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(Last Updated On: October 24, 2018)

The world of online business is undoubtedly a murky one. From the heady days of the dot-com bubble to the calmer, more established online world we see today, the online industry is one that is in a constant state of flux.

However, there is one consistent element of the online business world: failure. Failure has long walked hand-in-hand with online businesses. There are thousands of very famous online businesses that became huge and have since bitten the dust, and thousands of smaller operations that have suffered the same fate.

If you are, or aspire to be, an online entrepreneur, this track record has to be concerning— in fact, it would be worrying if you didn’t find the failure rate of online businesses troubling. When you want to make your way in a business sector, you have to be able to consider how that sector has functioned up until now. That means looking for ways to follow in the footsteps of successful entrepreneurs, but it also means learning from the failed entrepreneurs so you can sure you won’t repeat their mistakes.

Of course, no two online businesses are alike, but there are overarching themes that unite the companies that ultimately fail. Below, we’ve put together a list of the eight most common reasons online businesses fail— so you know the exact pitfalls you need to avoid with your own endeavours.


#1 – Lack of innovation

When an online business becomes established, it’s easy to see that you have made it. Your business has been able to survive in the rough and cut world online, so you can sit back, relax, and watch those profits begin to roll in… right?

Wrong. Success in online business is wonderful, but it can also be painfully fleeting. If you don’t seek to constantly reinvent your business, offer new options to your customers, and always be abreast of the latest changes, then your business could all-too-easily fall behind the times. Whether you’re an ecommerce store, a freelancer, or a service provider, you have  to constantly innovate your offerings if you wish to enjoy continued success.


#2 – Poor technical prowess

If there is one thing that can sink an online business faster than anything else, it’s poor technology.

When a visitor wants to visit your business’ site, then your site has to be there. It also has to function exactly as the user expects; broken links and other error pages are completely verboten if you want to enjoy long-term success.

In the early days of the internet,  visitors were likely to be more understanding regarding design and tech errors from a website. Nowadays, they’re not; visitors are far too accustomed to fast-loading, accurate sites to have any interest in sticking around waiting for your site to work. If your site doesn’t work, your online business won’t work either— it really is that simple.


#3 – Out-of-date SEO and marketing campaigns

If you know that your online business requires good SEO and marketing, it can seem as if your work is done. After all, you recognise the importance of these campaigns, and that’s more than can be said for less-savvy business owners… so surely, you’re onto a winner here?

Not quite. Marketing and SEO change constantly. If you take your eye off the ball, you could soon find yourself relying on techniques that are unlikely to deliver results, or may have become entirely passé. This risk is one of the reasons that so many entrepreneurs choose to outsource their SEO and marketing requirements; frankly, it’s a full time job trying to keep up with all the changes. If you’re generally too busy focusing on the nuts and bolts of your actual business to be continually tweaking your SEO and marketing strategies, then you’d be wise to consider outsourcing also. Thankfully, many companies now offer complete digital marketing packages, so outsourcing should be quick, simple, and — most importantly — able to deliver the results your online business needs to succeed.

If you don’t focus on ensuring your SEO and marketing campaigns are up-to-date, then your business is going to struggle to be noticed. No matter how great your product or service is, if potential customers don’t know it exists due to out-of-date techniques, your company is never going to be able to survive. If, however, you outsource so as to keep up with all the developments, you have far more chance of capturing the attention of potential customers— and you’ll see your business bloom as a result.


#4 – Over-diversification

A lot of online businesses are tempted by multiple income streams, passive income, and other ways of increasing their profit margin. This is all well and good, but realistically, you have to be very careful of becoming a “jack of all trades”.

It is better to focus on a few key areas that you want to see your business succeed in. With your main targets prioritised, supplementary areas should be restricted. It’s far better to be very good at one big area than just decent at lots of smaller ones. When companies start over-diversifying, it’s a very bad sign for the future health of the company, so keep things simple if you want to ensure you succeed.


#5 – Loss of entrepreneur focus

Online entrepreneurs have a huge amount going for them. This is a fast-paced world that is constantly changing, and there’s always something new to catch your eye and command your attention.

However, this also means that there is a real possibility of distraction. Online businesses — just like brick and mortar businesses — require focus, dedication, and a long term strategy. If you continually find that your head is being turned by exciting new innovations and types of online businesses, then that isn’t a good sign.


The key to a truly successful, long-term online business is to pick an idea and work on it, improve it, tweak it, and constantly manage it— for years. If you find that you can start a business but then lack the ability to stay interested in it, then you may be happier changing your focus as an entrepreneur. Rather than seeking to run a company for a long period of time, you can specialise on startups, which you then sell on once they are established. If you’re constantly full of new ideas and find the day-to-day minutiae of running a business rather dull, then this might work very well for you. You still get to enjoy the thrill of starting a business, but it’s up to the new owners to make it work in the long term.

If you’re not tempted by the above option, then you still have to focus on your online business with a high level of consistency. As soon as your focus begins to slip, your business runs the risk of slipping also.


#6 – No distinguishing characteristics 

A business has to be unique to stand any chance of surviving in the crowded online world. Ask yourself:

  • What does my business do that no other online business does?
  • What distinguishes my brand from other online businesses?
  • Why would someone choose my business over a competitor?

If you cannot clearly answer these questions, then you need to do some work on your business’ USP. Without a clear-cut, defined, and prioritised USP, your business is doomed to failure, because there’s simply nothing unique to stop it failing. Make your business special and exceptional, and you’ll be able to avoid the failure that so many other businesses have sustained.


#7 – Lack of focus on good customer service

Excellent customer service is vital for online businesses. In fact, your customers are likely to be less patient with an online business than they would be with an old-fashioned brick-and-mortar business. This is because tech has taught us all that interactions are quick and effortless when conducted online, so your online business’ customer service has to be swift to match customer expectations.

As a general rule, you need to respond to all customer queries, complaints, and feedback within 48 hours. Any more than this and the customer will likely follow-up, and usually, that follow up will usually contain an element of irritability too. If this happens with enough customers, it will earn your business a poor reputation for communicating with customers— and that alone can be enough to cause your company to ultimately fail.


#8 – No established online presence (outside of the business website)

Customers who are new to your business will turn to other areas, such as social media, to see if your company is worth dealing with. If you do not have an excellent online presence, then many customers will see this as a red flag, and they’ll decide to work with another, more established company. Customers need the reassurance of knowing a business is active outside of their own website; if you don’t have this, then customers will go elsewhere, you’ll lose business, and — ultimately — your online endeavours could fail.


In conclusion


If you can take the time to examine all of the areas above, there’s a very good chance that your online business will be able to succeed where so many others have failed.


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27 / Nottingham, UK. Trying these things since 2007. Writing about these things since 2014. Doing this full-time since 2018.