How does a web company grow to the point where it can be worth millions of dollars? Also, how come the same web company can’t turn a profit despite the millions of dollars worth of stock it owns? For years, investors have struggled to make sense of the same concept in the offline world. Since web businesses and their overheads are even smaller than traditional brick and mortar businesses, it becomes even more of a mystery how this can happen. If you’re thinking about taking your web business public and have the misconception that millions of dollars in stock will equal millions of dollars in profit, think again. Here are some common ways a business can still lose money despite having this key advantage:

Unable to cut expenses

Even in the web world you are going to have overheads. As the need for storage and transfer rates increase, you may not be prepared for the financial obligations. With an economy in recession, like the one the United States has been experiencing, an increase in revenue will not necessarily translate into an increase in profits. In tough economic times, it becomes more important than ever to control expenses and prevent them from spreading throughout all departments of your company. Pay special attention to the salaries and benefits you offer your employees.

Lost focus on visitors

When it comes to a web based business, the most important thing is the number of visitors you have to drive the success of your site. Too many companies lose sight of their website visitors when they experience the first signs of success. At the end of the day, you’ll never have the clients or advertising power you need to get ahead if you can’t find a way to engage your audience and keep them long-term. Never lose sight of the offers you offer and the content you provide. One or both are the reasons your audience keeps coming back and spreading the word to their friends.

Not meeting future goals

When it comes to a publicly traded company, you have to uphold shareholder expectations. Therefore, today’s gains may turn into tomorrow’s losses if you fail to achieve the goals you have set for yourself as a business. Insight is invaluable in the world of the stock market, and the shares you’ve currently sold can be gone in an instant if your shareholders get a bad vibe about the direction the business is headed.

Always be conservative in your spending and aggressive in your income-generating methods, and you’ll be well on your way to success.