Web Economics 101: Part 2Working From HomeThere is no surer or faster way to put cash in your pocket than getting a second job. But for many people, side employment is not an option. The disabled, the chronically ill, retirees, single parents with young children and many others either are unable to leave their homes or simply cannot afford to spend additional time away from home. Second jobs normally pay minimum wage and a minimum wage job makes little economic sense for single parents who must pay for child care. The current trend for many businesses and industries is to move to cyberspace. It is a good idea to study the steps of large, successful businesses. You always want to model what you do after successful people in your same line of endeavor. That doesn't mean that your specific products or services need to be identical, but they should be in related fields. You want to be where they are and to do that you want to duplicate their business plan. The facts and myths of starting your own businessScott Shane, on the faculty at Case University and a recognized authority on entrepreneurship, published The Illusions of Entrepreneurship - The Costly Myths That Entrepreneurs, Investors, and Policy Makers Live By, January 28, 2008. Professor Shane has culled government and private resources to separate fact from fiction about starting your own business. The first myth he exposes is that 90% of all business startups fail in the first 1-5 years. The truth is that 50% fail in the first year and 29% are still making profits 10 years later. The Top 7 Reasons Businesses Fail1. Poor Management Skills Many reports on business failures cite poor management as the number one reason for failure, according to The Small Business Administration(SBA). New business owners frequently lack relevant business and management expertise in areas such as finance, purchasing, selling, production, and hiring and managing employees. Unless they recognize what they don't do well, and seek help, business owners soon face disaster. They must also be educated and alert to fraud to learn how to avoid it. Neglect of a business can also be its downfall. Care must be taken to regularly study, organize, plan and control all activities of its operations. This includes the continuing study of market research and customer data. 2. Wrong Reason for starting your business ties with poor management as the top reason businesses fail. Entrepreneurs who venture into business on their own to get rich, to gain more personal time, and/or to escape an employer telling him what to do will quit in the first year. Business ventures are rarely Cinderella stories. Entrepreneurs never get rich over night. In fact, most never will. Professor Shane's profile of the average entrepreneur shows him making less than $100,000.00. In addition, business owners put in more time than most salaried employees. A business owner who fails to fulfill the dictates of his customers will not succeed. Thus, business owners don't have one supervisor or employer to contend with, but (hopefully) hundreds or thousands whose needs must be met. Belief in your product or service must be high on your list of reasons for starting your own business coupled with the belief you can run -- or learn to run -- your business as well or better than the competition.
3. Insufficient Capital The next common fatal mistake for many failed businesses is having insufficient operating funds. Business owners underestimate how much money is needed and they are forced to close before they even have had a fair chance to succeed. They also may have an unrealistic expectation of incoming revenues from sales. 4. Location, Location, Location Your college professor was right! Location is critical to the success of your business. On the internet, that means your website needs to rank consistently in the top 20, preferably in the top 10, where your customers are, or it must have external links that bring them to your site (preferably both). 5. Lack of Planning Anyone who has ever been in charge of a successful major event knows that were it not for careful, methodical, strategic planning -- and hard work -- success would not have followed. The same can be said of business success. It is critical for all businesses to have a business plan. 6. Overexpansion Another common cause of business failure is overexpansion when business owners confuse success with how fast they can expand their business. The focus should be on slow and steady growth. 7. No Website Simply put, if you have a business today, you need a website. Period. In the U.S. alone, the number of internet users, 70 percent of the population, and e-commerce sales--roughly $70 billion in 2004, according to the Census Bureau--continue to rise and are expected to increase with each passing year. At the very least, every business should have a professional looking and well-designed website that enables prospective customers to easily find out about your business and how to buy your products and services. Once the website is up and running, you'll want to investigate additional revenue sources: selling ad space, recommending affiliate products, and offering drop-shipping products. The SBA stresses if you don't have a website, you'll most likely be losing business to those that do. And they advise making sure that website makes your business look good. Read current thinking about starting your own internet business. Part 3: Can You Succeed?
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