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10 Reasons Why My Internet Business Failed is Revealed

You hear it all the time, “Why did my internet business fail?” The reality is that running an internet business is just as tough as running a traditional brick and mortar. By no means is it easy to be successful at either. Driving traffic, generating leads, challenging competition, and marketing strategy are just as prevalent online as it is offline. Based on a recent study, we know that over 80% of the population by the year 2010 will be running a for-profit business online or have some kind of internet presence [Resource: Oneupweb Research]. It’s clear that as internet marketers, we have to challenge ourselves to find the reasons why businesses fail in order to succeed.

Finding a systematic approach for an online business is key to your success. Trisha Ahlman, CEO of Augment Marketing Group recently released a poll of nearly 35 unsuccessful internet businesses and why they failed. Research indicated that most internet businesses failed due to 10 very important and common reasons. When marketing an internet business, marketers have to clearly devise a plan of action and take these reasons serious if wanting to succeed with an online business model.

“The 10 Reasons My Internet Business Failed is Revealed” [print it out and study]:

1) Commitment – Some people are starters but never really finish anything. They are people who want to succeed but never really quite get there. It boils down to commitment. When running a home-based or internet business, you have to be committed and disciplined. According to one success story, “I learned when marketing my internet business that commitment is a real key component. Having action plans, calendar of events, step-by-step instruction, and check lists have really helped with marketing my internet business successfully”.

2) Budget – Internet business that failed did so because they lacked budget. The rule of thumb is 10% to 20% of sales, in most cases, depending on how aggressive you intend to be with marketing your internet business. The question consultants face, “How do I develop a budget from sales when I first start?” The answer is that you have to have the mindset that you will spend a specific amount each month in marketing. Sure, there are grassroots internet marketing techniques just like there are offline, but you still need a budget in mind to get started. The research indicated that most who failed had little if any budget.

3) Resources – Lack of resources was a clear reason for failure based on the poll; including time, money, hardware, software, and manpower to name a few. An important point to remember when marketing an internet business is that you should treat it just like any other business. If you lack resources in one area, you have to make up for it in another area. If you lack money, for instance, put more time into marketing the internet business. There are tons of free trials, low monthly subscriptions, and/or automated marketing software that can help multiply your marketing efforts.

4) Support – Lack of support from family members, team members or customer support depending on your business played a huge role in failure based on statistics. Running a business offline or online is really no different. As an entrepreneur you are working long hours, you are committed and you are determined to succeed, then when you need to rely on a source for support, perhaps it’s not there. Forget selling to consumers, your first sales job is to your inner circle of support. Make sure you have ultimate buy-in from family, friends, and key support players.

5) Systems in Place – A systematic approach to marketing an online business includes developing an organizational chart, setting time lines when to launch products, services and PR campaigns. Developing an online business model, setting up a merchant account, marketing plan, and all other systems that should be considered to run a successful online business is still necessary. Those businesses that started marketing an internet business without systems in place or, at the very least, set it up on the front-end of their business –simply failed.

6) Planning – Writing down goals for sales, budgets, projections, campaign tracking strategies, as well as target audience, keywords, etc… were a huge role in failure across the board. When asked, businesses polled did not understand the power of goal setting and planning. Most didn’t even have plans for (3) three months out much less 12 months or (3) three years out. While the internet changes quickly, planning is still important to success when marketing your internet business.

7) Strategy – “What do you mean long-term strategy? This is a home-based or internet business. Why would I need to think of strategy? “, commented one business. Long-term vision is important to every business. Companies that failed did not take strategy into consideration when developing concepts for their brand. There’s a simple solution for online marketers. If you are marketing your internet business with success in mind, write down your vision, mission, and at least three to five core values. Begin creating a strong foundation for what you provide consumers even when marketing an internet business.

8) Motivation – Attitude is everything and internet marketers were consistently discouraged easily for those internet businesses that failed. Implementing core beliefs when starting an internet business is just as critical for online marketing. It’s highly recommended to get a dose of motivational inspiration on a daily basis or at least every other day when starting an internet business. Getting easily discouraged is not an option.

9) Mentorship – The number #1 reason that internet businesses failed was due to lack of mentorship. Most off line franchises are successful because they are team-centric and offer a ton of support, mentorship, and coaching. In order to sell more franchises, success is critical; therefore, it’s in their best interest to offer help. If you have an internet business that does not have some sort of mentorship program, team support, or coaching plan, you either need to begin developing your own or research services that have mentorship programs.

10) Training – The number #2 reason that marketing an internet business failed was due to lack of training through either mentors or through the chosen internet business franchise. Staying abreast marketing trends and techniques can only be achieved through training and instruction. Those who failed simply did not understand all the facets of marketing online. If the internet marketer is committed to marketing their internet business then they will seek training resources to support their success. If not, like the 35 polled internet businesses, they will fail.

In educating internet marketers how to develop strong brands on the internet, those who sought professional training, advice, and mentorship were the first to see success online. Many consultants today are taking a proactive, educational approach in working with beginners. “Marketing your internet business doesn’t have to be hard if each of these 10 key concepts are thought out thoroughly”, according to expert Trisha Ahlman.

Five Steps to Planning a Successful Business Exit

A business owner’s exit is a once-in-a-lifetime transformation. We’re not talking about selling a house or a car. This is a complex process that requires the technical expertise of a team of trusted advisors. The key to any successful business exit is planning. It must begin with personal reflection on the part of the owner regarding what he or she wants out of the business exit. Only then can the owner, along with his advisors, design an appropriate exit strategy. The five (5) planning steps outlined in this article are designed to help business owners define their personal goals, understand all the transfer options and work with an advisory team to execute a successful business exit plan.

Step 1: Define the Personal Goals of the Owner

Since personal goals intertwine so closely with the daily existence of a private business owner, it only makes sense to begin with the basic albeit crucial question, “What do I want to accomplish with my business exit?” The answer seems obvious–make the most money after taxes and fees. Often, however, it isn’t this simple. Owners have nourished and raised their businesses from infancy; they typically care a lot about who will take the reigns. Family members might also be involved in the business. Their fate will also be dependent upon what the business owner ultimately decides.

Aside from money, other motives for a business exit can include “transfers to family”, “transfers to employees”, “transfers to co-owners”, “partial transfers to gain some liquidity today but still run the company’s day-to-day business”, or “an initial public offering”. The decision often comes down to a question of liquidity. A substantial source of liquidity outside the business makes for a much easier choice.

However, more often than not an owner’s wealth is tied up in the business. The owner must therefore balance his financial and interpersonal goals in order to find the best possible exit strategy. Therefore, an assessment of the range of values for the business is the crucial next step.

Step 2: Understand that a Range of Values Exist for the Business

The value of a privately-held business depends largely upon who buys it. It’s not as simple as watching the ticker tape for today’s stock price. The type of buyer can impact both the price placed on the shares (or assets) of the business and the tax consequences to the selling owner. Value (net transfer price) is therefore a “range concept”.

“Internal” transfers to employees, family, and co-owners provide fewer dollars up front, but allow for greater “control” of the business, “continued income”, and flexible timing and tax characterization of payments to the exiting business owner. By contrast, “External” transfers to other industry players, financial groups, or by initial public offering command more liquidity “up front” while the owner relinquishes more control over the Company and the timing and tax characterization of payments. A closer examination of the transfer options can help an exiting business owner determine the right balance of money and control over the future of the business.

Step 3: Examine the Options Available for the Transfer of Shares

There are seven (7) primary purchasers of privately-held business stock (or assets). Below are listed the Parties to the Transaction and Types of Transactions Available (samples; not a complete list)

Internal Parties:

  1. Employees – Employee Stock Ownership Plan (ESOP)
  2. Charity – Charitable Remainder Trust
  3. Family – Gifting Program
  4. Co-owners – Leveraged Buyout

External Parties:

  1. Financial Groups – Recapitalization
  2. Industry Buyers – Acquisition (at Synergy Value)
  3. Initial Public Offerings – IPO (at Public Market Value)

Based on the primary goals defined in step one (1), an exiting business owner chooses the “party” to whom the business will be transferred. That designee, once chosen, will determine the limits or expansion of the Value. At the end of this phase, the process comes full circle as the Value (after taxes and fees) is matched against the owner’s goals. If the two meet as one, congratulations! A successful business exit strategy has been devised. Now it’s time to execute.

Step 4: Provide Full Financial Disclosure to the Buyer

This step isn’t going to be easy on the business owner. Assembling financial records and presenting them to a buyer/successor is a very time consuming, very personal survey of how the business is run. It can be huge psychological block for many exiting owners. Remember, any savvy buyer (or successor) to a business will need to understand the financial condition of the Company. When an owner fesses up to any “creative accounting” they may have employed over the years to help build wealth and reduce tax bills, the process goes smoother. Full disclosure is the best path to a seamless process. There is an old saying – “if the truth will kill a deal, then there is no deal”.

Not only that, but it may reward the owner in the end. Full disclosure is not about passing judgment, but instead affords the buyer (or successor) an opportunity to assess the business’s true profit potential. The astute exiting business owner will recognize this in advance. Why? Because most “creative accounting” practices depress the profitability of a business. Clear those away and the Buyer will recognize a higher earning power and in turn a higher Value for the Company.

Step 5: Assembling the Advisory Team – No One Should Go It Alone

Planning and executing a successful business exit strategy is a complex process that requires the technical expertise of a team of trusted advisors. It’s not the time to take short cuts or pinch pennies. Time and money should be invested in assembling the right team of advisors; a successful business exit is more than worth it. It should be viewed as an investment in success.

We must understand that business owners are independent “self-starters”. If they weren’t, their businesses wouldn’t be so successful and we wouldn’t be talking to them. But some of their strengths and characteristics can lead many business owners to attempt the “do-it-yourself” business exit strategy. This can create an unnecessary drain of time and money on both the business owner and their business.

A business owner’s exit is a once-in-a-lifetime transformation. It is an important milestone that is sure to provide any business owner with one of the most challenging yet satisfying sense of accomplishments.

So remember, planning is the key to any successful business exit because a proactive approach to an Exit Strategy is the only approach to a successful Exit Strategy. If you’ve come to the end of this discussion, you’re already ahead of the game.

© John M. Leonetti