Confessions of a Failed Web Entrepreneur
As any professional athlete, businessman, investor or coach will attest, learning from your mistakes or failures is a critical component of ensuring future success. I have been online close to 6 years now and thought, a public display of the mistakes I have made as I endeavour to become a web entrepreneur will not only help me to grow, but such public humiliation may also help new webmasters avoid many of the mistakes that I have made in the past.
Reflecting on this list and publishing it, is highly embarrassing now that I view them from a different understanding. Logic should have been enough for me to avoid most of these mistakes, but being inexperienced, and impatient is a handicap that can be difficult to overcome. So without further ado here is the mistakes that have shaped my past and led me to where I am now online.
Surveys (do I even need to elaborate?)
The first money making venture most people will come across online is paid surveys. It all seems straight forward, big companies looking for market research paying regular people (like you and me) for their information. Unfortunately in my experience the whole industry is saturated with hyperbole. Yes, you can make money but the surveys a few and far between, they take a lot of time to fill out and the compensation is less than desirable. If indeed you think you have found some surveys that pay a decent amount, it usually involves you paying money for a guide, links or participation in those surveys. Nothing screams scam more than being asked to pay something upfront so that you can than earn money. Needless to say after several weeks, countless hours and almost zero income I gave up the surveys.
Logic dictates: Companies would not want anonymous, impersonal easy to scam surveys for their market research. They would be better placed to put their money into face to face surveys and reputable research companies instead of the anonymous world of internet users.
Whilst ebooks are starting to find a niche these days within the premium content they contain, in 2004, they were pretty much repackaged articles and of the low quality kind. There was really no value to them. However I could buy resale rights to ebook packages and then sell them individually. With no stock to manage and no additional cost it is easy to see how a naive entrepreneur was quickly sucked in. I bought a couple of the ebook packages and tried to sell them in forums, on ebay and through my own ebook website. I made probably enough sales to cover my cost and a little bit of profit, but when you factor in the time spent making those sales, it was another spectacular failure.
Logic Dictates: People will only buy something of value to them. If you can not fill a need or a want with a product that meets the individuals standards you will not be able to make a sale, and in the rare cases you do make a sale, there is less chance of making a repeat sale, which is significant if looking to make long term profits. Also when selling a product or service in an over-saturated market it is critical to differentiate yourself from the competition.
OK my Ebay mistakes are due more to my incompetence then the auction giant itself, but I bet I’m not the only one who has made these mistakes. It usually always starts when experimenting with Ebay by selling the excess junk you have around the house. In my case it was old mobile phones and video games. Making a few hundred dollars out of junk you would otherwise throw out is a good feeling, so you continue to sell whatever you can find. Eventually however, you run out of your household junk and need to find more stuff to sell.
After running out of household items I began my search for more goods to sell and eventually I found out about dropshippers, companies who stock, package and post the goods for you so you can focus solely on the sales. Seemed like a perfect solution, but unfortunately it had more holes than the Green Bay Packers defense. Firstly dropshippers seem almost impossible to find. The only dropshippers with any credibility I could find charged prices which were comparable to the prices on ebay anyway. Anytime I found a reputable looking dropshipper with competitive prices I was required to pay for the privilege to sell their stock or worse for a list of contacts for dropshippers. Again this sounded like a scam and so I was left without any products to sell.
So with the dropshipper idea worse than Paris Hilton’s singing career, I tried buying in bulk and selling the products individually. I think I bought a bulk lot of DVD’s and was able to sell most of them. Unfortunately after accounting for ebay fees, the profit margins were small and I still had some leftover stock which I could not sell, so overall it was a fairly unsuccessful endeavour.
I had one more idea and it involved hitting up garage sales around the area every weekend and buying bargains which I could resell. This was actually fairly successful with most garage sales selling items way below their actual worth and for a couple of months I was making some nice profits. However getting up early every weekend was not my idea of being a web entrepreneur and keeping an eye on market values of products on ebay was becoming rather time consuming. Also I began playing sports on the weekend again and as such had to abandon this idea.
Logic Dictates: You need a reliable supplier (or supply) of a popular product, which you can get under market value. It would probably be best not to buy in bulk stock unless you have a plan to get rid of excess stock somehow. Ebay is very similar to a brick and mortar business and requires a lot of time, dedication and luck. The most important aspect is finding reliable suppliers which is something I definitely never achieved.
Pyramid type schemes
I should have been able to easily see through a pyramid scheme I know. But in effect it did actually sell a product and was more of an affiliate pyramid scheme. Essentially the scheme involved a 5 tier affiliate program where you sell .ws domain names. I probably could of been more successful if I had a website (and a list) at the time to help me sell the program, but alas I didn’t and so I tried to sell through ebay and ebooks. A few wasted weeks later I realised I would not see any success from this program and as such I cancelled it.
Logic Dictates: that pyramid schemes must have a large number of losers to have any big winners. The question to ask yourself is: are you at the pinnacle of the pyramid making all the money or are you at the base of the pyramid funding the people at the top?
This project is still alive and may yet become a success but at this stage I think we can still call it a mistake. The idea was to sell advertising space on a holiday site specific to a destination, in this case Ulladulla (my home town). You can view the site here to see the idea. Traffic was good, rankings were good but unfortunately I needed to be more proactive in generating sales. I made a few sales on the site, but I think the potential was far greater than that. Most holiday websites these days are national generic ones where you search for individual locations and I think there is definitely a market for niche sites like mine.
Logic Dictates: That small businesses (particularly in small country towns) are less inclined to use online advertising models. They are even less inclined to seek out advertising opportunities and as an advertiser I should of been far more proactive (I might still).
Pagerank Domains (Selling Llinks)
After becoming more competent is Search Engine Optimization (SEO) I became aware of the value of relevant links on high pagerank (PR) sites. I thought if I had a number of high PR sites selling 10 links each at monthly rates I could make a living off of the links alone. Buying an established site was too expensive and creating more would take far too long, however I found out that you could buy high PR domains at a decent price. I was also somewhat aware of the risk of buying domains based on PR alone. However having no patience, I jumped straight in, buying up to 10 domains with PR, setting up simple blogs and trying to sell links.
Half the sites lost there PR within a couple of months, 3 lost PR and 2 remained constant. Of the 5 remaining PR websites, 3 became niche blogs related to their domain and the other 2 became bidding directories. One of the niche sites did quite well in the search engines and I sold it for $400 with some adsense revenue as well as selling some yearly links. Selling monthly links proved far more difficult than I had envisaged and so I began tying to recuperate funds by selling yearly links. The other two niche sites made a minimal profit as well after selling them. The two bidding directories were actually quite successful. I sold quite a few links and used this revenue proof to sell the sites at a very tidy profit.
Overall though, I would estimate that I broke even with my PR domain endeavours. That being said I was in the red for a long time while I added value to the sites so that I could sell them. Selling links on the sites was far more difficult than I estimated and far less lucrative. I would probably not recommend ever buying a domain name (as opposed to registering one) as search engines and visitors really do not pay much attention to the domain.
Logic Dictates: People don’t sell something that could easily make them more money. Any domain without content (website) is going to be punished by Google as it offers nothing to its visitors. There is merely a delay between the infringement and the punishment.
Without doubt my most disappointing mistake as well as my most costly. I tried to make a quality marketplace to buy and sell websites because I felt there was a gap in the niche with no easy search options for listed websites as well as no escrow payment options. I spent $5,000 and a better part of a year getting the site developed by foreign freelancers as well as creating a strong website flipping blog and getting first page rankings for buy website and sell website.
However the site had a few bugs in it and the quality of the scripting was generally very poor. In addition Sitepoint began rolling out changes eventually leading up to Flippa (which I think was somewhat a response to my marketplace) and I had run out of funds to properly launch the website. Despite the site being of high quality and countless hours of work involved I made a few key errors that caused its eventual demise. I later found a strong adaptable auction script for $500 which could of easily been customised to suit my needs and it would of save me $4000 as well as being more secure and taking far less time to develop. An extra $4000 to promote the site may of been the difference between success and failure. Another mistake was not being more knowledgeable about my subject matter. I had bought a couple of sites before I began the project but by no means was I an expert in the field and as the project evolved with my knowledge on the subject, my cost and time similarly were affected.
Logic Dictates: Most sites can be made from available scripts that can be customised to your needs. Usually it is far cheaper and far quicker than developing a script from scratch. Also when creating a marketplace you need to be able to quickly establish yourself amongst your competition with a number of both buyers and sellers to create activity within your site, so you will need a budget that can help you achieve this result.
I could almost make my entire living off of the internet. In fact I think if I chose that path and dedicated more time to my online activities that I would be able to live comfortably (not rich) from my internet businesses. However I think I will keep my day job if only for the social interaction I enjoy which is definitely one of the worse attributes faced by many a web entrepreneur.
My next goal (amongst many) is to develop, promote and sell my own product aimed at webmasters. I have seen the amount of success many have made by selling their products through places such as clickbank and I have a few ideas of products that will fill certain needs many webmasters face.
I hope you have had a good laugh at my expense and also learnt a few things. I think I will write up a partner post in the near future something along the lines of “what I have learnt from my mistakes”, but for now all I want you to take a way from this article is that a god dose of logic and cynicism when making decisions online will often be enough for you to avoid making these types of mistakes.
Also I am looking forward to hearing some of the mistakes you guys have made. Get it off your chest, you will learn something, make others smile and feel better as a result. So if you have made a mistake (everyone) post a comment below.