Wednesday, April 22, 2009

Three Signs That You Need to Rethink Your Online Business Model

At some point, any online business owner needs to make changes to his business model in order to continue to make money online. This is because the market as well as the online business environment continuously evolves. If an online business owner is not able to adapt his business model to those changes, he will ultimately fail to make money online.

There are a number of indicators that you need to rethink your online business model and most of them are actually quite obvious. However, many online business owners choose to ignore them and refuse to act on those signs. To be successful, look out for the three most commonly ignored warning signs listed below. Once you notice them, reflect on how you can tweak your online business model to avoid failure.

1. Your Profit Margins are Decreasing

More often than not, online business owners choose to have a constant profit margin and only increase expenditure when revenues increase. If you find that your profit margins are slowly decreasing, try to find out why. It may be because your sales are decreasing or you are spending more than you should.

2. Your Sales Growth is Slowing Down

Continuous growth is the only thing that will allow an online business to thrive. If your sales growth is slowing down, it may be because you have saturated your market or your potential customers are turning to your competitors. It may also be because your old customers are no longer buying from you. Determine what it is that is causing your sales growth to slow down and act on it right away.

3. Your Response Rates are Dropping

If your online business model involves direct marketing or depends heavily on your email marketing campaign, be sure you track your open rate and your response rate. Once you notice that these are dropping, you should realize that you are doing something wrong. You may want to improve your copy or make your offer more enticing.

These are just the three most commonly ignored warning signs that an online business owner should rethink his business model. Once you observe them, act on them quickly so you can avoid online business failure and continuously make money online.

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