By Pascal Culverhouse, founder of the Electric Tobacconist
While the internet has made it easier than ever for entrepreneurs to start a business, sources suggest that more than 90% of online businesses will fail in their first 120 days. So what is it that separates the successes from the failures, and what pitfalls can we learn to avoid by paying close attention to those that have gone before us?
- Offer customers a unique selling point
If you can’t immediately answer that question, then you are not ready to start a successful online business. It’s important that you have something that differentiates you from the competition in a meaningful way that transfers real value to the consumer.
Perhaps the best way of doing this is with a unique product, but that is far from the only option. My favourite example of a company that found a unique selling point in an everyday item recently is dollarshaveclub, a startup now worth $615 million. They are far from the only place to buy razors, but they were the first to think of delivering a new razor to your door when you need one at a low cost.
- Understand internet marketing
The difference between being the first company to come up in Google and the last is literally the difference between huge financial success and complete failure.
But as with everything, and especially with everything not yet fully understood by the majority of business owners, there is good internet marketing and there is bad internet marketing. Bad internet marketing promises quick fixes and short-term gains, but almost always causes enormous headaches further on down the line. Good internet marketing is more expensive and takes up more of your time, but you’ll easily recoup the investment when the exceptional results start coming in.
To be successful online, you need to maximise the number of people finding your website and the number of visitors that become customers. Internet marketing is essential to achieving that goal.
- Think about the problem that your product solves (and what price the solution is worth)
It’s so easy to fall in love with our own ideas to the point where we can’t step back and get a little bit of perspective. But unless you are able to clearly identify a target market that is willing and able to spend money on your product, then everything else about your business means very little.
Electronic cigarette companies have done this very successfully over the last few years, and for them, identifying a target market with a problem wasn’t too difficult. Conventional cigarette smokers who disliked the health risks, costs and smell associated with tobacco, but didn’t want to give up on something which gave them pleasure made up a group with a problem that were waiting for a solution. E-cigarettes and vape-pens solved these three problems by offering an alternative product, and were consequently able to gain a $2 billion per year market share.
- Hire people to do what you can’t do
One of the key differences between the successes and the failures is the people that they surround themselves with. I know plenty of entrepreneurs that have fantastic drive and ambition, but are rarely able to actually complete one task before moving onto the next. The only way that these people manage to attend all their meetings, hit all their deadlines and get everything done is due to having someone else organise things for them. If you are creative but spacey, hire an organiser. If you are organised but unadventurous, hire a risk-taker. If you understand business but can’t communicate with your colleagues, hire a motivator.
Problematically, people tend to hire other people that have similar personalities because they can relate. But by doing that you can easily end up with a roomful of creatives that all miss deadlines together, or a roomful of spreadsheets with absolutely no creative spark. To be successful in business, make sure you are not hiring the people that you like, but the people that you need.