Every year thousands of new businesses are launched on the Internet by people seeking to earn a living by working from home. Lured by the promises of huge incomes, these well intentioned people spend a great deal of both time and money to design a website, stock inventory and then offer their products or services to the general public. Unfortunately, the majority of these Internet businesses will ultimately fail within only a year or two. They do not fail because the people are not seeking products and services. They fail because of some very basic retail business management mistakes. Here are some of the major reasons why Home Based Internet businesses fail.

Not Understanding How The Internet Works

As opposed to opening a traditional business storefront or office, opening an Internet business requires a great deal of computer knowledge to realize any chance of survival. Most people do not understand the importance of terms like search engine optimization, automated systems, traffic generation and the many other components that are necessary for making a website stand out in a virtual world. The good news is that the Internet has made it easy for just about anyone to open an online business. The bad news is that a lot of people seeking to work from home are considering opening an online business. Without understanding how the Internet works and what it takes to drive traffic to a website, an Internet business will fail because it quickly becomes lost in a very big virtual sea of competition.

Not Establishing A Niche Market

Even when many Internet businesses realize a high amount of traffic, they ultimately fail because of little or no sales. This is usually due to the fact that what they are offering is no different than what is being offered by thousands of other online businesses or being sold in traditional neighborhood stores. The only way to survive on the Internet is by establishing a specific market niche. A niche is a slice of a larger market share that offers something unique enough that potential buyers will be attracted to it. It is one thing to sell toys, but it is an entirely different thing to only sell toys designed for autistic children. While the overall market share may be smaller in a niche market it holds much more potential for actual sales. Without establishing a market niche, any business will have a difficult struggle to survive.

No Business Plan Or Strategies

One of the basic lessons taught in business management schools is the importance of developing solid plans and strategies before launching any type of business. Without them there are no road maps for keeping a business owner on the path of success. But because of the relative ease of opening an Internet business, many people overlook the importance of writing down sales goals, marketing ideas, budgets, projections and the strategies for implementing these components. They simply think that all they need to do is open their business and then sit back and watch the money roll in. In the real world, that is not going to happen. Operating any type of business has always been a tough, competitive endeavor and the same holds true for conducting business over the Internet. Unless regular goals and strategies are developed, any Internet business is somewhere along the line going to be overwhelmed by the competition.

No Targeted Advertising

There is a false perception held by too many people that an Internet business requires less advertising to potential customers than traditional businesses. In fact, just the opposite is true. There is simply too much competition online to make it realistic that a business will be discovered simply because it has a registered domain name. And because of of the huge number of websites people can now go to, advertising on the Internet requires a very targeted approach to reach the customers most likely to purchase a particular product or service. It makes no sense to place ads on a teen website for a product or service most likely to be purchased by senior citizens. Attempting to run an Internet business without targeted advertising is nothing more than hoping that customers will accidentally stumble across a website while shopping in a virtual mall that spans the entire globe.

A Poorly Designed Website

The entire purpose of starting an Internet business is to make sales, yet too many websites are so poorly designed that they actually drive customers away. There is very little useful content, poor pictures of the products being offered or they are difficult to navigate. A poorly designed Internet business website is like a traditional store with crowded isles that havent been cleaned in months. Customers may walk through the door, but the majority will quickly turn around and leave.