Monthly Archives: February 2010

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!

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!

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).

by admin, on       8 comments