Top 6 Reasons New Online Businesses Fail

Online Businesses

Many people start an online business because the capital needed is affordable. It is convenient and the operating cost is significantly less than brick-and-mortar stores. 

However, studies show that nine out of ten online businesses do not survive—most of the owners decided to close after a few months. 

Today, we will take a look at the top six reasons why new online businesses fail. It makes sense that we have to study what others did wrong in the hopes that we could avoid doing the same mistakes.

  • Too Much Competition
  • Poor Research
  • Lack of Social Media Presence
  • No Strategy
  • Not Being Resourceful
  • Lack of Commitment

By the end of this tutorial, you should be able to pinpoint some symptoms of the underlying problems in your own businesses and do something about it. 

Too Much Competition

It sounds cool and exciting to have a business. You see friends having their online business so why don’t you open one and be successful, right? 

You have lots of ideas, but these ideas may not entirely be original. And if your ideas are original, chances are you will put up a business that has no unique value proposition

It is true that there is no such thing as a non-competitive niche. But you have to be innovative and creative so your products look attractive to your customers. 

It can be tough to compete in a saturated market, so you have to find a differentiator. It should be unique enough for people to see that your product is better and more unique compared to others. 

Also, everybody wants to lower their prices just to make a sale. Others give freebies to increase their conversion. Evaluate your competitor’s weaknesses and take advantage of them. 

It is also vital not to ignore your competitors even if you are already making a profit. Others might be coming after your potential customers. 

Poor Research

You spent a lot of time and money on designing, building, and then launching your online business.

But when you launched, it was a failure.

It is likely that you did little research about your business. Did you really dig deep to identify the needs and demands of your target market? Did you make a survey or asked your close friends and families if you would buy your product? 

They will probably say that “Yes, it’s a good idea.”—that they will buy it. But after launching, you get surprised that you never made a sale. Or if you did, it was not enough to keep your business afloat.

Sometimes, people act differently with what they say especially if money is involved. You assume that what you offer on your website is what they wanted; you believe that it’s what they are interested in.

Don’t sell something that you love—sell things that have a demand. 

To get around this problem, you have to carefully analyze if your product is solving a problem—people will only give you their money if you are solving a problem. You need to identify the pain that a customer is going through, and you need to fix this pain. 

Lack of Social Media Presence

Social media is one of the best places to promote an online business. You should never ignore the power of social media. One of the top reasons why a business fails is the absence or lack of social media presence.

Here are some ways to make social media work: 

  • Create business pages on various social media channels
  • Regularly blog on your site and share the content on social media
  • Publish content on your social media regularly
  • Create video tutorials—content that is helpful
  • Be involved in social media communities

The trick to making social media work is not to be salesy. You have to provide value to the reader or help build a community of people who have problems that need solving. Your business must become an authority—and only then will people buy from you.   

No Strategy

Your business plan is pristine, but without a strategy, your business is likely to fail. You need to know where you’re going and what steps you need to take in expanding your business.

A strategy allows you to deal with the fluctuations of the market, and how you should act in times of crises. 

Strategy refers to a plan—the basis of all your decisions. It allows you to keep track on how well your business is performing, and what problems it is facing. 

Strategic decisions get you where you want to be. If you want to excel in online business and promote your brand, you have developed an aggressive and effective marketing strategy. 

You will not get traffic if your website is not ranking in Google or other search engines. Be a content creator—record a video or participate in a podcast. You can also leave comments, share images, and so much more.

A strategy is basically a game plan. While the word “strategy” itself sounds like jargon, it is nothing more than a plan that addresses several of your problems—problems that, if solved, will keep your business afloat. 

Not Being Resourceful

Most of us believe that it requires a lot of money in order to start a new business. This is an excuse lazy people make to justify their lack of effort.

Money is never an issue if you have time and skill because this combination will help you to earn more money and then use it in your business.

In fact, you can start a business online with low capital or without any capital at all.

For example, you have an option to use WordPress for free and set up a blog. You can also be an affiliate marketer, or you can have a dropshipping business. 

There are also selling platforms like eBay or Amazon where you can sell goods without maintaining a large inventory. You do not even have to build your own website. 

Your only focus is on how to market and promote the products you’re offering. The only cost you’re going to have is the expense of marketing and advertising. 

Lack of money is never the main reason why businesses fail. It is poor management, the implementation is bad, the decisions are bad, and so on. Cut down some of your sleeping hours and spend more time figuring out how to obtain more capital if you want to expand your online business. 

Lack of Commitment

It can never be enough that you are interested in having a successful online business. You have to be committed.  

You always talk about starting one, but you can’t even find time to launch it. Or if your business is already up and running, you always find an excuse not to improve or update your website. 

Take a seat and figure out ways on how you can achieve your goals. List all the steps you’re going to take in order to achieve them. Sometimes, people tend to lose focus and determination if they face some hardships. 

New online businesses will definitely encounter some issues and hurdles, but do not be discouraged. Don’t lose faith if you don’t have traffic on your website, or if you’re not making a sale on your first month of launching. 

You can’t expect that people will come to your website after you’ve launched it. It takes years to build traffic. You have to work hard for it. Read more books about effective business planning, strategy, implementation, online advertising, marketing, SEO, and other stuff that relates to how to improve your online business. 


Failure is not uncommon. What sets you apart is how you deal with it. Even the most successful business owners went through all of these challenges, but what’s important is that you overcome these as they come along. 

These errors and causes of failures are preventable but only if you take time to read articles, study your errors, and accept that you made errors. Join groups and communities that provide insights on how to better manage and market your business.

Don’t stop learning—upgrade your knowledge and learn new skills that might be useful in making your online business a success. 

John Kilmerstone

I'm an Aussie living in Japan who enjoys traveling, photography, and blogging. Please visit this website and explore the wonderful world of blogging. Discover how to turn your passions and pastimes into an online business.

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