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Why More And More Internet Companies Are Failing And How To Prevent This

by Robyn Hemingway A lot of Internet businesses fail without even having a chance to grow. In the past, a lot of Internet businesses failed because they lacked a serious business plan. This is still happening now, albeit on a lower scale. People forget that an Internet business is like any other - it needs a plan and successful methods of making money. Here are five reasons why more and more internet companies are failing, and more importantly, how this can be prevented.

Market Research

Many people come up with a great idea, only to find out that nobody else agrees. Anyone looking to start an Internet company needs to do a lot of market research. Some ideas are intriguing and could be fun, but in reality, without interest, the idea will fail. Market research should not take too long either - it can be as straightforward as interviewing friends and family. A market can be small, especially online. As long as there is no massive competition, any Internet company can do well.

Make Money

Unfortunately, many people who start an Internet business do not research numbers. It is crucial to determine how the business will make money - more importantly, how much money and when! This can be through advertising, affiliates, or product sales. Even large Internet companies have a hard time monetizing their sites. Many make the mistake of starting a company without any plan for monetizing. This can work out, though it usually results in failure. Getting additional funding, or becoming a force to be reckoned with, require the site to be making money.

Drive Traffic

A lot of Internet sites offer a great product. Unfortunately, without sufficient traffic, it will be difficult to make the site profitable. Many people start a site without any thought of traffic - this is like opening a brick and mortar store without considering when you'll be open for business. Remember that ensuring both short and long term traffic is essential to the long term survival of any Internet business. Gaining traffic through advertising is a powerful way to get visitors, but is costly.  It should be noted though, that once traffic is obtained; this is only the beginning. Traffic needs to then be tracked for marketing purposes, and capitalized on!

Static?

Many high profile Internet companies have faded because they failed to change when they needed to. What is popular one day may be entirely out of style the next, and internet companies HAVE to respond to customers' needs and interests. Studying market conditions and being ahead of the game will increase the ability for an Internet company to be successful. Small Internet companies often have an advantage, since they can change quickly - don't forget this!!

Poor Design

Many sites, large and small, are designed poorly. When a site is designed poorly, it is tough to make a sale to the visitor. You MUST invest in your design. This does not mean building a site with flash and music. A site needs to be easy to understand and navigate. Having a poor website design sets any Internet company up for failure - this is SO key!!!   Robyn Hemingway write about business, e-commerce and more at http://www.backgroundcheck.org.

This is an article contributed to Young Upstarts and published or republished here with permission. All rights of this work belong to the authors named in the article above.

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  • http://twitter.com/startupdispatch Startup Dispatch

    Are they really failing more? I know a lot more are being launched, but I would like to see some statistics on this.