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10 Pitfalls to Avoid in Your Online Business

9 minute read

By WalletGenius Staff

In many ways, starting an online business is just the same as starting a traditional one. You need to do your market research, write a business plan, find investors, keep your customers happy… the list goes on. But in other ways, an online business is a different animal than a brick-and-mortar company. First off, your website is your bread and butter and must be the ultimate priority. If it’s not up to snuff, your business might as well not exist to a large number of people. Your marketing efforts also have to reflect the fact that your target audience will be exponentially bigger than if you were operating locally. Not taking the plunge into social media (after carefully testing the waters, of course) is a serious blunder that you can’t afford these days.

An online business will also have different legal considerations than a traditional one, so not lawyering up could be a costly mistake. And that’s just a starter list. Here’s how to avoid the most common pitfalls that can spell the demise of your online business.

10. Not Having a Solid Website

If you’re running an online business, you obviously have a website. That’s the face you show to the world, so at the very least it has to be functional. There’s no excuse for not having an airtight site: Faulty links, design straight out of 1997 and dysfunctional shopping carts are just not acceptable. Your domain name is also very important — it must be concise and easily understandable. If it’s unmemorable or nonsensical, you’re just making it difficult on potential customers. Your business won’t be credible, and people will take one look (if they find you at all) and head elsewhere. If you doubt your web-development or graphic design skills, hire it out. Customers can sniff out a homemade, ramshackle website from miles away.

Besides the look and functionality of your site, security is a huge consideration. You need to protect yourself as well as your customers. This could end up being a tedious and time-consuming job, but you can’t ignore it. When the alternative is being a victim of identity theft or having your customers’ personal information stolen. Again, outsourcing could be a good idea, here. You might not have the skills to make sure that everything is locked down.

9. Not Covering Your Legal Bases

When you’re starting an online business, it might not seem as “real” as if you were setting up shop in a physical store or office. You very well might be working from home all by your lonesome, at least at first. If you’re not sitting in front of a computer, it’s almost as if your business doesn’t even exist. It’s just out there in the ether.

So, it might not seem like you’d need to do much in terms of a legal setup, as you’d have to with a business that has a physical location and multiple employees. While you’re simultaneously playing the roles of head honcho, graphic designer, web developer and receptionist, you might not realize that you should also add lawyer to the list. And this is probably one task you’ll want to outsource. Online businesses need legal protection just like traditional ones do, but they also come with a host of legal considerations that you might not even know about. So do yourself a favor and hire a lawyer who specializes in Internet law.

A lawyer can review contracts, advise you on intellectual property and taxation issues, guide you through the incorporation and registration processes, make sure your and your customers’ information is protected properly and confirm that your site is set up correctly and legally. It’ll probably be one of the most worthwhile investments you make in your business.

(Oh, and while you’re at it, go ahead and hire an accountant, too.)

8. Not Paying Attention to Your Customers

Besides a completely dysfunctional website, there aren’t many things that’ll send you down the tubes faster than bad customer service. This is especially true for online businesses, whose customers have instant access to the competition. When it’s so easy to shop around, why wouldn’t people just click on over to another business if they have a bad experience with yours? And never forget the equally easy opportunity to fire off a nasty review on your site or on social media.

With an online business, customer service is a 24-7 job. You might not have the chance to have a face-to-face conversation with an unsatisfied customer, but you can e-mail them at all hours and fix things fast. You can issue refunds, accept returns and answer questions instantly (when you’re not putting out fires elsewhere, of course). People are accustomed to speedy service now, and it’s not an option to put off placating a disgruntled patron. Waiting too long to make things right could be the kiss of death.

7. Resting on Your Laurels

When you finally have your beautiful, secure website up and running, it could seem like the hard part is over. Your initial marketing campaign, perfectly executed on a range of social media platforms, has brought in many more customers than you expected. And they’re buying, too! You couldn’t be happier with the way things are going. Your site is a well-oiled machine that can basically run itself, so you figure you can coast for at least a month or two while you catch your breath.

Stop right there. Sorry to break it to you, but there’s no rest on the Internet, especially when you have a brand-new business. Even if things are going smashingly well, you can’t assume it’s going to continue. The online world moves at warp speed, and if you don’t stay on your toes you’ll miss out. A sales opportunity or a new trend could pass you by if you don’t stay active on social media, or you could lose customers if you don’t realize there’s a broken link on your site. We don’t want to be alarmist, but anything could happen! So keep plugging and always stay on your game.

6. Taking Your Eyes off the Competition

If you run an online business, we’re sure you know very well how uncomfortably close your competitors are. It’s basically like having a brick-and-mortar store smack dab in the middle of an entire strip mall of your competition. You’re selling the same products, you have the same hours and your customers can hop to the next store in a flash if they think the grass is greener over there. The smallest slipup or perceived shortcoming in the eyes of your customers could cause you to lose business.

Having your rivals just a click away is definitely one of the more nerve-wracking aspects of having an online business. But that proximity can also be beneficial — it makes it extremely easy for you to keep an eye on them. You don’t want to obsess over how your competition does business, but you could fall behind if you don’t keep track of them. Observing the competition is the best way to stay current on trends.

5. Not Staying Focused on the Big Picture

If you haven’t yet taken the plunge and delegated some responsibility, you might be having some trouble seeing the forest for the trees. When you’re the CEO, accountant, manufacturer, sales force, marketing manager and social media maven all at once, it’s easy to lose perspective and forget to focus on where your company is going in the grand scheme of things.

Even if you do have employees and are able to leave the trenches once in a while, it’s still common to get bogged down in minutiae. You could find yourself so absorbed in the technical details of your website, you forget all about marketing, for example. Even if you take your eyes off one aspect of the business for a month or two, that could be too long. If every aspect of your business — marketing, branding, positioning, sales and distribution — isn’t on the same page, things could get ugly quick.

4. Not Separating Yourself from the Business

When you’re a worker bee for someone else’s company, it’s easy to tell the difference between your work life and your personal life — one happens in the office, the other typically happens everywhere else and rarely do the twain meet. But if you’re starting a company on your own, especially an online one, you might soon lose all distinction between your two worlds. Chances are you’re working from home and everything’s getting all tangled up. Some people are perfectly happy with their personal and professional lives being one and the same, but it’s not healthy for most of us.

Regardless of whether or not you’re comfortable living your life with these blurred boundaries, some things should not be intermingled. You need to set hard-and-fast rules for certain things like finances. We hope we don’t have to tell you that you absolutely need to have separate bank and credit-card accounts for personal and company use. Combining them is disastrous from an accounting standpoint and could also get you into legal trouble down the road.

Here’s another non-negotiable action: Separate your e-mail and social media accounts. Post only company news on your business accounts and say nothing at all about business on your personal feeds. This will help with brand identity, organization — and keeping your sanity.

3. Ignoring or Mishandling Social Media

Just as you obviously can’t have an online business without a website, you can no longer be a legitimate contender without a social media presence. You don’t have to be on every platform, but it’s the best marketing tool out there today — ignoring it basically means losing business.

But hang on a second — you shouldn’t just throw yourself into social media willy-nilly, especially if you don’t have much experience with it. You don’t have to be on every platform, either. Do your research and figure out which sites suit your company and your personal style best. If you’re not selling a physical product, for example, you might not need to be on Instagram. If you’re not the best at witty remarks, Twitter could be a no-go for you. If you’re a social-media newbie, observe for a while before you jump in. Start following your competitors and the leaders in your industry and then throw your hat into the ring when you’re ready. At the very least, start a Facebook page for your business — it’s a guaranteed audience-builder, and your customers will appreciate the effort.

Above all, remember to watch what you say on social media. You’re there not only to interact with customers and gain new ones, but to build your brand. Everything you post should be brand-appropriate. Never get into flame wars or arguments — if you need to settle a dispute, take it to e-mail or offline.

2. Not Scaling Properly

Expansion is yet another aspect of online business that can be slightly more difficult than with a traditional model. With a physical location like a store or restaurant, it’s easier to tell when you’ve outgrown your space, when you need more staff or when you’ve saturated the local market and it’s time to expand. But it’s a different story when you’re building a software product, your employees work from home all over the world, and your market is basically unlimited. The temptation can be to expand as quickly as possible and write yourself one of those crazy overnight online success stories we always hear about. But that’s almost never a good idea. Before you expand, have a solid plan.

Patience is key when it comes to scaling. Doing it too quickly could seriously and irrevocably screw up your whole company — corporate structure, operations systems, user experience, you name it. Not to mention that you’ll be totally unattractive to investors. So even though your competitors might have just simultaneously expanded into 38 markets, do your research and control the pace.

1. Trying to Do Everything Yourself

Starting a business can be an all-consuming task. Your business is your baby, and you have to work around the clock to keep it alive, especially if you’re flying solo. Once the business takes off, you’ll probably find your responsibilities — and your stress levels— soaring. If you find yourself in this situation, there’s only one thing to do, and it’s a tough one. You’re going to have to relinquish some control.

Even if you’re barely keeping your head above water, delegating responsibility could be one of the most difficult moves you make as a business owner. But there’s no way around it if you want to stay in business. If you’re doing it all on your own, customers will eventually figure it out. Your service will start to suffer, and things will start to slip through the cracks. You might think you can’t afford to hire any help, or that taking time to train someone will make you fall behind. But trying to go it alone is a path to burnout.

Sure, you’ll now also have to manage employees, but if you outsource and hire wisely, you’ll find that your stress levels will plummet and you’ll have (slightly) more time on your hands. When you’re able to concentrate on the big picture instead of stressing over the details, you and your business will get a new lease on life.

WalletGenius Staff


This article was worked on by a number of the WalletGenius staff, including freelancers, full-time writers, and editors.


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