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Why Most Online Businesses Fail

Jason Roy

Most of our readers own or help run an online business. It’s a fantastic type of business to run.

Many online businesses can be bootstrapped for less than $50. These businesses can go on to be worth millions of dollars. Additionally, thanks to the internet, starting a business isn’t just cheap – it’s quick.

You can test out how certain changes affect conversions and revenue within hours. If you have an idea for a new feature, you can implement it almost instantly.

So why, then, do most online businesses still fail?

We’ve all heard the statistic – “9/10 businesses fail.” The reality is, that statistic is nonsense. But the majority of new businesses do fail. And in most cases, that failure stems from one main reason.

Before we go on, though, it’s important to note that failure is not a bad thing. If you want to succeed in business, you MUST embrace failure. You’ve probably heard it 100 times. Well hear it again, and this time internalize it. When you fail and get a knot in your stomach, realize this failure is going to take you to the top someday (if you let it).

Breathe deep, smile, accept failure and move on. It’s easier said than done – practice it.

“What Business do I want to Start?”

This is the question most soon-to-be business owners ask themselves. It’s probably due to the mindset that surrounds business in general. In order to be successful in business, you have to have that “great idea.” 

So most people spend their entire lives looking for that “great idea” and never find it.

Instead, they settle for the idea that sounds most interesting. For someone who loves fishing, an online business may be created that sells fishing poles.

It makes sense. If someone’s passionate about fishing, why shouldn’t they want to make a living doing what they’re passionate about?

There are two problems with this mindset, though. First I’m going to hit on that “passion” aspect.

Being passionate is a core part of the human experience. Passion will keep you going when everything else is going against you. But be very careful when you mix business and passion.

For many, a passion is something with no rules – no limits. There is no time-constraint. For the fisherman, passion comes when he can fish on his own time. 

But when you start a business with your passion, you automatically put constraints on it. Instead of fishing for fun—for passion—it’s now about work. It’s about making a living. It’s about paying the bills. It doesn’t take long for your passion to be sapped of virtually all enjoyment.

Now, this doesn’t happen to everyone, but it’s certainly a risk you should consider.

Second, businesses fail due to a lack of need. A successful business is when you start with the customer. When you release a product or service that people already want or need. For the fishing pole example, do people need another website selling fishing poles?

Is that what the market is clamoring for?

This is—hands down—the main reason businesses failed. They’re not answering a need in the market. They’re launched and sit around doing nothing. Why? Because no one needs the product or service being offered.

So when “9/10 businesses fail,” it means, “9/10 businesses were started based on what the founder WANTED to start, not what the market NEEDED.”

Does this mean successful entrepreneurs are doomed to lead passionless lives? No. Passion can be found in the steps to business success. Instead of limiting passion to fishing, the passion could come from the process of taking ANY business from point A (bootstrapping) to point B (profitable).

There’s something to be said about creating a business that solves a need in a market. When you find what people want and give it to them, the level of satisfaction experienced is significant.

Don’t want your business to fail? Become passionate about people’s needs.

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