10 Reasons Why Online Businesses Fail & How To Prevent It

10 reasons why online businesses fail

We’ve all had “the” dream. The dream to have a lasting impression of our own. The dream that may take more effort and time than a 9-5 gig, but leaves us with something that is entirely ours. A dream of having a business of our own

Gone are the days where brick and mortar stores were the only way to own a business. In the digital world of the 21st century, it’s only normal for people to dream of opening a business that is entirely, or in most parts, online. And what better time to open an online business than one where people are forced to confine themselves in their homes with nothing else to do except stay engaged on the internet?

On the surface, opening an online business at a time when people are encouraged to stay home may seem like the perfect idea, but as we dig deeper, the numbers paint a different picture. Several studies suggest that almost 9 out 10 startups fail in the market, often incurring huge losses to entrepreneurs. Most of these failures are not because of the lack of trying, but because of the lack of preparation that people skip past while rushing to achieve their dreams. Dreaming may be the first step towards starting an online business, but what makes your business successful is the preparation that has gone behind it. 

So where are you supposed to start with the preparation to run your business? Thankfully, the key to a successful business is not an ancient skill guarded by a “chosen few”. All you need to do for now, is to go through the following list that notes down things you are not supposed to do to ensure your dream of owning an online business does not go bust:

1. Running On An Irregular Cash Flow

There’s a fine line between being “street smart” with money and being “that” friend that gives you the cheapest available gift on your birthday. Penny pinching while starting an online business may harm you more than you think. Not only does it limit the kind of infrastructure you can afford for your new venture, it also affects your business the moment you plan to expand. It is strongly advised for new online businesses to maintain a smooth cash flow and budget the company’s needs accordingly. Making use of the vast array of free online tools and softwares also goes a long way! 

2. Not Having A User-Friendly Website

A well-designed website is probably the most basic ingredient of a successful online business. Your website is your business’ equivalent of a brick and mortar store. Every customer that wants to interact with you, will only do so through your website. Making the user’s experience accessible and perhaps, unique will make your website stand out over thousands of others that may look the same. 

3. Missing Out On Your Social Media Presence

A rule of thumb while starting an online business is to never underestimate the power of social media. Your users and potential customers are part of the interconnected world that now forms social media. They communicate and form opinions about brands and businesses on social media. Your first step to jump into this conversation is to have a social media presence for your online business on all major platforms. Creating an insightful and interactive community on your social media platforms always leads to positive returns. Afterall, your customers will only buy things and services from you when they truly trust you.  

4. Inadequate Research

For a business to not go bust, you need customers to buy your products or services, and to make sure of that, you need to know exactly what your customers are looking for. It is necessary for you to present yourself as an attractive option that trumps its competitors by understanding their customers better. Proving to be a brand that listens to its customers will not only ensure your customer’s loyalty, it will also generate a positive word-of-mouth recommendation in the community.  

5. Having A Boring Logo

Like the website, a memorable logo is an aspect that is often ignored by people starting their online business. Always remember that a logo is not just an “iconic description” of your company, but it is also a tool that you can use to make space in your potential customer’s head. A unique logo therefore, is something that every upcoming online business should strive for to ensure maximum profits. 

6. Having A Dysfunctional Team

Studies point out that upto 23% startups fail due to a dysfunctional team. It’s true that the post-pandemic world has made it easy for us to have team members spread across the world, but you should ensure that the physical distance does not turn into a professional one. Only an effective team with clear lines of communication and coordination can adapt swiftly to the ever changing market of online-businesses. Therefore, always ensure that you invest some good time and money in building a team that suits your goals. 

7. Sprinting To Success

How often have you seen a startup that starts with a bang, makes a big impact in the market  and fizzles out into obscurity by the last quarter of the year? Unfortunately entrepreneurs, especially when starting an online business try to sprint their way to success instead of having a detailed plan of their quarterly goals. Think of running an online business as a marathon that needs to be run, or even jogged at a uniform pace rather than a sprint where the first to get to the post wins. Planning a few quarters in advance always reaps good results.

8. Being A One-Man Army

Most entrepreneurs entering the world of online-business try to don as many hats in the company as they can as a means to both save money and avoid sharing the dream that they believe is exclusively theirs. Not only does this lead to the entrepreneurs being stressed and exhausted due to the work, it also affects the quality of the output badly. The smarter thing while starting out is to recognise that you may need help along the way and hold a hand out to look for someone that truly takes some of the work off of your shoulders. Remember, you are only human that also needs time to themselves.   

9. Pricing Your Product Inadequately

Pricing can be one of the make or break factors of every startup that is trying to find their space in the world of Online Business. Often considered a slippery slope, entrepreneurs need to be extra careful while deciding the price of their products and services. Price it too high and you may lose out on a substantial chunk of your potential customers, price it too low and you may struggle to keep your business operating smoothly. It is recommended to decide the pricing after analysing the market conditions and behaviour to ensure a good balance

10. Not Having An Adequate Internet (Digital) Marketing Strategy

As a new player trying to make a name for yourself in the world of online business, you need to be visible, and that too in a positive light. If your website is not ranking high when people search for services you provide on Google, you may lose out on the potential customers. An advised way to avoid this problem is to have a well-planned Internet Marketing Strategy that can be adjusted to your goals with time. Keeping your SEO strategy up-to-date is usually considered the best place to start from while looking into your marketing strategy.


In the end, you need to be aware that a lot of businesses fail but they do so largely because of the reasons mentioned above. Keep them in mind and your way to success only gets easier. Being an entrepreneur is tough, especially in the fast paced world of online business where trends change even before you can log in to your computer. But with the right tools and motivation, you can do it. Don’t be afraid to be wrong or admit your mistakes, being an accepting leader will always take you a long way. 

It is your dream after all, why let a few obstacles noted down in concise points become an obstacle. Right? 

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