulltime commitment is better that a part-time effort for any business. Regardless of the type business, you undertake, you should understand your suitability to go into that business, assess your strengths and weaknesses, what are you needs, and what is your understanding of the risks.
The Scammers will tell you, you do not need money, or not that much, and that they will do everything or most of the work for you. Just sit back and collect your money. If you believe that, then you may as well stop reading further.
In business, we must understand ourselves, what is involved. Some of you want to be your own boss, or you have already started your business, some of you are retired, or work at home moms, whether online or offline. Maybe some you want a change of career or just want to supplement your income.
Building a successful business online is just that – a building process. No overnight successes, no immediate money, no joy, unless you prepare and treat it as a business and are in it for the long run.
In the next article we will examine what is an entrepreneur? What are their traits, challenges and opportunities?
Thanks for reading