Why Do Most Home Based Businesses Fail?
People start home based businesses every day. Some are e-businesses,some are not. Some people have amazing success and make lots of money. They live the good life, buying large houses and expensive cars, retiring early. Traveling the world. You know what I’m talking about - because it’s your dream for your home based business too. But most people (96%) fail, making no money at all, or making just enough to live on.
So why DO most home based businesses fail? What’s the missing component? Really, there are two.
#1 You Must Sell Big Ticket Items.
It will cost you - in time and/or money - to bring qualified prospects to your website. Then after they arrive, you must convert them into cash-paying customers (which means that your website must be compelling enough to make them want to buy what you have to offer). Now here’s the point: it will cost you the same investment in time and money to develop an effective website and drive traffic to it,whether a sale will earn you $20, $200, or $1,000.
Let’s say your goal for your home based business is an income of $5,000 per month. If you have a widget that sells for $20 and earns you $10 per sale, you must make 500 sales per month. If your website has a 5% conversion rate (converting visitors to buyers), you must average 10,000 qualified hits per month to your website in order to earn $5,000. A task that is not impossible, but it IS certainly quite daunting. But now let’s say you’re selling an item that sells for $1,000 and earns you $500 per sale. This means you only need to make ten sales per month! With the same 5% conversion rate, you will only need to drive two hundred qualified hits to your website! And if you did attain the 10,000 hits in the previous example, you would earn $250,000 per month! You can make money with an inexpensive item, but it’s MUCH easier to make BIG money with a big ticket item.
But isn’t it much harder to make a $1,000 sale than it is to make a $20 sale? No, not at all - IF you have a relevant product, you know how to market effectively, AND you are marketing to the correct demographic. You must develop a SYSTEM to identify relevant products, market them effectively, and reach the right demographic. Which leads us to the next missing ingredient.
#2 You must have a proven SYSTEM to market effectively.
Let’s say you find an item that you like, one that you think will sell well. You check out the company and it seems legitimate; it has the right “feel.” You discover that they even give you some marketing tools: a website, business cards, sample newspaper ads, and banner ads for internet marketing. But the amount of guidance that they give you about how to USE these tools is limited, or non-existent. So you place some newspaper ads. You hand out as many business cards as you can. Maybe put a few banner ads out there on the internet and hope for the best. You get a few hits to the website, but if people don’t buy the first time, they’re gone - forever. You try diligently for awhile, and you may even make a few sales. But in the final analysis, you discover that you barley
make enough money to cover the cost of the advertising that you did.
Have you ever been there? I have!
Then I discovered that, although they provided me with some marketing tools, they were not cutting edge tools, and I didn’t have a PROVEN SYSTEM to implement an effective campaign. A campaign is not just marketing, it is the entire PROCESS of turning suspects into prospects, then turning prospects into customers. It cannot be willy-nilly, seat-of-your-pants, what-should-I do-today type of marketing. It must be an ORGANIZED and AUTOMATED system that takes every one of your prospects through the same pre-planned marketing steps - every time.
What’s really necessary to design an effective campaign?
* Product - You must have a product that really sells, not just one that you like. And, as discussed earlier, it should be a big ticket item if you want to make any BIG money.
* Marketing - You must have MANY ways to market, ie. Google adswords, ezine articles (write for others or start your own ezine), blogging, direct mailing post cards, press releases, email lists (when someone comes to your website, you should collect their email address so that you can follow up with them. Most of your sales come from the follow up.) Some of these methods cost money, some are free and will only cost you the time to set them up. But you must use all of them. Notice that I did NOT say “make a list of your friends,” or ”pass out business cards.” Those things might make some sales, but in order to be really successful, you must reach the MASSES.
And the MOST IMPORTANT aspect of marketing; you must track and test your ads - every one of them - all the time. You must know exactly how much each ad cost you, and how many sales came from THAT ad. This will help you keep attuned to what is really happening with your advertising dollars. Delete the ones that do not bring the best RESULTS, and then test different ones, always looking for the most cost effective ways to drive traffic to your website.
* Website - First of all, your website must be written in such a way that it COMPELS your visitors to buy. (Most affiliate websites do not do this.) If it doesn’t have a high conversion rate, then everything else you’re doing is wasted effort. Next, it should collect the email addresses of your visitors so that you can follow up with them. Then, if you’re selling an expensive item, you should have a low-cost ($49?) front end product to sell first. This could be anything, but one thing that works well is an information product that will teach them how to do something, or do it better, or do it faster. It will be even more profitable if your front-end product is somehow related to your back-end big ticket product (though this is not essential). The entire website should be aimed at getting them to buy the inexpensive front-end product. Don’t even mention your other, expensive product. After they buy the front end product, you send them a weekly or monthly ezine or e-newsletter. Or better yet, send them a series of personal emails (totally automated, of course) full of more useful details about the front-end product that they just bought. You are now building relationship. Once they trust and respect you, selling them your back-end big ticket item (through your follow up emails) is almost a forgone conclusion. This is how $1,000(or $3,000) products are sold.
*Automation - The final step. Once you have the system set up, the only “work” you should be doing is to continue to improve your advertising. This will only take you a couple hours per week, at most. Once people respond to your advertising and go to your site, the entire process from that point on should be TOTALLY AUTOMATED. Collecting emails of visitors to send them a “free report”,following that up with sending them a series of emails to sell your front-end product, collecting payment for your front-end product, delivering your front-end product, sending additional follow-up emails, making the back-end big ticket sale (with your follow-up emails), delivering the back-end product… everything should be fully automated. That way, you can spend your time doing what YOU want instead of talking to prospective customers and fulfilling product orders.
Conclusion
This is the basic process to making huge sums of money online with your home based business. All of this may seem daunting. Can you do all of this yourself? Can you design a SYSTEM that will do all of this automatically? Sure you can. Anyone can. But it takes much more time, effort, and money than most people are ready or willing to invest - and that’s why so many home based businesses fail. But if you go for it, designing a system that incorporates all of these elements, you will see a significant improvement in your sales, and your bottom line! Maybe even enough that you can begin to live the good life - you know, the life that you’ve always dreamed about.
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