What can your online business learn from the credit crunch?

Bankers are not sleeping easily these days. First, the “subprime” problems emerged in the USA, then French banks took a cautious approach, before the debacle of Northern Rock hit Britain. Clearly, all around the world banking is hitting troubled waters.

Even though we hear lots of technical terms like “subprime” or “the interbank rate”, what’s going on is simple. The banks were greedy. They lent to people who were not in the best position to pay them back and they also lent more money than they actually had in their coffers.

This is just plain daft – and is dead against the advice you’d be given by any of these bank’s business managers. “Don’t borrow more than you can afford,” they’d tell us and “Don’t look for quick buck, plan for the long term.” Well perhaps we wouldn’t be in the financial pickle we are now in if the banks had swallowed some of their own advice.

However, the credit crunch as it has become known provides some useful lessons for anyone running their business online. It shows clearly that being greedy and being tempted by all those “make a million before tea-time” adverts is likely to end up in trouble. Plan, instead, with a long-term view and your online business is much more likely to be financially viable.

However, nine out of every ten online businesses fail within the first three months. Indeed, I’ve spoken with several people who have set up an online business, only to discover a few months later that it hasn’t worked for them. Why? Because in every case they cobbled together a web site and looked at it as a short term fix to cash flow problems.

This is just the same as Northern Rock. They could not afford to lend as much as they did, so they borrowed it from other banks. This is focusing on the short term cash flow, rather than the long term; clearly that’s not a sustainable business model in the world of banking.

The same is true for online business; by focusing on short term, cash goals your business is less likely to succeed than one that looks at the five years ahead. Long term business planning for most Internet businesses is still but a dream. It shouldn’t be.

Like this article?

Share on twitter
Share on Twitter
Share on linkedin
Share on Linkdin
Share on facebook
Share on Facebook
Share on email
Share via email

Other posts that might be of interest

man searching
Internet Marketing Articles

Can you find what you are looking for?

If you want to increase your sales, your business needs to make it easy to find everything. That means reviewing how your web search works. It suggests you might need to reconsider the navigation structure of your website. It might even mean you need to distribute your content away from your site and have it on a variety of different platforms.

Read More »
Empty football stadium with no supporters
Internet Psychology

How well supported are you at work?

Yesterday I was transported back in time. I haven’t discovered time travel. Instead, my mind quickly flipped back to a meeting about three years ago that involved the same group of people. I noticed how

Read More »
Man using digital technology
Internet Psychology

Are you obsessed with digital?

Being obsessed with digital could take you away from old-school technologies that do the job better. Yet, avoiding technological change can cost your business dearly. How can you get the balance right?

Read More »