Internet business failures are growing exponentially. The 80/20 Rule is alive and well. In fact, the Rule is probably more like 90/10. Only 10 percent of those who register with a business and become an associate or partner at any given stage will be active a year hence.



The reasons are not too difficult to find and the main ones are listed below. These are not necessarily mutually exclusive but they are quite comprehensive. In order that the reader does not become the next victim, a list of considerations that he/she should review is also provided. Starting an Internet business is a serious undertaking although the investment may not appear large. Like any new business it should not be entered into lightly. The consequences if negative could be enormous.

Problem Areas

These are some of the main reasons why Internet businesses fail.

1.INCOMPATIBILITY between the new associate and the business. Consider the nature of the work, the commitment, the product, other associates. Some people just consider the financial aspects.

2.FINANCES. Inadequate startup funds; inadequate cash flow, unexpected expenses

3.FALSE ADVERTISING BY COMPANY. Exaggerated claims of financial rewards; Failure to provide full picture of benefits and expenses.

4.KNOWLEDGE, SKILLS AND EMOTIONS. Consider the following: the associate’s over-optimism, gullibility, ignorance, immaturity, inexperience, bad decision-making ability, inappropriate or lack of knowledge and skills. These all limit chances of success.

5.INADEQUATE RESEARCH by the associate of the company, its claims, its critiques, and other company associates.

6.NO NEEDS ASSESSMENT BY THE NEW ASSOCIATE. i.e. no game plan. no or little thought given to the kind of business in question. The sole objective may be to "make a lot of money", not, “will I be successful?" and “will I enjoy the work?".

People seeking a business have to proceed in a methodical and systematic manner, unemotionally and rationally. They need to set out their requirements; a shopping list of what they want, what they need, and have an in depth look at what the business under scrutiny has to offer. The reader requires two Excel spreadsheets or Word table to tabulate his/her results,

1.In the first spreadsheet he/she should consolidate the fields (i.e. variables to consider). Place fields on the vertical plain. Horizontally write the answers;

2.In the second spreadsheet, the reader would have the same vertical fields. On the horizontal he/she would have all the companies under consideration. In each block use truncated text and a numeric score on a 1-10 scale where "1" is poor or inadequate and "10" is excellent" to score yourself.

Provide plenty of spreadsheet room as this should be a long document if the task is to be done correctly.

·Personal Characteristics. o List personal strengths? (e.g. good communicator, good sense of humor, gregarious, unemotional o List personal weaknesses (e.g. short tempered, lazy, untidy, disorganized, unfriendly)

·Professional Characteristics. o List professional strengths? (e.g. team player, good public speaker, organized, stress proof o List professional weaknesses? (e.g. not a team player, dislike other people, lazy, disorganized)

·Personal Commitment, Interest, Knowledge and Skills in and for this particular business. What commitment is expected of the new associate? and can he/she meet them? o How much active interest is necessary? o Is special knowledge and skills required?

·Personal Compatibility. o Is the new associate going to get on with the owners, other associates? o Is he/she interested in the product? o Is he/she going to enjoy the new activities, responsibilities which could become a new life style? Is he/she going to get family member cooperation and support?

·Finances. o What start-up money is available (Likely it will to be at least $1000)? o What monthly expenses are going to be need (e.g. license fees, long-distance calls, marketing expenses, buying leads, advertisement? o Money for further "hidden" buy-in/up-sell essentials o Setting up an office, buying/upgrading equipment, consultant fees o When is break-even likely to occur? Can expenses be carried until revenue starts coming in? When will revenue start arriving?

·Time. o How many hours will it take to set up the business? o How many hours can the associate comfortably spend a day on the business on an ongoing basis? o How many hours does the company say an associate needs to spend? Are they compatible? o Will the associate need to attend conferences away from home? Who will pay? o List other personal, professional and social commitments and see whether there is the time to undertake this new commitment properly.

·The Company. The associate may very well have his/her personal act together, but has the company been closely scrutinized very closely. The vast majority of Internet companies have at least one major fatal flaw and the associate is likely to come out the loser if he/she jois up with them. Exaggeration at all levels is the biggest problem. There is big-time B.S. with many of these companies and due diligence must be done to winkle these out by researching the company. Of course there are companies with fatal flaws, with whom an associate still can make a lot of money. But the Golden Rule: "caveat emptor" - beware the buyer- applies here.

Consider the following carefully. o Who are the owners? What is their background? What other businesses do they have or did they have? How successful were they? Can you get arms length testimonials on the owners? o How long has this company been in business? What is its financial situation? o How many people have already joined? How many are still active? o What information is available about the other people who join up? o Request a random list of people who have joined so they can be talked to o Search the Internet thoroughly for comments on the company (e.g. blogs, directories, chat sites) o Is there a "money back" policy? Is it unconditional? o What is the product(s)? Is it for real or irrelevant? Is it trendy and likely to fall out of favor with buyers? o How do the owners describe the company e.g. MLM, Network Marketing? o Ask to see the companies policies and procedures manual, and its strategic plan if it has one. o Who would the associate report to if there are questions? o What kind of training will the company provide? Who will pay for it?

Too often, people enter into a new Internet business in a euphoric, heightened emotional state of mind. Regardless of the pressure to join, the associate needs plenty of time to consider the pros and cons. It is better not to join than to be pressured into joining the wrong company. The associate must not listen to all the nonsense about not having any courage or not being able to take risks. This is sales hype which must treat with the contempt it deserves. If the associate makes a mistake no one will bail him/her out.

Remember the old Roman Law maxim: caveat emptor (beware the buyer)

Article written by Michael Brooke, Internet business owner, retired university administrator who can be found on http://www.ehomebiz.org