Even though Semify is not my first business, I still find that I fall into many of the same traps that any early-stage business owner hits. It's easy to be discouraged and lose site of the big picture. It's easy to start thinking the "grass is greener over there." And as I see so many people talking about starting an SEO services business, I thought I might outline some of my thoughts here in the hopes that it will help them not fail. First off, if you are considering a start-up SEO services business, you should watch Rand's most recently Friday Whiteboard video over at SEOMoz.com. It's a great overview of how to win and retain customers in the SEO space. But my thinking today is more about the psychology of the business owner. I'd like to dive deeper into the personal challenges you will face as you launch an SEO services website (or any other for that matter). I'd like to outline the top 5 reasons you will probably fail. And many small businesses fail - and quickly. 
* 7 out of 10 businesses are not around after 10 years.
* 25% of businesses fail in the first year. 1) It takes about two years to be profitable. Most people enter into the idea of an online business thinking that riches are waiting for them right around the corner. For some reason, the idea of working on the Internet seems to make people forget that the old truisms of business still apply. One of the biggest issues for start-up businesses is survival. As you can see from the following chart about (Source: The Illusions of Entrepreneurship: The Costly Myths That Entrepreneurs, Investors, and Policy Makers Live By by Scott A. Shane), 7 out of 10 businesses don't make it 10 years with 25% failing in the first year. Most businesses don't become profitable for two years. This is probably even more true in the SEO services space. For this reason, many businesses need solid investment to get started. They need a cushion of cash to keep the lights on while the revenues are lower than expenses. Just because you are in an online space doesn't mean that you can cheat this notion. Only the very skilled (or very lucky) come out of the gate and make money.
2) Online competition is higher than off-line. Again, there is some magical thinking that happens as people ponder an online venture. If you look around at the search output from Google you will see that SEO services is a very competitive field. Likewise, many specific product areas are extremely competitive. Yes, the Internet is still young. But also, the secret is out. If you think you can just put out a website and magically people will come find you, you are mistaken. It just doesn't work that way. The Internet opens up the market to people working out of the cabins on the top of a mountain somewhere. It opens up the market to people in far-away countries. This means more people competing for the same customers.
3) You can't be an anonymous business owner. You will see this advice given a lot, and that's because it's solid. You actually have to work extra hard with an online business to establish a human persona. In a face-to-face business, humans are in the same room and relationships develop naturally. Online, you have to figure out how to create a relationship through a computer screen. Many people starting out in the SEO services space believe they can win customer deals without putting themselves out there. I just don't think that really works. At the end of the day people buy based on trust. To establish trust, you have to be real and credible. These are hard traits to convey online. Be ready to work extra hard on this. And be ready to put yourself out there.
4) The hours are longer than working off-line. If you read surveys or discussion boards at places like Sphinn.com, you will see that people in the SEO services world work really long hours. And this is just generally true of any start-up business. If you are not prepared to put in the dedication it takes to launch a business, you should think of more lucrative ways to spend your time. Starting a business is like a marathon. It is not a sprint. You need significant endurance. You will be running for a long time to get to the "finish line" (whatever that is). You will need mental discipline and a hefty dose of organization if you want a successful start-up business. Setting goals helps. This puts tangible mile posts on your virtual marathon. For example, "I want to be on page 1 for SEO services in 12 months" would be a great goal. Your goals should be difficult. Motivation does not appear in the face of easy goals. Make sure your family knows what you are heading into as they will likely be impacted by your long hours as well.
5) You don't have a solid off-line marketing strategy. The final reason your SEO services business will fail is that you will think you can build a thriving business simply through online relationships. Perhaps you have been reading too much propaganda about how easy it is to meet people in forums and forge lucrative partnerships. I'm sure it happens, but not very often. I spend a great deal of time in forums and for the most part I see junk. You need to be ready to promote your on-line business in the same fashion you would promote an off-line business. You need to be passionate about your business. And you need to tell anyone who will listen about how great your SEO services are. I am in an interesting position having built and sold 1 business already over the last 13 years. It has been amazing to me to see how many of the challenges repeat themselves. As Chad and I have launched into the SEO services space, we've also been amazed by the competition. We feel fortunate to have had such early success. But we realize that much of that came from our off-line reputations and business contacts. And even in our position it's easy (on a particularly bad day) to say "maybe we should be selling car wax instead of SEO services."
UPDATE TO THIS POST: On 1/19/2016, we switched from Moz to A h r e f s for domain metrics in the dashboard. Please see our Moz to A h r e f s system update post.