Why Businesses Fail Online

Many traditional businesses fail to make money online – in fact, they often invest substantial amounts for very little return.
This makes company leaders reluctant to risk further investment. But why does this happen so often? Who’s to blame? And, how can we change things?
All of us know of successful bricks-and-mortar
businesses that have thrown money at Web development, blogs, social marketing campaigns, eCommerce stores and failed to deliver any ROI (Return On Investment).
It is commonplace to find CEOs, directors, and executives in small, medium and large businesses who have been stung by “the Internet
“. Some have spent hundreds of thousands of dollars with little more than a few dollars in return.
This article will discuss some of the main reasons (to my mind
) why competent and successful businesses fail so often, and so miserably online.
I regularly come into contact with business owners or C level execs who have completely sworn off the Internet as a medium for business. One company I came across had spent, over two years and several hundred thousands of dollars for a Website that wasn’t, in any sense, useful.
This type of story is commonplace, and is indicative of two important points:
Companies are (initially) prepared to spend money online Companies are ill equipped to plan and execute online
These two points are a perfect recipe for failure because they lead to large initial investments that are effectively directionless, ineffective, and ultimately, wasted.
This leads to dissatisfaction and disillusionment about the Internet, leading to a loss of competitiveness in the online arena going forward.

The Internet is such a powerful medium to drive business, yet very few businesses get it right. Here’s why…
Almost every business failure I have encountered has originated as a result of a failure to properly analyze the company’s targets and goals
. This is because businesses tend to operate like this:The CEO (or CTO, or whoever) gets it in their head that a website or Internet marketing campaign is importantInstructions are passed on to employees to “make a website” or “start a social marketing campaign“Employees act on those instructions – either implementing in-house, or outsourcing
The problem is that, right from the start, no-one has actually analyzed what the company needs from their website or online marketing campaign.
Instead, everyone works towards providing the CEO with what (s)he wants – because that’s how the business operates traditionally.
While the CEO is often very competent at running their business, they are often ill-equipped to know or understand what is required to successfully convert that business into the online medium.
Web development. eCommerce. Blogging. SEO. Internet marketing. None of these things are generally the core focus of a traditional business. This leaves them vulnerable to poor decision making.
Businesses don’t take time to acknowledge the fact they do not have the knowledge, experience and skills to work effectively online.
Simply finding the right person
to speak to about online business is a business skill in itself.
Far too little emphasis is placed on finding the right people before going ahead with implementation.
Traditional business people seem to have an Internet sized blind spot when it comes to anticipating the ROI (Return on Investment) of websites, online campaigns and content.
For some reason, the Internet seems to cause otherwise astute business people to throw the following business related ideals out the window:
There’s no such thing as a free lunchBusiness assets don’t tend to pay for themselves overnightYou get out what you put inThere’s no point in doing things half way
It’s probably a result of my earlier point (2. lack of expertise
) that business people tend to forget that, as with any aspect of business, growing your business online takes hard work, skill, dedication, and investment.
The online world may have a different set of challenges, but it still abides by the core principles of business.
With so many businesses acting on the principal of “once bitten; twice shy
” there is a danger that they become less competitive with time.
Considering that:
the Internet as a medium for business is undergoing explosive growthmobile access and mobile eCommerce are growing rapidlyalmost everyone in developed nations use search to find the information they need
its not prudent to ignore the Internet.
Simply put:
If a business decides to neglect the Internet, it will ultimately be out-competed by others that do succeed online.
The answer is to basically do the opposite of the 3 reasons for failure listed earlier:
Invest time and effort into analyzing business requirements and goals before moving on to implementationUnderstand where your company lacks skills and find the right people to provide expertise and advice before moving on to implementationUnderstand the online market. Have realistic targets and goals. Understand the likely ROI of your online business before moving on to implementation
I’m giving a talk on Internet marketing for businesses to SAICA (South African Institute of Chartered Accountants) tomorrow and I’ll be telling them much the same thing as I’ve told you.
However, if you’d like to learn more or chat with me about how your business should proceed check out my consulting page to learn a bit more.
Alternatively, follow me on Twitter, LinkedIn and Google+ to get more tips, ideas and advice for business online.

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