Mistake #1: Buying everything for your business that comes along.

List building tools. Business automation tools. Business information and advice.

One thing you learn very quickly when you run a business online is that there’s a ton of information and tools out there for sale, all promising to help you grow your business more quickly. Some of them will even deliver on that promise.

The problem is that many people buy too many things and then never make use of them. Buy a bunch of automation tools, and you probably won’t use them effectively, especially if you don’t really understand what they’re automating or how to do it yourself. Buy too much information and you’ll either waste too much time reading rather than taking action, or you’ll forget about it and never read what you paid for.

Which leads nicely into…

Mistake #2: Spending too little on your business.

Sure, you might be starting out on a shoestring, and you’re determined to bootstrap your way up. It’s possible to grow an online business without spending a ton, but spending some money on your business is an excellent idea.

Yes, some people have done well starting out without spending a single penny, but you’re making things harder than they have to be by refusing to spend on little things such as a domain namehostingemail list management, and carefully chosen tools and information to grow your business.

Yes, much of that can be had for free. Free is not always the right choice. A free website is at the whim of the company hosting it. Managing your email list yourself is asking for trouble either when your ISP says you’re sending out too much email or you get a spam complaint from someone too lazy to unsubscribe properly.

Free productivity tools can be great, but they can vanish over time. Free information is a wonderful way to get started, but you often have to buy information products when you want to get into the serious details.

There’s a balance between mistakes one and two. Think before you spend. Don’t fall for a pretty sales letter; consider whether or not you really need what is being offered and if you’re ready to use it. Most products will still be there later if it’s not something you need immediately. You’ll save a lot if you limit purchases to what you need at the time.

Mistake #3: Fail to know what’s working and what isn’t.

It’s not always easy to know where traffic and customers are coming to your website. I’ve had my site clobbered by traffic where it wasn’t at all clear how people were learning about me, as it mostly came from people pasting my domain name into the address bar or searching on it. I had to do research to find the articles causing that. The articles mentioned my domain, but had no live links to my site, so it was difficult. Still, I was able to figure it out.

You probably won’t have that problem too often. Most times you can use the data you get from your hosting or from services such as Google Analytics to figure out what’s driving traffic to your site. From there you need enough tracking to see which traffic is converting for you or not to learn what kinds of things are working for you. You want to focus on what works and decide if the stuff that isn’t working is worth trying to improve.

Many people ignore this part. They get traffic, they earn money, they’re happy. The problem is that you don’t really know what’s effective for you, and so you don’t know where to focus your efforts. Sometimes that really slows down the growth of your business and your income.

Mistake #4: Imitating the competition.

You should absolutely know what your competition is doing, but you shouldn’t just be following in their footsteps. It’s much better to make your own path. Sure, there will be similarities to your competition, but get creative and make your business stand out. Find a way to do it better, more quickly or more cheaply. There’s always a way to stand out.

Mistake #5: Fail to prioritize.

Every day you work on your business, the first thing you do is decide what to work on. Most people will choose based on what they feel like working on at the moment. It’s one of the great parts of working for yourself, after all. It’s just not always the right choice.

The first thing you should do each day is to decide what’s most important to get done that day. It may not be your favorite part of your business, but if it needs to get done, that’s it. You need to do it because it’s not happening otherwise.

Social networking, for example, is something many people love, and it can be valuable to your online business. The problem is that many people spend too much of their day on it, and the returns aren’t what they should be for the amount of time spent. If that’s the case, you need to be more careful about how you spend your time.

Mistake #6: Starting too many projects at once.

I’m great for this mistake still. I get too many ideas, and it’s hard to keep up with them all. It’s very much a good thing that I don’t try to start all the websites I think of, because it wouldn’t work. There just isn’t that much time in the day.

Start with one website. Work on it, marketing it, tweaking it and try to make it profitable before you allow yourself a new project.

Don’t fall for the bit about if you can get one site making $1 a day, it should be easy to get 100 sites making $100 a day. It sounds great, but it’s just not true. Some will do better, some won’t, and in the meantime, you’re increasing the amount of work you have to do to keep up with all those sites. Work that little $1 a day site and learn what you need to know before you start the next one.

It’s possible to run a ton of sites, but it usually involves outsourcing and more experience than you have when you’re starting out. Save your extra ideas for when you know what you’re doing. Then, if you want to give it a try, go for it. Be prepared for the kind of work involved before you try it.

Mistake #7: Fail to test.

Just because something is working for you doesn’t mean it can’t work better. Take some time to test different parts of your sales process and you may find ways to earn more money even if traffic to your site doesn’t increase.

You don’t have to change big things to make a difference. A single word or two may be all you need to change or the color or placement of your “buy now” button. Simple things can make a big difference.

You don’t want to make big changes all at once because they can disguise which changes are most effective. If change A makes people more interested but change B discourages customers, it’s going to be really hard to tell that you should keep change A, for example.

Give any changes you take some time to work. One day is not always enough, as any difference over a short period of time can be a fluke. A week or so is enough to see what’s happening, depending on how much traffic you get and what your current conversion rate is.

Whatever mistakes you make, don’t get too down about them. It happens to all of us. It’s not the mistakes you make that are bad for your business so much as what you do about them. Failing to learn from your mistakes is the biggest mistake of all.