40 Rules for Internet Business Success

1. Build on a Strong Foundation: Know Your Why & Nurture Relationships

If you know why you want to start your business, you will be able to answer just about every other important question to shape what your business needs to look like.

Define your purpose. Starting a business requires immense effort and sacrifice, so understanding your core motivation ("Why") is crucial. Your "Why" acts as a compass, guiding critical decisions about your business structure, lifestyle goals, and priorities, especially during challenging times. It reminds you why you're putting in the long hours.

Relationships trump knowledge. Success isn't just about being the smartest; it's about building and leveraging a strong network of connections. Cultivate relationships with mentors, peers, and potential partners, as they provide invaluable wisdom, open doors to opportunities, and can help you access skills you lack. Actively seek out and nurture these connections through events, online communities, and direct outreach.

Prioritize family. While building a business demands time, never sacrifice your relationships with family. Be intentional about scheduling quality time with loved ones and ensure they are on board with your commitments. Your business should ultimately serve your life goals, not consume them at the expense of the people who matter most.

2. Choose Your Market Wisely

Selecting your target market is perhaps the most important early decision to consider when starting your business.

Market dictates success. Picking the right group of people to serve is fundamental; a great product in a shrinking or unwilling market will struggle. Focus on identifying a specific subset of a large, growing industry that has money and is already buying similar products or services. Avoid trying to be everything to everyone, as this dilutes your focus and appeal.

Understand your audience. Create a detailed avatar of your ideal customer, considering demographics, interests, problems, and online behavior. Build a product or service for a market you already know and understand, leveraging your existing knowledge or experience. This reduces rookie mistakes and helps you identify real problems to solve.

Look for existing buyers. It's easier to convince someone to switch from a competitor than to persuade someone to buy a product or service they've never considered before. If no one is doing what you plan to do, it might signal a lack of market demand, not just a unique opportunity. Find where your potential customers already congregate online.

3. Develop Products With Customers

It is important that you take the time to listen and get feedback from people in your target market before diving into product development.

Solve real problems. Don't assume you know what your customers need; talk to them first to identify their major problems, pains, or frustrations. Customers are happy to pay for solutions that save them time or money, so focus your product development on addressing these specific issues. Your ideas are valuable, but customer feedback is essential for validation.

Interview potential users. Meet with at least three people in your target market to discuss their challenges and gather input on your product ideas. Ask open-ended questions about their frustrations, current solutions, and what they would change. Use these conversations to refine your concept before investing heavily in building the final product.

Start with minimum viable. Resist the urge to build a perfect, fully-featured product before launching. Create a minimum viable product (MVP) or proof of concept that does just enough to solve a core problem and validate your idea with real users. This allows you to get feedback early, avoid building unwanted features, and iterate based on actual customer needs.

4. Be Unique, Not a Copycat

You need to find something new that not everyone else is doing to stand out from the crowd.

Find your differentiator. In a crowded online space, simply copying a successful entrepreneur's model from years ago won't work because the landscape has changed. Identify your unique selling proposition (USP) – what makes you different and why customers should choose you over competitors. Your USP should promise a specific benefit and become inseparable from your brand.

Leverage your strengths. Build a business model that aligns with your unique skills, personality, and interests. Consider using tools like StrengthsFinder to identify what you're naturally good at and focus on areas where you have an advantage. Avoid trying to replicate someone else's persona or business if it doesn't fit who you are.

Avoid competing on price. Your USP should never be solely based on being the cheapest option. Competing on price often leads to unsustainable profit margins and a race to the bottom. Instead, differentiate yourself by offering more value, better service, or unique benefits that customers are willing to pay a premium for.

5. Price for Value

Always charge your customers based on the value that they receive and not what it costs to run your company.

Value-based pricing. Determine your price points based on the economic value your product or service provides to the customer, not just your costs. If your solution saves a business significant time or money, price it as a percentage of that value. This ensures you capture a fair share of the benefit you deliver.

Know your minimums. While value is key, understand your baseline costs, including customer acquisition and product delivery. Your price must cover these expenses to be profitable, but this should be a floor, not the ceiling, for your pricing strategy. Digital products often have low delivery costs, leading to high potential margins.

Test and iterate. Your initial pricing is likely an educated guess; use split-testing during your launch to determine which price point generates the most revenue. Segment your audience and offer different prices to see how conversion rates vary. Consider recurring payment models for ongoing services to build predictable cash flow.

6. Master Your Finances Early

Remember that the IRS should always be paid first.

Separate business finances. Treat your business as a distinct financial entity from yourself from day one. Open a separate business checking account for all income and expenses to maintain clear records and understand your profitability. This simplifies bookkeeping and tax preparation significantly.

Understand tax obligations. Learn what taxes you need to pay (income, sales, unemployment, etc.) based on your business structure (sole proprietor, LLC, S-Corp) and jurisdiction. Set aside a portion of your profits (e.g., 25%) in a separate savings account for quarterly tax estimates. Failing to plan for taxes can lead to significant penalties and interest.

Use bookkeeping tools. Implement online bookkeeping software like Quickbooks Online or Xero early on to automatically track transactions and generate financial reports. This provides real-time insight into your company's performance and makes filing taxes much easier. Avoid mixing personal and business funds or relying on a shoebox of receipts.

7. Work On Your Business, Not Just In It

If you are working on a $12 an hour task which prevents you from working on a $50 an hour task, you are actually losing $38 an hour by not paying someone else to work for you.

Avoid being an employee. As the owner, your most valuable time should be spent on high-level tasks that drive growth, not performing every operational duty yourself. Focus on strategic activities like identifying vision, building teams, developing marketing plans, and analyzing key metrics. Delegate or outsource tasks that can be done more efficiently or cheaply by others.

Delegate and automate. Identify tasks you lack expertise in (like accounting or graphic design) or those that cost less to outsource than your time is worth. Use freelancers from platforms like Upwork or Fiverr for one-off projects. For repetitive tasks, hire virtual assistants or employees, or leverage automation tools like Zapier or IFTTT.

Create systems. Document standard operating procedures (SOPs) for key tasks before delegating them. This ensures consistency, streamlines training for new team members, and allows your business to run smoothly even when you're not directly involved. Building systems frees you to focus on scaling and strategic initiatives.

8. Track Key Metrics, Not Just Vanity

The metrics that you should be tracking will be actionable and tell the story of how your business is doing right now.

Measure what matters. Don't get distracted by vanity metrics like social media followers or total website traffic, which don't necessarily correlate with business health. Focus on actionable metrics that provide insight into your current performance and guide decision-making. These metrics should help you understand what's working and what needs improvement.

Key actionable metrics:

• Customer Acquisition Cost (CAC)
• Conversion Rates
• Referral Sources
• User Growth & Active Users
• Customer Lifetime Value (LTV)
• Churn Rate
• Revenue and Profit

Monitor regularly. Track your key metrics consistently (monthly or weekly) to identify trends and spot potential problems early. Just like monitoring vital signs in health, tracking business metrics allows you to address issues before they significantly impact your bottom line. Use spreadsheets or dashboard software to visualize your data.

9. Embrace Failure and Know When to Quit

The truth is that winners decide to quit things on a regular basis when they recognize that what they are doing does not work.

Failure is inevitable. Not every business idea or strategy will succeed; nearly half of new businesses fail within five years. Prepare for failure both financially (emergency fund, Plan B income) and emotionally, recognizing that setbacks are part of the entrepreneurial journey. Allow yourself time to process losses, but don't dwell on them indefinitely.

Know the difference. Distinguish between a temporary setback (a "dip" requiring perseverance) and a fundamental failure (a "dead end" where effort yields no progress). If you've worked hard for an extended period with no traction and no clear path forward, it's okay to acknowledge that the specific idea or strategy isn't working. Continuing down a failed path is insanity.

Quit and regroup. Quitting a failing venture is not giving up on entrepreneurship; it's freeing up your time and resources to pursue something with a better chance of success. Re-evaluate your market, product, and strategy based on what you learned. Use your failures as lessons to inform your next attempt.

10. Marketing is Non-Negotiable: Go Where Your Audience Is & Test

If you build it, there is no guarantee that anyone will come to your website.

Marketing is essential. Building a great product is only half the battle; you must actively market it to attract customers. Don't assume people will find you online; you need to drive traffic to your digital storefront. Start marketing early, even while developing your product, by building an email list and creating a marketing website.

Go where the people are. Identify where your target audience congregates online – specific websites, social media platforms, forums, or email lists. Focus your marketing efforts on reaching them in these locations. Avoid generic marketing advice and tailor your strategy to the specific habits and preferences of your customer avatar.

Test everything. Continuously test different marketing channels, ad copy, landing pages, and pricing to optimize your customer acquisition process. Use split-testing software to compare variations and measure which performs best. Focus on results-driven advertising where you can directly measure the cost of acquiring a customer from each source.

11. Secure Your Future: Own Your Customer List

Your future ability to generate income is based on the relationship you have with your customers and your ability to communicate with them.

Avoid platform dependency. Building your business solely on large tech platforms (Facebook, YouTube, App Stores) is risky, as these platforms can change rules or shut you down without notice. While they can be great for initial reach, they control your access to your audience. Your business's long-term viability depends on having a direct line of communication with your
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Last updated: May 5, 2025