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One of the most exciting things about an online business is the ease of starting a new venture. And one of the most disheartening statistics you can see is the rate of failure of such ventures. In this article, we will discuss why so many web-based businesses fail and if there are lessons for those who plan to start a new endeavor.

According to research, most online businesses fail due to multiple factors, rather than one big weakness. Stats show that 90% of new ventures fail within the first four months.

 One of the biggest reasons for such a staggering rate of failure is a lack of knowledge and experience in running a business. A majority of these new ventures are started by people who have no experience in running any kind of business. They wanted to try out an idea, and an internet business seemed like a great way to bring it to life quickly.

 Many new entrepreneurs have no idea about their operating costs, a time frame for breakeven, or even when to shut the shop.

 Even if you are making thousands of dollars in sale every week, if you are spending too much to acquire customers, sooner or later, you will run out of money. Plus, there are always ‘hidden’ expenses you may not know about, until too late. Buying more inventory than you need, renting a fancy place for an office or throwing too many launch parties are just some of the ways in which you can lose money easily.

 Most businesses die an early death because of cash flow issues. Even good ideas cannot sustain long without prudent financial backing.

 Another set of businesses fail because they have no clarity about their customers and market viability. There is a big need to switch mentality between offsite sales and online sales. The faster a business owner learns the difference; the higher are his chances of survival.