3 Harsh Realities of Starting An Online Business

by admin on February 19, 2010

failure 3 Harsh Realities of Starting An Online Business

People always talk about “firing their boss” once they have a successful online business. After all, why would you want to work if you have a “successful” online business?

Would it not be dumb to work for $15/hour when you can make millions from the “comfort of your home”?

Here is the simple, brutal truth: A profitable online business is very difficult to start and maintain.

I have found comparing a brick-and-mortar business to an online business is a little misleading. If you try to manage your online business as a real-world business, you will most likely fail.

Here are 3 harsh realities of an online business which no one told you about:

1. Most people starting out online will fail many times: An online business is normally much more competitive than its brick-and-mortar counterpart. In fact, starting an online business has one of the worst failure rates.

The reasons are simple. You have to compete globally against companies whose costs are 75% less than yours (and who are still willing to offer discounts just to get additional business). You have to constantly innovate and stay ahead in the game. And finally, because the world is becoming smaller everyday, you have to work even harder to get the same customers, who can now choose between a million suppliers.

But what about those “get rich quick” courses, you ask? Arent they supposed to help you become an overnight success?

Nope! Most get rich quick courses are designed to feed on the dreams of people. The authors normally understand that their claims are outrageous, but if they can cover themselves legally, it is all good business. Most of them are more inclined to make a quick buck themselves than to care about the success of their customers.

The end result is simple. Most people starting an online business will fail because they do not have the time, money or the intellectual capabilities to handle such a unique venture.

2. People who make it big online are extremely rare: Let`s face the facts. Although every make money online website you go to features amazing success stories, we all know that they are exaggerated for the most part.

And even if they are not, only the successful people can afford to brag. The reality is that successful people make an extremely small percentage of the total number of people who have tried starting a business online.

In other words, the picture you see is extremely skewed.

For every success story, there are thousands of failures. The only difference is, unlike successful people, people who failed online cannot afford to brag or tell their story.

Chances are, if you ask the owner of a successful online business the secret behind his success, he will tell you that the secret was to fail 15-30 times..

3. You need a competitive edge: If you are thinking of starting an online business, you better differentiate yourself from your competitors effectively or you will go broke. Period.

Competing on price on the web is suicide because someone will always be able to under-cut you. This normally results in a price war where everyone loses. You and your competitors find it hard to stay profitable and will drive yourselves out of the market. The customer will look at your product or service and lose interest because “if it looks cheap it is cheap”.

Differentiate yourself and you will make money online. Statistics show that established copywriters and consultants make 100X-200X more money by servicing a SMALLER number of customers.

Think about that for a minute and you will understand how important differentiation is.

In conclusion, the picture is bleak, but not if you approach things the right way. Please note that this post is aimed not to discourage people, but to inform them of the realities of starting an online business.

If you are committed and are willing to learn, sooner or later you will succeed online.

Comments? Suggestions? Let us know what you think of this post!

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3 Reasons Why A High Bounce Rate is Bad For Business

by admin on February 16, 2010

Bounce Rate 3 Reasons Why A High Bounce Rate is Bad For Business

Although nearly everyone and their grandmother has a personal or business website in these modern times, not a lot of people know how to track their website statistics.

Ask a couple of webmasters what Google Analytics is and most of them will look at you questioningly.

After all, they argue, shouldn’t you start making money online as soon as you put up a website and start driving paid traffic to it? Isn’t that what the gurus tell you? Isn’t website marketing supposed to be “simple”?

Not quite.

The harsh truth is, the art of getting visitors to your website is by far the most involved and complicated task. Realistically speaking, most webmasters will not make a dime unless they track their website stats effectively.

One of the more important web statistics is the bounce rate. Formally speaking:

Bounce rate essentially represents the percentage of initial visitors to a site who “bounce” away to a different site, rather than continue on to other pages within the same site.

As you can imagine, a high bounce rate suggests that your website is not doing a good job of “entertaining” your visitors.

I personally admit that I have never had a bounce rate of lower than 40% (which might be OK according to some people) but a bounce rate of over 80% is simply bad news.

Here are 3 reasons why a high bounce rate is bad for business:

1. Bad or ineffective content: One of the most common reasons for a high bounce rate is that your visitors think your content is crap. Either that or your visitors do not think your content is related to the keywords you are ranking for.

Your visitors might be searching for some non-promotional info on Eczema, but if they come to an affiliate Eczema course website, they will most probably click back without spending another second on your website.

It is precisely for this reason that affiliate websites find it very difficult to sustain their rankings in Google. After all, nearly every person out there can differentiate between a sales-oriented website or an informational website, simply by looking at the first 5 lines of text on the website.

And adding insult to injury, most savvy people do not like huge hype-filled sales letters which exaggerate their product effectiveness to unbelievable levels. All this results in a very high bounce rate for affiliate websites.

2. Ranking penalty: Google is now known to take the bounce rate and time spent on the website into account to determine your rankings.

This means that even if you have the most amazing looking website but your visitors exit the website quickly, you will get into trouble.

This is Google’s way of ensuring that only relevant content is served in the search results.

If your bounce rate is very high or the time spent on your website is very low for a prolonged period of time, you can expect Google to drop your rankings by around 30-40 positions (sometimes even more).

3. You are leaving money on the table: A high bounce rate suggests that most visitors do not like your website enough to spend time on it. This translates to the fact that you are leaving money on the table.

Think about it: If 80% of your visitors leave your website quickly and never come back, would that not make a huge dent in your sales?

The first rule of making money is to give your prospects something they actually care about. A high bounce rate in this case is the exact opposite of what you want.

In conclusion, high bounce rate can break your online business and will make it extremely easy for more savvy competitors to easily push you out of your market.

Bounce rate can be lowered by ensuring that you post content which your visitors like. If you have affiliate websites, try to give the image that your on-site content is actually informational instead of promotional and then discreetly add your sales message in the ending paragraphs.

Did I leave anything out? Do you have any personal anecdotes or suggestions on how to lower your bounce rate? If so, comment!

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Tagged as: bounce rate, lower your bounce rate

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3 Reasons Why You Should Not Rely On Google Alone

by admin on February 12, 2010

Microsoft%20yahoo%20big%20fish%20google thumb 3 Reasons Why You Should Not Rely On Google Alone

Since 1998, Google has taken the web by storm.

Yahoo, MSN and Altavista’s popularity dwindled in front of the steep rise of Google and now most savvy web users do not even use those “outdated” search engines anymore.

Anyone using search engines other than Google is thought of as a newbie on the internet because “Google is so much better”. It is for this reason that you “Google” up stuff and not “Yahoo” or “Bing” it.

Google has advanced in the search engine game to such a large extent that it some users think of the internet when they think of Google.

Google might actually have a monopoly in the search market because of its sleek features and its huge market share.

But with its high demand comes a threat: Google’s dominate market share can get web users into trouble if they focus all their energy on Google alone.

If you are an online business owner, you have to understand that relying solely on Google is a horrible strategy. As with finance, the key to getting long-term, sustainable traffic is to diversify effectively.

Here are 3 reasons why you should not rely on Google alone:

1. Google owes you nothing: The central argument is simple to understand – A search engine owes the webmasters nothing. It does not owe you your rankings, neither do the search engines care about how much traffic you get. They could not care less if your website ranked on page 90.

It is your job to keep up with the latest SEO trends in order to make sure you rank high enough.

Unfortunately, most people cannot keep up with SEO because it is a full-time job. Search engine algorithms change all the time, which has caused many successful online businesses to go under.

Why? Because they were relying only on Google traffic.

These webmasters landed their website on the 1st page of Google for a competitive term, started making money and became short-sighted.

Not a good strategy.

Unless you have an old and established website, you can expect your Google rankings to fluctuate quite a bit, at least until you build a solid presence to warrant a certain ranking position.

2. There are other effective traffic sources: Even though Google is the most successful search engine, 30% of the search market is still dominated by other search engines such as Yahoo and Bing.

Have you ever tried using these search engines to get additional traffic?

Always remember that you can use pay-per-click ads on Yahoo and Bing too, so Adwords should not be your only choice (unless you know what you are doing or if you have a lot of money to burn). If you do it the right way, you can spend much less on Yahoo and Bing and have a much larger ROI.

You would be surprised at how large the PPC  bidding differences are among these search engines. To give you an idea, one term that I bid on Google cost me $1.50 while the same term on Yahoo was 35 cents.

If you are not using the resources of other search engines, you are leaving money on the table. Period.

That being said, social media is another viable option, although it might take a lot more effort to gain traction in the beginning. Twitter, Facebook, MySpace etc can be effective for your market if you know how to use them correctly.

3. There is a lot more competition on Google: Because of the huge market share, nearly all prices on Google are inflated to (sometimes) absurd amounts. You can get a much better ROI using other search engines for your markets if you do your research properly.

It is nearly impossible to get the top positions for competitive terms in Google because of the significant investments involved. However, you might actually rank near the top in Yahoo and Bing with a smaller investment.

The main point is this: Because of Google’s success, everyone wants to be a part of Google. Advertisers are sometimes paying $10 to get a $5 customer on Google, which is inflating the PPC prices.

I personally think that if you can take the initiative, using other search engines can make you a lot of money because of the lesser competition and awareness.

In conclusion, search engines have a duty to go where the users go i.e. to display popular webpages. If you can get traffic from various sources, search engines will be force to give your pages more importance (because of the large amount of traffic they receive).

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Tagged as: google seo, google traffic

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5 Reasons Why Facebook Will Never Dominate Google

by admin on February 10, 2010

facebook opening you to google 5 Reasons Why Facebook Will Never Dominate Google

I was over at CopyBlogger reading quite an interesting blog post, which seemed to imply that Facebook actually has a chance to dominate Google by “changing the whole game” as far as Google is concerned. Read that blog post first before moving down.

Do you think Facebook can dominate Google?

If you replied “No”, you and I think along the same lines.

Facebook is a social networking website which has recently seen tremendous success. I understand that “everyone and their grandmother” is on Facebook, but this does not change the fact that Facebook is nothing like Google.

Simply put, these two websites operate use different models to operate and generate revenues.

I feel that comparing Facebook and Google is like comparing small apples with big oranges.

Here are 3 reasons why you can safely assume that Facebook is not the Google-killer:

1. They use different business models: Facebook is a social networking website, which focuses on bringing individuals together. It is not a search engine, neither does it claim to be one.

Facebook’s mass appeal is simple to understand: Everyone can connect with everyone else and figure out what they are upto (and even stalk them), without going through a lot of hassle.

Google, on the other hand, is very different. Google is a search engine, which also offers many other unique services. Google’s business model is based on a simple idea: Provide the users with relevant, accurate content as quickly as possible.

The result? Different markets and different business models, which minimizes competition.

Will you ever go to Facebook to search for “Dentists in California”? Didn’t think so.

Along the same lines, will you use Google to see what your best friend, Ryan is upto these days? Nope!

2. They are horribly different in size: Facebook has around 400 million “active” users currently. By active, we mean users who talk to each other, share pictures and post videos among other things. Active does not mean buying users.

Now, 400 million might seem to be a very good number (and it really is), but compare it to Google and it is not that impressive anymore.

Google controls 75% of the global search market. A good percentage of Google’s users are actually buyers, which causes an even greater disparity between the 2 websites.

Facebook only operates mainly in one market: Social media and Web 2.0.

Google operates in the search market, but also has many innovative services such as Gmail, Google Wave, Google Reader, Google Docs, Google Analytics etc. This gives the leading search engine a huge edge over its competitors.

Does Facebook have any similar features? No, because these features do not go in line with its business model.

3. Both operate in hugely different ways: As if the two websites were not different enough, in some ways, they are quite the opposite.

Facebook blocks users’ pages from public indexation i.e. most of the users’ pages are not in the indexes of search engines. This practice is actually quite prudent; it gives Facebook an edge because you cannot really find out other users’ info if you did not join Facebook.

Google on the other hand gains value through indexing webpages. This practice is so important for Google that if their crawlers were stopped from indexing content, Google would quickly lose a lot of business.

How can you expect Facebook, which blocks all its content, to replace Google, whose job is to index content?

4. Both generate different kinds of traffic: Facebook traffic mainly relates to people who are there to participate in conversations. Most Facebook users will never buy anything worthwhile for a long time, simply because that is not why they are there.

It does not matter how colorful Facebook ads look, the users simply will not buy. I have spent enough money on Facebook to know that direct marketing and Facebook do not go together.

Sure, the users will click on your Ad if you make it compelling enough, but that click will be more related to “being curious” than to fulfilling a crucial need. Facebook traffic converts at horrible percentages. Period.

On the other hand, Google traffic is a lot more targeted and Google is known to have very effective ads. Users on Google are actually looks to buy.

5. Social media will not replace regular search: Social media is here to stay.

But suggesting that it is the “new” search is a bit too far fetched.

Search will always been there as long as people need to find specific information in minimal time. Do you think you can use social media to find out where the nearest Pizza Hut is? I doubt it.

People who suggest Facebook will replace Google seem to believe that social media is THE future. I disagree with that statement.

Social media and traditional search fulfill different purposes and both need to be available in order to provide a better web experience.

In conclusion, Facebook and Google operate in different markets and suggesting that Facebook can compete with Google is very far-fetched.

Do you have any comments or suggestions? Let us know!

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3 Reasons Why Social Media Success is Extremely Difficult

by admin on February 9, 2010

social media landscape 3 Reasons Why Social Media Success is Extremely Difficult

Social media is the future of the web, right?

Yep!

But what exactly is social media? According to Wikipedia:

Social media is media designed to be disseminated through social interaction, created using highly accessible and scalable publishing techniques. Social media uses Internet and web-based technologies to transform broadcast media monologues (one to many) into social media dialogues (many to many).

Simply put, websites like Facebook, Twitter, Delicious, StumbleUpon etc, which allow user contribution and quick sharing of information form what we call social media.

Social media rocks.

But have you ever wondered why it is so difficult to succeed in social media as an online business owner?

Now, I understand that a couple of internet marketers are making a killing online using social media, but most internet marketers are still trying to find out how to make social media work.

For people who still have not found success here, it really isn’t their fault.

Here is the brutal truth: It is very difficult and time-consuming to make social media work..

And to cause even more problems, social media courses make everything sound a bit too easy, which confuses people even more. Just about every course out there gives the user a “foolproof” plan. Social media does not work that way.

Anyway, here are 3 reasons why it is quite difficult to find success using social media:

1. Social media processes are extremely difficult to manipulate: This is by far the most important point.

There is no short-cut to getting mass appeal. There is literally no way you can “force” the masses to promote your content if they do not like you. If people do not like you, they might ignore you, leave your group or simply report you as a spammer.

The point is, it is very difficult (if not impossible) to get a short-cut to social media success.

And taking a short-cut is exactly what most people want.

A lot of people start a Twitter account in order to leverage their followers into becoming buyers, but give up hope in a few weeks. They complain that the followers are always “listening” to their tweets but never respond.. How do you sell to someone who does not respond?

This slide-show suggests some of the reasons why people think Twitter might not be perfect after all.

It is the same with Facebook too. Most people also start marketing on Facebook by quickly forming a group, sending mass invites and hoping to see the sales roll in, which never happens.

If you want to be successful in social media, you have to avoid taking short-cuts. Social media success is a game of consistency and persistence.

If you try to manipulate people to your benefit, it will backfire as most people will be able to see through your self-serving practices.

2. You need to give it a lot of time: Unless you are someone popular, you need to work very hard to get people to like and trust you.

It all comes down to trust. If there isn’t an element of trust, no one cares what you have to say. And trust takes a lot of time to develop.

Social media successes like Guy Kawasaki, Yaro Starak and Brian Clark have been around for over 4-5 years. They have provided their audience with a lot of good content, which has allowed them to leverage their trust. To get their level of success, you need to make some serious effort.

If you are serious about social media, you will have to connect to your audience everyday and think up new ways to engage them.

99% of online marketers will find this task extremely difficult to do for hundreds of different reasons.

3. Social media hates direct marketing: If you try to market directly using social media, you will be disappointed.

And this is exactly what happens. Most people try to use direct marketing on Twitter and Facebook, spam everywhere and end up getting their accounts suspended.

These practices can easily be seen on Twitter. For one thing, my Twitter timeline is always full of people trying to sell Twitter software or home business courses.

People seem to believe that slapping an affiliate link on their profile/outgoing message and writing a catchy, hyped up promotional message will do the trick. This is just not the case.

Social media users are very tech savvy and are there mainly for the content. Provide them with good content, maintain your relationship with them and they MIGHT buy from you down the road.

In conclusion, I am not saying that social media is useless. Quite the contrary.

However, from the perspective of an online marketer, it takes much more time to be successful at social media than it does to rank a website to start receiving traffic through SEO.

That being said, if you have the drive and determination in making it work, it can be a very worthwhile investment.

Comments? Feedback? Let us know!

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Tagged as: Social Media, social media drawbacks, social media success

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