The Top 4 Reasons Your New Online Business Isn’t Making Money

The first year of entrepreneurship is, admittedly, the toughest. It’s the year where you’re really finding out how much dedication and grit you have to go up against what feels like a tidal wave of skills to learn. Unless you learned business along your life journey or perhaps in college, this may feel daunting. And this concept is actually demonstrated through The Dunning-Kruger Effect.

The Dunning-Kruger effect is a psychological concept that shows the bias of the mind on whether one believes they know more or less about a certain topic. Its overall “U” shape within a two-axes graph demonstrates that at the very beginning of your journey, you have very little knowledge (which is, at the time, unknown to you) but a grandiose feeling of confidence. When you start inside the journey, you realize how much you don’t know and how much you’ll need to learn. And at this point, your confidence level dips almost all the way down in the chart, also known as “the Valley of Despair.” Then the rest of the time, you’re facing an uphill slope to climb to a breakthrough; but as you gain knowledge, you also gain confidence.

Unfortunately, most people will reach the Valley of Despair (VoD) and give up. Or they’ll reach the VoD and then change their mind or focus on things that put them all the way back at the beginning of the graph, leading to a vicious never-ending cycle of starting at the beginning confidently, realizing the VoD, restarting at the beginning confidently, again realizing the VoD, etc.

This is the main challenge to overcome in your first year as an entrepreneur. Because when you get through the Valley of Despair, climb up the knowledge ladder, and regain your confidence along the way, you reach a point of breakthrough. And this breakthrough is where your business starts to become profitable.

While the Dunning-Kruger effect is a great tool for understanding one of the main mistakes entrepreneurs make in their first few years of business, it’s not the whole picture. There are many different reasons why you may not be profitable in business yet, but let’s look at 4 of the top reasons many new online businesses aren’t making money yet.

1. You’re not focusing on needle-moving tasks.

Whether you spend most of your time tweaking your website, rewriting your Instagram bio, or trying to figure out your branding, none of those are needle-moving tasks. While those are important factors to your brand in the long run, in your first year of business as an entrepreneur these aren’t helping you reach profits.

Spending hours tweaking your website each week isn’t going to help anything if you aren’t even getting traffic to your website in the first place. Rewriting your Instagram or Facebook bio multiple times per week (or day!) to find the perfect sentence to describe your business isn’t helpful either; it’s something that will change and evolve as your business changes and evolves, so release the perfectionism around it. And spending hours agonizing over your branding isn’t helpful if you aren’t even sure what niche you’ll stay in.

What are needle-moving tasks?

• Marketing
• Sales
• Product creation
• Lead generation

Many new entrepreneurs fear these topics and avoid them like the plague. I know I did in my first year too. The last thing I ever wanted during that time was to focus on sales. Sales seemed like a sleazy topic and I had a bad reference from movies and television showing it as a demonized topic. But once I started learning about sales, that entire perspective shifted for me.

Here’s the highlight: Sales isn’t about convincing someone to buy something they don’t need. Sales is about helping the people who need your service become aware that you can help them. They make the decision on their own. But if they never hear about your product or service, how would they ever know? And past that, how are you ever going to make money if you’re not selling?

Start taking a look into sales and marketing today. It’s something you’ll need to know the basics of (at least) in order to stay in business.

2. You’re not pivoting.

A pivot is a shift in approach or strategy. When you pivot in business, it could be as small as a strategic pivot - like switching the platform you’re on - or as big as changing the entire business idea. Either way, it’s a shift that impacts the business.

Businesses need to pivot over time to stay relevant to their audience, to continue growth, and to maximize profits. While many won’t tell you how many times they’ve pivoted, I have no problem admitting how many times I pivoted in my first year of business. Want to take a guess?

Okay, ready?

36.

Yes, really.

Pivoting is something that is natural for businesses. And the faster you make decisions in your business, the faster you get to take action and see whether or not to continue forward or to pivot again. A lot of new entrepreneurs are ashamed of pivoting, I was at first, too. But when you fail fast, you get to move on and try again.

You aren’t going to succeed in business on your first idea (well, at least it’s not likely). So don’t hesitate when you feel the pull that it’s time to change it up, take a new approach, and start again. If you’re not sure when it’s time to pivot,here’s an article from Forbes that gives you 13 signs that it’s time to pivot.

The only way you won’t succeed is if you quit altogether. Keep persevering, and you’ll reach success inevitably. Gary Vaynerchuk even talks about this idea in many of his events, videos, and content. So don’t just take it from me, take it from the other successful well-known entrepreneurs as well.

3. You’re forcing yourself to fit in a box.

Have you ever tried to force yourself to put the laundry away? Or maybe it was to do the dishes, vacuum, or go to the grocery store? How did that go for you?

Probably not very well. These things aren’t inspiring or exciting. And if it left you feeling exhausted, drained, burnt out, or unmotivated, then you know exactly how it feels to try to force yourself to do something. It’s the same feeling as forcing yourself into a box.

Now, this isn’t to be confused with picking a niche. Picking a niche is totally different. What I mean by forcing yourself to fit in a box is that you try so hard to be like the other content creators or the other businesses in your niche, that you completely lose your own identity and your own authenticity.

For example, let’s say you absolutely abhor Instagram. You don’t like creating graphics, you think it’s superficial and fake, but you see every other competitor you search has an Instagram. So you decide to do it anyway.

This is forcing yourself to fit in a box. You don’t like it and don’t want to do it, yet you’re compromising yourself because it’s “what everyone else is doing.”

But what if you’d rather write? You could write blog posts, write an eBook, or even write posts on Facebook. What if you enjoy making videos? You could choose to be on YouTube or TikTok. What if you’re more into pictures and creating graphics and linking them to a blog post? You could be on Pinterest. Short quips? Twitter. Audio? Podcast or Clubhouse. And these are just the bigger platforms; there are multiple smaller platforms that are up-and-coming that you could dive into instead.

The bottom line is: you’ll be able to attract customers anywhere online. What matters is that you enjoy the platform so that you continue with it long-term.

4. You aren’t following your desire.

Motivation is a tricky concept. And willpower can only go so far.

Contrary to popular belief, motivation actually comes after beginning a task. It’s the feeling of “Oh, I can keep doing this. I enjoy it more than I thought I would.” Whereas willpower is related to discipline. It’s what you build up to, set a determination for, and hold yourself accountable for. You build up this muscle over time when you set goals, take actionable steps, and apply your discipline to accomplish them.

Neither motivation nor willpower is reliable to lean on when you’re just starting out. And entrepreneurship is a whole new experience like nothing you’ve ever experienced before. So what are you to fall back on? Desire.

Not only is desire a deeply emotional avenue, but it also implies a reward. Whether you desire financial freedom, flexibility in work schedule, the ability to spend more time with family and friends, time to travel and experience the world, or even just to have a peaceful work environment, all of these relate to a feeling and a reward that you desire. When you remind yourself of why you’re going in this direction, it’s mentally easier to push through the tough start-up phase. It gives you a push toward perseverance.

Ask yourself why you want to have a business. Write it down, put it on a sticky note, write it on your felt board or whiteboard, wherever you feel would be best for you. Having this reason top of mind every day adds that little extra oomph you may need to keep going.

So now, take a look at your business and objectively ask yourself these questions:

1. What tasks are you focusing your time on each day? Are these tasks actually moving you closer to making money? If not, it’s time to reprioritize and shift your focus.
2. Are you allowing yourself to pivot in your business? Are you pivoting too much and not giving it a full chance? Shift depending on which side of the spectrum you’re on. If you’re not pivoting at all, it may be time. If you’re pivoting every day, look into why you’re pivoting so often. And if you’re pivoting because you’ve reached the Valley of Despair, it may be time to slow down on pivoting and shift into focusing on one idea and seeing it through.
3. Are you forcing yourself into a box because of what everyone else is doing? Or are you allowing yourself to test and find what works for you? If you’re only doing something because it’s what everyone else is doing, it may be time to shift to a new way -- a way that actually works for you.
4. Are you following your desire and reminding yourself of your why? Or do you depend on motivation and willpower to get you through the tough times? It’s not a one-size-fits-all situation. Find the balance that feels right to you.

Analyze your business, make the necessary shifts, and remember to save this post to come back to, just in case you ever feel stuck again in the future.