In this blog I point out some of the more obvious pitfalls regarding setting up an online business for the first time that most new potential online business owners do not think about or just don’t fully understand.

I have had many clients come to me thinking they can set up an online business and make money from Day One investing as little as $4,000! The reality is that for that budget you most likely won’t even get a website live, let alone a web marketing strategy!

If you think that you can, then you are most likely destined to fail. 'Why?', you might ask. Well read on for a more indepth perspective from my point of view and experience in this marketplace and having dealt with many customers who think they can set up an online business and it will run itself!

‘An online business is normally much more competitive than a physical bricks and mortar business. The actual facts are that more start up online businesses fail than actual bricks and mortar businesses!’

The reasons are quite simple. You are competing from Day One with global companies whose overheads are significantly less so they have the competitive edge and can still offer deep discounts because they sell by volume! The pure fact that they have been in business longer would suggest that they have made all the mistakes in the early days and worked through them, now they have a slick online operation which is very profitable. You may also be surprised to learn that a lot of successful web businesses actually have more than one website, they have multiple sites and sometimes utilise a different brand to reach out to very specific market niches which drives increased warm traffic.

Because the online world is becoming smaller every day, you will need to constantly look for new niches and outlets for your products and services and have to work even harder to get the same customers, who now have a massive choice of providers. You must also bear in mind that they have market position and unless you have an excellent website built with search engines and your visitors in mind and a generous marketing budget, you have very little change of making the online business a success! I have been approached so many times by people who want to start a new online business and think that just a few thousand dollars will be all they need! How wrong they are. If you are to be successful online in the current online marketplace, you need to have a strong business plan, great products or services, supplier relationships (if applicable) and a marketing budget for at least the first 6-12 months.

On top of that you need to be sure that your online marketing budget is being spent in the right places. So many people just go with paid advertising on search engines and think it will generate them all the traffic they need. To be honest this could not be further from the truth! Research, research and more research is the key to finding the ideal marketing and media mix for your products and services and they differ so much depending on many things such as geographical location of your customers, demographic and psychographic information, to mention just a few.

Most people think that an online business runs itself! How wrong could they be? A successful online business takes hard work and long hours and this never stops. You are constantly trying to stay ahead of your competition and looking for new avenues to market your products and services and you must always offer great customer service whenever you need to! Bear in mind that when you start an online business your website is open 24/7 - that alone means that your opening hours are most likely twice as long as most businesses. How are you going to answer your client questions at two o'clock in the morning? Constant optimisation and marketing needs to be effected and research into emerging marketing concepts and tests and measures of the many already out there. Still think you will have time for the kids and a social life??

The end result is very simple. Most people who start an online business fail because they do not have the time, money, research, experience or the intellectual capabilities to cope with their proposed dream!

OK so you might think that I am trying to put you off by painting a bleak picture. No, not at all, just understand that if you really want to open an online business you must have several things in place in order to make that dream a reality and just some of these elements are:

1. Time – starting an online business will take much more of your time than you ever thought.
2. Commitment – you will need to be open to learning and researching as this will become an everyday task in your new venture. After all, you must keep up with the competition and the rapidly changing online world that we live in!
3. Great product – your product or service offering must be able to be sold or at least ‘pitched’ successfully online; you must be able to generate interest without actually being there!
4. Money – just think - to set up a bricks and mortar business in Australia today would cost $50,000 + and then you will need staff on top of that plus the usual overheads so be prepared to spend more than you think as the website is just the beginning of the cash drain before you start to make money.
5. All rounder – you will need to learn to multi-task as you will need to be a great marketer, salesperson, negotiator, accountant, to mention just a few!
6. Competitive edge – what are you going to offer your target audience that will differentiate you from them?

The online world is a huge playing field and as such there are players that are very experienced in their field and should not be tackled in the early stages. You are the new guy on the block who needs to learn the trade and gradually become successful and then, just maybe ‘the world's your oyster’!