7 Reasons My First Business Failed by NEIL PATEL

7 Reasons My First Business Failed

by NEIL PATEL on JANUARY 25, 2009

When I was 16 years old, I decided I was going to try to find a job because I needed money. The only way I knew how to do so was by searching job boards like Monster. While I was searching Monster I noticed a small link at the bottom of their website, which was a link to their stock quote.

At first I thought Monster was just another .com company that was making a few million dollars, but after analyzing their income statement, I realized that I was wrong. The company was actually earning hundreds of millions of dollars a year.

It was at this moment that I was inspired to create my first .com company. And naturally it ended up being a job board called Advice Monkey (I no longer own AdviceMonkey.com). My reasoning behind creating a job board was that if I could make 1% of Monster’s revenue I would be a rich kid. Sadly Advice Monkey never made any money and within two years I closed it down. Here is why it failed:

Solve a unique problem

The concept behind Advice Monkey was to help people find jobs through the web. Sites like Monster, Career Builder, and Hot Jobs solved that problem years ago. So why would anyone visit my website? Honestly, there was no reason.

Make sure your company is solving a unique problem that others haven’t solved yet. You may make some money creating another me too company, but your chances are slim to none.

Now this doesn’t mean you can’t enter a saturated market. You just have to find out what problems exist in that market and figure out how to solve them.

Be scrappy

I only had a few thousands dollars when I started the company, but that didn’t stop me from getting what I wanted. I posted a few messages on some popular web forums and convinced a developer to build me a website that was similar to Monster.com.

Although I may have seemed to be a scrappy guy, I wasn’t. If I was slick, I would have been able to get the website built for FREE. I could have pitched my vision to a developer and convince him to build the website in exchange for some equity in the company.

If you don’t have much money, don’t worry; you can still start a company. You just have to be scrappy and convince others to help you out for free. You will be surprised on how many people will trade their time for equity in your company.

Don’t get too comfortable

Getting your website up and running is the easy part. After it is up, you have to continually maintain and improve it. I did very little maintaining of Advice Monkey and it didn’t change with the times. This caused visitors to visit my website once and never come back again.

The web is evolving everyday. If you don’t evolve with it, you will not survive. Sooner or later your competition is going to make the necessary changes to evolve with the times.

A good way to evolve your website is to get feedback from your visitors. Remember, it doesn’t matter what you want, it’s all about what your visitors want.

Have a marketing plan

I know this sounds dumb, but a lot of people don’t think about driving traffic to their website until they launch it. When I launched Advice Monkey, within the first few months, no more than a 1000 visitors came to the website. To solve this problem I hired a few Internet marketing firms, and most of them didn’t drive more traffic, all they did was take my money and run.

Before you launch your company, have a marketing plan. Figure out how you are going to create buzz right when you launch your company and how you are going to continually grow it. Most importantly don’t take the easy way out by paying a good Internet marketing company, do the marketing yourself. You can do this by:

1.      Optimizing your website for search engines.

2.    Creating a viral  website.

3.    Asking bloggers to blog about your website.

Simplicity is the ultimate sophistication

To compete with my competition I added all of the features they had plus more. I thought if I had more features, sooner or later people would start using Advice Monkey. The features made the site complicated and hard to use, which caused my traffic to drop.

Features can be great, but only add them to your website if they really help your visitors. There is nothing wrong with being the most simplistic and easy to use website on the web. Some of the most popular websites, such as Google, succeeded because they were the simpler solution.

Don’t be afraid of your competitors

The easiest way you can grow your website is by leveraging your competitors’ traffic and data. I leveraged other job boards by importing their job openings into my website. I also got them to add Advice Monkey on their partner’s page, which helped drive traffic.

The key with partnerships is that they have to be mutually beneficial. You want to reciprocate the same amount of value that you are receiving, if not more.

I didn’t start embracing my competitors until a year into the business. Don’t make the same mistake I did and try to partner up with as many related websites as you can from day 1.

Conclusion

Although I made a lot of mistakes with Advice Monkey, it still could have succeeded. The problem was, I didn’t learn from my mistakes. If I realized them when Advice Monkey was still around, I could have made the necessary changes to improve upon it.

Hopefully you won’t do the same.