Every corner you turn on the internet, you will bump into an internet marketer telling you that 95% of the small online businesses fail within 5 years of startup. And only their products or services will put you in the 5% elite club.

I have good news for you. My research suggests that the small business failure rate is over exaggerated and it's more like 50%-70%.

Whew, isn't that a relief?

But, wait! 2 failures in every 3 internet startups is still no laughing matter. If you are careless, your online small business may well be the next in line to fail.

So, what causes an online business to fail? Is it the design of the industry or simply the human nature to fail in business? Here are a few common reasons of online small business failure according to entrepreneurial experts.

Many failed online businesses thought that they could make money out of the internet without shelling out a single cent. They under estimate the financial resources needed to tie them over till their online businesses are self-sufficient.

Certainly you don't need much to start and maintain a small business online. You can enjoy the same services and products an offline business needs at a fraction of the costs, thanks to the convenience and lower costs afforded by the internet. Yet the fact remains that a business startup requires capital, whether big or small, offline or online.

For a business to succeed, you have to incur costs not only in production, but also in the constant marketing and promotions to bring in sales. Unless your business can generate enough profits to sustain itself, all the expenditures must come from your pocket. That means you must have a pool of ready funds until you establish your market and the sales pick up.

New small online entrepreneurs normally get their first sales from their warm market, ie. the people whom they already know. They believe that with the patronage of their families, friends and associates, their businesses will thrive. This is a fatal assumption.

Simply ask yourself these questions: How big is your circle of acquaintance? How long will they patronize you out of support? Once you honestly answer the questions, you can clearly see the need to expand beyond the warm market into the cold market.

There are hundreds of thousands of times more strangers than the friends you have. They should be the ones making up the majority of the business incomes, not your friends. Forget about your mother's advice not to talk to strangers. Start using your business skills to reach out to the vast cold market.

Just because you can easily start an online business doesn't mean you have the skills and know-how to run it successfully. Like any other trade, you have to learn the ropes to succeed. A lot of businesses fail simply because their owners lack the necessary knowledge.

Fortunately, acquiring the necessary business knowledge is none too difficult nowadays. It is made easier with the proliferation of self-help books in management and entrepreneurship. All you need to learn the business knowledge and skills is a little investment in time and money.

Business skills are no rocket science. They are things you already do in daily life, such as math skills to assess profitability, and relationship skills to serve customers. You just need to know exactly what skills are needed and how to enhance them. Then take actions to put them into proper use in an online business environment.

Have you heard the old adage: People don't plan to fail, they just fail to plan? Planning certainly helps give your online business a direction to succeed. But a plan not executed will get your business nowhere.

A business has no feet and won't run on its own. It is merely a vehicle, waiting for you to drive it to the destination. It is up to you to step on the accelerator to build up the momentum and get everything rolling. Your discipline and will power fuel the business by turning plan into action.

To succeed as a business, your efforts alone is not enough. Your staff must be motivated too. It is no good having staff who just sit pretty instead of helping to run the business. You have to prep the staff up when they get sluggish. If they still won't budge, you have all the right to replace them with someone on-the-go.

The reasons why two-third of online small businesses fail are no mystery. Lack of financial resources, reliance on warm market, poor business skills and know-how, and failure to act are a few common ones. With these factors of failure identified you can then easily avoid them. Take the necessary steps to overcome them and you are well on your way to success with your small online business.

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