Online Entrepreneurship

Understanding the Difficulties of Starting a Business

Internet Entrepreneurship

• The widely-held perception is now that

starting and sustaining

a profitable web-based

business has become

very easy.

Lure of the Online Business

• Starting a business online is

now very inexpensive.• Domain = +- $8• Hosting = A low monthly cost • Plethora of free/inexpensive content

management services, like WordPress,

and customizing these products is simple.• Cheap logos, cheap eCommerce options.• Inexpensive and free coding environments and programming languages.• Low-cost, high-yield marketing options

Online = Lower Costs

• Plethora of free/inexpensive website building services.• Customizing products like Wordpress,

Joomla, or any other CMS, is simple.• Cheap logos, cheap eCommerce options.• Inexpensive and free coding environments

and programming languages.• Low-cost, high-yield marketing options• Plethora of potential customers can be

reached via the internet.

Online = Lower Costs• Perception of thinking you “save more” without having to

lease an office space or spend money on discount office supplies.

• On the contrary…

.

The Reality is, The Vast Majority of New Online Business Will Fail

Failure is the Norm

• Starting, growing and sustaining any business is

exceptionally difficult.• 20% of new businesses fail

within the first year.• 51.2% of businesses

have failed after year five.• 71% have failed by year

ten

Online Company Failure = Higher

• Experts estimate that the rate of failure for internet companies is even higher than brick-and-mortar stores.• Abundance of competition• Same opportunities listed in earlier slide

available to all• Consolidation Trend• Segmentation and Targeting Issues• Unexpectedly Costs• Messaging Issues

• Estimates range from 70% to 97% failure rate

Established Players

• Established competitors have a huge advantage.• When people search, they click on the first result 42% of the time.• Established companies have:• More money• Better rankings• More experience• Established partners• Etc…

Failure Rate by Industry

• Some areas of business have a much higher rate of success than others do.

Causes of Failure

1. Incompetence• 46% of Business Failures can be

accounted for by some sort of incompetence. Some common examples include:• Lack of Planning• Lack of having an organized system

• ex: not saving important documentation. Use file cabinets you should always have a hard copy of the most important documents.

• Lack of Knowledge Regarding Finances and Taxes

• Poor Pricing Strategies

Causes of Failure

2. Lack of Experiencei. 41% of Failed Businesses,

do so because of a lack of managerial and/or sales/supplier/marketing experience.i. Credit and borrowing Issues

ii. Rapid expansion

iii. Inadequate inventory

iv. Lack of supplier relationships

v. Ineffective marketing

Shoplet’s Perserverence

• Despite the very high failure rate in new retail and online startups, Shoplet.com has beaten the odds.

• Founded in 1994, Shoplet is one of the original e-marketplaces. We're proud to have grown tremendously without any outside funding, and we have been profitable since 1997.

• You can learn more about the office product industry in a e-book we have created.