Advice on how to avoid common startup pitfalls

3 most common online startup mistakes

If you're in the process of starting a small online business, then make sure you take a look at these three most common, and damaging, mistakes entrepreneurs make.

Unfortunately, most people tend to make the biggest mistakes early on while their fledgling startup is still very fragile. That's just the nature of business. The hardest part is earning the first dollar - after that it usually gets easier.

The fact is, the vast majority of all online startups fail - or fail to even earn a cent. But, by avoiding these common pitfalls it is possible to radically increase your chances of success and turn a decent profit.

The following list of potentially terminal startup mistakes should help you avoid wasting time, effort, and money from the outset, and hopefully buy you the time needed to start earning a stable income.

1. Not using the right technology

It doesn't matter whether you are a complete techno geek or completely allergic to technology (especially software and Web development). If you're spending a lot of time and money building a website, you're doing it wrong.

For all but the most specialized of businesses, there already exists state of the art hosted website builders that can do a much better job of creating a website than expensive custom Web design (or a home-made effort).

The real, long term benefits of using website builders are perhaps not immediately obvious at the start, but they will:

  • integrate easily with other important online technologies - like accounting, sales, CRM, communications, and marketing software
  • undergo constant development (behind the scenes) to stay on the cutting edge of Internet development and trends
  • remain low-cost and affordable, offering great value for money due to high competition in this industry

Remember, the cornerstone of any online enterprise is a quality Web platform that is responsive (to support the majority of browsers using mobile devices, like smartphones), flexible, fast, functional and optimized for search.

Talking of search, that's another huge mistake startups tend to make...

2. Relying on Google for Web traffic

Arguably one of the most common scenarios in the modern era of business goes as follows:

Joe public starts a new online business. After working hard to set up a site and market it, he starts generating Web traffic from Google. As more and more traffic starts flowing in, Joe's company grows.

...

a year goes by...

...

Suddenly, all Joe's traffic disappears, and overnight his business stops generating income. After trying unsuccessfully to regain traffic from Google for 6 months, Joe closes his business down and lays off his employees.

How or why Joe's site lost traffic is irrelevant - it could have been a penalty or it could have simply been that Google changed its mind about what pages it wants to show (there are sometimes over 500 algorithm tweaks a year).

The point here is that Google doesn't care about your business and there is no way to ensure that a site will always generate a healthy amount of traffic.

Don't build your business on the quicksand that is Google search traffic.

Treat Google as the 'icing on the cake'. If you are creating great content for a wide range of marketing activities (such as email marketing), hopefully, quality search traffic will follow anyway.

3. Not generating income early enough

One thing that really struck me the last time I attended a function (highlighting promising startups), was how many entrepreneurs were focused on what they were building and not how to turn their innovations into a business.

Almost without exception, startups came in two flavours:

  1. innovation focussed
  2. money focussed

The guys and girls in group one tended to spend all their time working on their precious innovation. Those in group two believed they had a way to make money.

But neither had a clear idea of how their idea was to be put into action - no solid business plan. Not a single startup out of the fifteen finalists had a clear, fast, and attainable path to sustained revenue.

Having a great idea is not enough. You need to know who the target market is, how to reach them, and how to convince them to:

  1. trust you
  2. use your product/service/etc

One of my earliest startups succeeded despite me doing everything wrong. I took too long building the technology, I thought I could rely on building organic traffic, I had no plan to market it, and no clear idea about who and how people might use it (I guess I thought doing a good job creating something new meant that people would automatically use it).

So how did it succeed? The answer is simply that it cost me nothing to keep running it. It took five years before one of the few clients using it mentioned it in a forum. That lead to a few more clients, and a few more. The trickle became a stream, and it continues to grow... 5 years down the line.

Unless your business costs nothing to operate, and you have plenty of time on your hands, you will need to have a plan to be sustainable within months - not years.

Remember that sustainable doesn't necessarily mean profitable. It may take a long time to generate real profits, but you won't get there unless the business is sustainable very early on.

So those are my 3 best warnings that I can give to anyone starting their own Internet based venture. What other pitfalls have you encountered? How did you overcome those problems?

Share your advice in the comments.

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How to earn a passive income online. Pic by John Haler

The Web is arguably the best medium from which to earn a passive income because content, software and online services can persistently drive traffic and revenue for years at a time.

In other words - build once; earn indefinitely.

The downside is that because there is this great potential to make money, a lot of people are trying it. And, with a lot of people, comes a lot of competition that makes starting out tricky. One thing's for sure; if you're not prepared to put in work upfront, forget about earning a passive income online.

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Finding a way to make money quickly is really not as good as finding a way to earn a stable income in the long term - get rich quick schemes tend to be a waste of time and effort (except for the people selling the scheme).

At least that was the point of my argument with a friend the other day. They ended up betting that I couldn't come up with at least one idea that would start generating cash within 24 hours.

In the words of Barney, "Challenge accepted!"

Gap in the market startups. Photo by Robert S. Donovan

Being an entrepreneur is one of the best vocations in the world because it encourages you to view everything as an opportunity for innovation. And, once you have an idea, you have to challenge it. Break it down. Make it better. Throw it away. Start again. Fail. Fail. Fail. Until you succeed.

Whatever you can imagine, you can do. Provided you have the drive and determination to see it through.

Free beginner guides for entrepreneurs. Pic by James Jordan.

It’s hard work trying to find the time to develop a new business idea, create a business plan, build a website, create content, marketing, promotions, networking, investments, and everything else that has to get done.

New business ideas that are already making people millions

Coming up with innovative new ideas can be a frustrating ordeal unless you know where to look for inspiration. The good news is that there are people making a lot of money doing things you may not have dreamed of.

So, if you are feeling bold and adventurous I've got a list of killer business ideas that are working for people right now. Who knows, perhaps one of them is perfect for you.