My online business has failed

online business failure

One of my online businesses has failed. It has died a slow horrible death and I was too stubborn to recognize the signs that it was time to shut things down. As a result, I’ve wasted a considerable amount of time, resources, energy and money trying to keep a business running that should have winded down at the beginning of the year.

I wanted to quickly document this story for a few reasons. One, I hear that unburdening your soul is therapeutic and when it comes to this whole experience, I know I am in need of some kind of therapy. Secondly, I want to share the lessons that I’ve learned from this failure. Lastly, I think its important that I acknowledge the mistakes and failures experienced throughout this process so I don’t repeat them. I have the odd habit of taking longer to learn from previous mistakes than I really should.

So here’s the abbreviated story.

The Beginning

In 2012 I started a service business based on a customer request. I am not going to go into the particulars of the business as that’s really not important and I’m currently in negotiations to sell off a few scripts and contracts to another business.

I was doing some Internet marketing and promotion for a client when they asked me “Hey Chris. Do you know how to do [insert mystery service here]”. I said sure, not a problem. I can handle it for you. In reality I had no clue how to do it but adopted the old “fake it until you make it” mentality.

I proceeded to learn everything I could over the next few days and set out on the task. I was pleasantly surprised that I was able to get things completed quickly, enjoyed the process and provided the exact results that the client was looking for. I didn’t charge him for it but encouraged him to get in touch if he needed that service again.

A few days later, he decided to order another round. And another. And another. Soon I went from spending an hour or two a week to an hour or two a day doing this service for the customer. When I asked him if he knew anyone else who might need this same service completed, he referred several people to me. Within a week of those referrals, I had three new customers.

Scaling the business

In my mind this was the beginning of a new business with huge potential. The beautiful part about it was that I felt it was totally scalable. I created some “Standard Operating Procedures” and screencasts using Screen-Cast-O-Matic so I could being locating and training some freelancers to do a good portion of the legwork. This was done mostly via UpWork (formerly oDesk) and helped me learn a fantastic process for outsourcing work and profiting from the margin between what was paid to the contractor and what was billed to the client.

A couple more clients were added and I started the development process for some custom scripts and tools for my freelancers to use. I also created a custom reporting script that would allow me to track the direct results that we achieved for the customer. Things were proceeding swimmingly and I was able to focus on landing new clients while my freelancers did their thing.

My First Saas (Software as a Service) app

The other thing I focused on was a custom solution that I thought was going to be an industry standard. I had been infatuated with the idea of creating a SaaS (Software as a Service) application that would allow me to earn a monthly recurring income. This service wasn’t going to be cheap either. A basic monthly subscription model would be in the $199 / month area with high end clients spending $999. The benefits of this tool were immense in my mind and thought it would be an easy sell.

Everything I was making was going back to freelance coders who were building this monster for me. I had visions of 2015 being the year that I finally did something “big” in the world of online business.

Boy, was I wrong.

The first warning signs

The warning signs started coming late 2014. Some customers started either spending less for our services or “pausing” it entirely. There were a number of reasons they relayed to me including a slow Christmas period, rethinking their overall marketing strategy (as our service fell loosely in this category) or just didn’t have time to review the previous results.

I didn’t immediately panic but instead decided to wait for things to turn around. Early 2015 the trend continued with my first customer coming right out and saying they were canceling the contract altogether. We had done a great job but it was just not a service they wanted to continue using.

The end of April of 2015, my biggest customer cut their spending in half. This represented a huge portion of my own income so I went into full blown panic mode. I started talking to other similar companies trying to land new customers. While I was able to sign a few smaller clients, they only lasted with us for a month or two. My freelance team started shrinking as the revenue stopped flowing in and I was left doing a greater percentage of the day to day work until finally I was the only one getting things done.

In the meantime I also attempted to market my SaaS app, which I thought would be a game changer. After spending a considerable amount of money developing it, I was unable to sign a single customer after approximately 250 hours of sales pitches, tours, beta testing, countless emails and elbow grease.

Taking some time off from the business to recharge

With no signs of life, I took a good portion of the summer off as this was traditionally a slow period for this service. I traveled to Nashville with my wife and friends. I hit my favorite local country music festival. I spent time with the kids. I went camping. I did everything but work on the business or earn much of an income.

September 2015 hits and I am completely recharged, ready to turn this puppy around. I spent two months grinding it out, trying to find new clients and introducing my SaaS to the target audience. While there were some small wins that I thought would snowball into getting things rolling again, it never materialized.

A couple of weeks ago I officially decided to shut things down as it was finally clear to me that it was over.

The end and lessons learned

After having some time to reflect, I now see that this should have happened at the beginning of the year. Hindsight’s 20/20, right? I’ve looked closely at all the warning signs that tried to show me this throughout the process and analyzed what went wrong. These are the key points that I’ve come to acknowledge.

I didn’t immediately start seeking new customers when people started cutting budgets or cancelling

When I started receiving e-mails and phone calls from customers starting to slow down their spending on our service, my reaction was to ride it out thinking that they’d come back in the New Year. This was a big mistake because I had come to the conclusion that our service was essential to their business and there was no way they wouldn’t be back. What I should have done is immediately gone into full-blown customer acquisition mode in an attempt to replace those lost dollars.

One of two things would have happened;

  1. I would have landed some new customers that would have extended the life of the business.
  2. If the new customers didn’t come, it would have been an earlier sign that the viability of the business was in question.

Ignoring all the “No’s”

When I did start focusing full-time on acquiring new customers, I was met with a resounding “No”. I would explain the benefits of the service to potential customers but I was unable to convince them this was something they absolutely needed. I didn’t just receive a handful of “No thanks” responses. There ended up being hundreds of them.

Yet I continued with my sales and marketing efforts convinced that I could turn things around instead of recognizing that the business model overall was flawed.

Operating a business without clear and measurable benefits to the customer

The service that we provided is important and I still believe that wholeheartedly. If I was independently wealthy, I would provide this service for free to small online businesses because I believe it helps in their sales and conversions.

The problem as a business model is there is absolutely no way to measure how the service we performed translated into something tangible for the client. Did our efforts help them in gaining new customers? Probably. Did our products and services help our clients make more money? We’re sure of it! Can we prove this with a direct, measurable metric, statistic or result. Unfortunately not.

This ended up being the ultimate downfall of the business in my mind and the reason why I couldn’t gain new customers. If there was anyway of tying a direct measurable result to our efforts, I think the business would still be going strong. If I could show new, potential clients a direct result in sales conversions or new customer acquisition, I could have even changed our billing model to a pay-per-performance result and still have a nice, tidy and profitable business.

The problem was this just wasn’t possible.

Creating a “Solution In Need Of A Problem”

I funneled a great deal of time and resources into my monster SaaS app that failed miserable. I re-invested most of the income from the business. I maxed out credit cards. I learned how to do some basic coding myself in the programming language so I could change a few features when the money ran out.

Despite everything I had read about validating products, creating minimal viable products and pre-selling to customers, I ignored the advice of those in the know to forge my own path. I knew this service was going to be a success and would be laughing all the way to the bank.

And I was absolutely wrong. Completely wrong.

During the initial stages of project planning, I had a vision for the product and set out to create it. I should have marked things up, created wire frames, mocked up some designs and showed it to customers to see if they would use it.

I should have taken it to current customers to see what they thought, if it was something they would use. If not, what features would they need to see in order to convince them to subscribe.

I should have asked for money up front to validate the idea. If people were willing to pay for it in advance, it could have helped fund the development using client’s money. I would also have an invested advisory panel directing what features needed to be included in the minimal viable product.

I shouldn’t have tried to create the entire SaaS app before launching. I should have focused on the bare minimum required to gain that first customer and added features from there.

Lastly, I should have read the writing on the wall much sooner than I did.

In various podcasts I have heard the term a “solution in need of a problem.” This describes the process of spending time, money and effort building something that nobody really wants. When you launch it, you are greeted with a resounding silence of zero customers.

That is what I had created and was the final nail in the coffin for the business.


I’ve heard that failure is a good thing and its necessary to fail before you can succeed. I’m taking that and the lessons I’ve learned from this experience to heart. I’m back to the drawing board and coming up with ideas for some new projects that I am excited about.

I can guarantee you this though. It will not be a business that provides a service with no definitive way of measuring the benefits for its customers. And it definitely will not include a big, expensive SaaS app that nobody wants to buy.

Leave a Reply

Your email address will not be published. Required fields are marked *