Many people enter the information product niche full of hope, expectation, and excitement. Often they haven’t taken the time to gather and understand the data surrounding their chosen niche or have a clear plan on how they will make a sustainable income. Some will misunderstand or ignore the relevant facts and accepted wisdom and end up working towards failure.
Here are some of the common mistakes that are made.
Not recognising reality
There’s a lot of data to gather before you should enter a niche. The size of the potential market, sustainability, competition, how to reach your prospects, accepted price points, etc. All of this can be researched before you even decide on a product or service. Once you have the data you need to be certain that your plans reflect the information you have gathered. This is the worst time to be wearing ‘rose tinted spectacles’.
Poor Business Plan
Even with all the correct information it’s possible to put together a business plan that will fail to deliver the profit you’re hoping for. Many people starting out online concentrate on the revenue they could produce and fail to offset the costs of delivering a product or service. These costs are much lower online compared to running a brick and mortar business, but it does not mean they can be ignored. See my previous post Is your online business model profitable?
Unwilling to commit resources
Many newbies fail to realise the resources they will need to get their first product or service up and running. Even businesses online need some start-up capital and the quality of some of the basics does depend on how much you are willing to spend. Website hosting is an area where they may be tempted to go cheap, and subsequently find that their site occasionally goes missing, and that technical support is almost non-existent. As well as financial capital there’s also the investment of time and effort. The have-it-now, get rich quick approach rarely works in business, even online.
Shiny object syndrome
Conversely, many people overinvest when starting online. They probably don’t have a focused business plan and start hopping from opportunity to opportunity, throwing money needlessly as they go. With a realistic understanding of the data and a good business plan it will be possible to predict how revenue will grow in the early days. This will indicate the size of your budget and, together with a focused business plan, should prevent any temptation to invest in shiny objects.
Creating what is not wanted
Too many start with an idea for a product or service they believe their niche will crave yet they fail to do any market research. Consequently they throw themselves and their resources into producing something that the niche will completely ignore. As this is likely to be their first attempt at product creation it will probably have taken a substantial amount of time to get the product ready for launch. Time that could have been spent more constructively if only they had evaluated the product first.
Spending before receiving
Cashflow can be a problem for an online business just as it can be for a brick and mortar one. With all the stories of online entrepreneurs becoming rich quick, it’s easy to be over optimistic about the sales your start-up will achieve. This is where you need to control your budget, continually revise your expected levels of revenue, not forget the effect of commissions if you pay any, and avoid spending money that has not yet entered your business account.
Poor customer service
Neglecting customer service is another beginners mistake. If your product or service hasn’t pleased the customer the worst thing you can do is offer a poor level of customer care. It costs a lot more to keep acquiring new customers than to retain ones you already have. Underinvesting in customer service will have consequences for the long-term future of your business.
The above are some of the most common mistakes made by people hoping to make money with information products. There are plenty of other areas where mistakes can be made. The quality of the product, how well it is marketed, and the use of upsells, downsells and cross sells will all have an impact on the business.