We’ve noticed that successful online entrepreneurs often experience a perspective shift once they reach a certain point in the growth of their businesses. Typically, this shift significantly and permanently alters the strategic, operational and financial aspects of their entrepreneurial endeavors.
So what is this mysterious shift?
It’s the realization that they haven’t been treating their online entrepreneurial income like an actual business.
With many of the online entrepreneurs we’ve talked to and worked with, they start their online businesses with a simple mindset: “I want to learn how to make money on the Internet.” This may sound like a “No duh!” statement, but wanting to make money on the Internet is a much different goal than “I want to start an online business.”
You might be unclear what the difference is here, but let’s compare two different business models to better help you understand.
Someone who is opening a brick and mortar business like a restaurant needs a great deal of expertise and capital to both start and manage their operations. They will have to deal with challenges that many online entrepreneurs will probably never have to face, like taking out a six-figure loan just to get the business started, filing for permits and licenses with the city, and hiring employees before they even open their doors to the public.
With a more classic business like this, there is very little room for learning as you go. From the start, the business is usually in debt, and the business owner is likely not making any income from the venture until months later. These entrepreneurs can’t afford to ignore any aspects of running their business if they want it to succeed.
Things tend to be a little different for online entrepreneurs.
Most online businesses have far fewer startup expenses or liabilities compared to our restaurant example. Often, these entrepreneurs start their businesses while still working a full- or part-time job. Then, once they begin to create some momentum in their new business, they make the transition to working on it full-time.
Being able to support your livelihood with your online business is a huge accomplishment, but getting to that point usually involves far less risk than starting a brick and mortar business because you don’t have bone-crushing debt or huge liabilities right off the bat. The only thing most online entrepreneurs tend to have at risk is their time and any re-occurring revenue they’ve managed to generate so far to support their living.
A low cost business that doesn’t involve a lot of big upfront costs is a great opportunity. That’s why starting an online business is appealing to so many people. But because of the minimal risk and low expenses, early efforts for online entrepreneurs are almost exclusively devoted to generating more revenue.
This is all fine and dandy… except for one thing:
These entrepreneurs spend so much time trying to figure our how to market and sell their services and/or products that they neglect to learn the other aspects of managing a small business.
For many online entrepreneurs, this can mean a rude awakening when they discover how complicated an online business can get once it starts making some real money (typically in the 6-figure range).
All of a sudden, hiring employees or contractors becomes necessary, filing your taxes becomes much more complicated, finding new revenue streams is necessary to help keep the business going, and tracking and utilizing data becomes critical for decision-making. It doesn’t matter if you’re an affiliate marketer or a personal/business coach. If you want your business to grow and experience any sort of longevity, you have to manage the business in its entirety, not just the part that makes the money.
No matter what size your online business is, it’s never too late to plan and prepare for the challenges ahead. By knowing what you’re working towards, you can make decisions now that will make the business easier to run in the future when it’s larger and more complex.
In part two of this article, we share how entrepreneurs who have experienced “the shift” think about their businesses differently.
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