Online businesses are incredibly popular because they’re easy to start, they’re relatively inexpensive to manage, and they have practically unlimited income potential. But just because you can succeed as an online entrepreneur doesn’t mean you will. In fact, up to 90 percent of internet-based businesses end up failing within the first 120 days.
So what are the biggest threats to your online business, and what can you do to protect against them?
The Top Threats
These are some of the most commonly-cited root causes of failure, and some of the most overlooked threats for online entrepreneurs:
- Cybersecurity breaches. You don’t have to be a multibillion-dollar corporation to be the target of a hacking scheme; in fact, 61 percent of all cyberattacks target small businesses. If a hacker targets your website for a breach or a DDoS attack, it could take your site down and/or compromise your reputation. The best way to protect yourself here is to invest in better firewalls and follow best practices for online security, including choosing strong passwords and changing them often.
- Lack of market interest. If nobody wants to buy your product or read your content, you won’t be able to generate revenue. Performing thorough market research can help you start on the right foot, but if you aren’t observant, a market shift could displace your original target audience and render your business undesirable.
- Excessive costs. You might generate enough user interest to make sales, or generate ample traffic to attract advertising revenue, but if your costs are too high, you might not be able to strike a profit. Consider both your monetary costs – including what you pay for ongoing hosting and other professional services, and your time costs – including the time you spend writing and updating content on your blog.
- Competition. The internet is wide open, so there are likely hundreds to thousands of businesses like yours already in operation. If they’re able to offer similar products for a lower price, or better all-around products, you won’t have a chance on the market. Aim to differentiate yourself, so you stand out, and have a unique advantage that your competitors can’t touch, such as better customer service, or a more complete package deal.
- Personal disasters. If you’re the victim of an accident, you may be rendered unable to continue work—at least not in the same capacity you were used to. Dealing with the aftermath of the accident, including paying for medical bills and following through on your recovery, could bring your online business to a halt. Business interruption insurance is one way to mitigate your risk here, as is training a greater number of people who could step in for you temporarily if you’re unable to do the work yourself.
- Legal issues. If some of your onsite content is found to conflict with existing intellectual property, or if one of your products accidentally injures one of your customers, your business could be held liable for the damages. Legal issues can destroy almost any business, so it’s vital that you get business liability insurance to protect yourself. On top of that, you’ll want to talk to a lawyer at every step of your business’s development.
- Growth stagnation. You might have a profitable model to start out, but if you aren’t able to scale the business, you may find yourself unable to progress. Maintaining baseline profitability isn’t necessarily a bad thing, but unless you invest in marketing, advertising, and other expansion-driven strategies, you’ll be stuck at the same level of revenue indefinitely.
The Proactive Guidance of a Business Plan
You certainly can’t account for everything, but the more proactively and conservatively you plan, the better you’ll be able to protect your business from these internal and external threats. Writing a business plan, with the standard recommended template (or something similar), will help you uncover these threats and weaknesses proactively, so you can figure out a way to defend yourself against them or at least lessen their damage. Make sure to invest ample time in this exercise – or you might regret it if and when your website collapses.