E-business advocates often make e-business models sound like a no-hassle solution to business and financial woes. E-business can offer specific advantages, such as reaching out to a wider customer base and faster transactions. Customers frequently consult the Internet to find stores and service providers or to make purchases. Before jumping into the world of e-commerce, though, business owners also need to know the risks.

Hidden Costs

One of the biggest selling points of e-business is the low start-up costs. Domain names and web hosting incur comparatively low costs when considered against renting or buying a physical space. While some business owners choose to build a website in house, many hire a third party to build the site. The costs of a custom site can run into the thousands of dollars. Maintaining and updating the website also requires time, which can mean either hiring someone to do that work or using your own time to do so.

Data Security

Every business faces the problem of data security, and e-business maximizes these challenges. Customers enter a considerable amount of sensitive information, ranging from phone numbers to credit card numbers, on your site. As the site owner, you take responsibility for protecting that information with appropriate security measures, such as Secure Sockets Layer encryption or contracting with third parties to provide secure transaction processing. Failures in data security can lead both to fines and loss of faith on the part of your customers.

Marketing Failures

Online and offline business both rely on effective marketing to drive growth and sales. Unfortunately, the techniques and strategies for online marketing diverge radically from offline techniques. Business owners can find themselves lost in talk of pay-per-click, viral techniques and social media. Businesses new to e-business may find it necessary to hire an individual or company that specializes in online marketing, in addition to any offline marketing services they already use. Without effective online marketing to drive traffic to the website, the entire project can turn into a waste of time and financial resources.

Website Availability

Even if a business manages costs, employs top-flight data security and uses online marketing best practices, a bad web hosting service can destroy an e-business. No web host can guarantee a website will remain available 100 percent of the time. Anything from a crashed server to insufficient bandwidth causes websites to go down. Businesses with bad hosting services experience persistent website downtime. Customers who find your website unavailable on a regular basis will stop going to it. You can avoid this problem by sticking with well-known hosting providers and asking other business owners about their experiences with hosting providers.