5 Online Business NOT to start in 2012

We have read so many online business ideas – but did you know that not all online business ideas – and online money making opportunities – are still good ones to start this year 2012? That’s right – the main driving factor is Google Panda and Penguin updates. Some online businesses fit Google’s category as spammer and low-quality; you might want to avoid such businesses at all cost.

To help you out in getting you started on the right footing, here are 5 online business ideas you should avoid at all cost:

1. Web directories

If you are visiting webmaster forums, such as forums.DigitalPoint.com, you will notice that web directories are still being established and listed for sale. How so? It’s simple: Because a web directory is easy to start: Just purchase a script, post a forum thread announcing your new directory and voila – link submissions are flocking in.

The problem is, not all web directories are created the same: In fact, I’d say that 90% of web directories on WWW today is low quality and are link farms: Some are auto-approving link submissions, meaning that the directories will list any kind of URLs you can think of: from baby products to adult-only products and so on. Some are manual approving, but the editorial standards are simply weak.

The end results? Google think such directories pollute the web and should be banished from the search results; reportedly, there are many directories that are deindexed from Google – and there will be more to come in the future Google algorithm updates.

Unless you have the money to invest in building a great web directory that is niche and actually will benefit visitors, not link owners, you should not start a directory in the first place.

2. Blog network

Building blogs – and strategically interlink one to another – is known as a good SEO technique to get them rank better on search engines. Getting ranked better means more money coming into the Webmasters’ pocket.

However, Google now thwarts such network and penalize the blogs in the network. So, unless you can build a blog network that is consisting of independent blogs that are unrelated from one to another, you should not build one.

3. Auto blogs

Auto blogs mean you update your blogs automatically with content from the blogosphere – legally or ilelgally. This means that the blogs will contain copies of content from other blogs. Duplicate content has always a big issue to Google, but with the Panda update, the importance is escalated.

Auto blogs are deemed as dead today, and if there’s any auto blog owners claiming they are still making money all and well today, I think they won’t in the near future – if they want to play in Google’s playground.

4. Cheap SEO/link building services

I used to use these kind of services: Get 1,000’s of backlink for $10. Submit to 5,000 directories for $20. Submit comments to 1,000 “dofollow” blogs for $20. Submit articles to 10,000 article directories for $20; and so on… I even once started such services!

Now, those types of cheap link building services will now resulting in low quality backlinks pointing to your website. With the Panda and Penguin update, you can get penalized by over-optimization, having those sites pointing to your website with your main keywords. Not only that, the sites pointing to your website are almost always questionable in nature.

You don’t want to make others fail just for you to make money, right? If so, don’t start this kind of service, ever. Period.

5. Social bookmarking sites

Building yet another Digg, BizSugar, DesignFloat, and such is pretty attractive: You can have users to submit and vote for stories – you, on the other hand, just need to promote and start making money via ads; pretty simple and lucrative, right?

No. You should consider and reconsider your options before you start yet another social bookmarking site. You know what happened to Digg? Once one of the most popular social sites on WWW, it has been sold for a measly $500,000. Tip’d, a social bookmarking site in business finance niche, closed down due to high operational costs.

That’s right – running a social bookmarking sites seem like no work on your side – just like directories, you only need to install a good script like Pligg, do some customization, and there you go. However, it’s pretty daunting task managing such sites: You need to heavily moderate things as stories are user submitted. Your site might get good traffic, but income from ads per visitor is darn low. Ultimately, as your site is heavily visited, you need more resources to run your site, meaning you need more hosting power, which lead to expensive monthly bills. To say the least, it’s not worth building.

Takeaway

You see, the big guys enter the online business market usually with strong financing (via venture capitals, crowdfunding, bank loans, etc…) That’s why they can get things up and running without worrying too much on breaking even (income equals or greater than expenses.)

For the rest of us who bootstrap, we need to pursue other online business opportunities. Yes, there are opportunities requiring you minimal investment, but again, don’t trap yourself into believing that online business is easy.

When an opportunity is easy to turn into a business and requiring you minimal investment, then you must be ready to compete with millions others. So, unless you can offer different things, you’ll end up building a so-so website nobody want to visit or put their money in.

I hope this blog post can help you get started better. Good luck in discovering lucrative online business opportunities!

Image by Michael Law