8 Reasons Online Dating Sites Are a Business Dead End

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Aspiring entrepreneurs often contact me as an angel investor, touting their innovative idea for another online dating site. I agree that the need is there, with more than 91 million interested singles aged 19 to 45 around the world. Yet almost no one in this business makes money because it comes with a longer list of challenges than most of the other opportunities I see.

Related: This Dating App Lets Your Real Heart Choose Your Matches

So, I encourage you to view these challenges as reality checks for your own business idea – dating or otherwise – before spending all of your time and someone else’s money in vain.

1. The market is already saturated with competitors.

According to statistics, there are more than 5,000 dating sites around the world and 1,000 new ones appear each year. If you are looking at your market on Google and finding numbers like these, I suggest you look for another opportunity where the number of competitors you can find is less than 10.

2. This company suffers from the problem of starting the “Facebook model”.

Many business opportunities, like this one, require thousands or millions of existing users before new users and advertisers want to pay real money. Thus, the investment in time and money required before recovery is enormous. Facebook spent $ 150 million before a positive cash flow.

3. Barriers to entry are difficult to establish.

For a new startup, the best way to ensure its survival is to file patents or any other intellectual property to prevent future competitors from copying your success. Dating is not a highly scientific process, and the first-mover advantage has already been taken. Think of this challenge for your best idea.

4. The separation of large existing companies is low.

In reality, dating is a form of social networking, so Facebook could easily improve their services in that direction, if the pull of others in the market was evident. Google or other search engines could add image matching or another objective to capture this market. The best startups have a real differentiation.

5. The field of activity is strewn with false declarations.

Online dating scams for money or attention are a very common and growing problem, according to several Huffington Post articles. For starters, 40% of frequent users of the site are already married. If your new idea has the same potential for abuse, is it worth the risk to your reputation?

Related: John McAfee Offers Post Hack Analysis of Ashley Madison

6. The customer value proposition is difficult to quantify.

Investors and clients alike want a measurable return on cost. Value propositions such as “easier to use” or “find better partners” rarely compete with terms like “half the cost” or “50% faster”. Make sure your new innovation has a quantifiable value proposition.

7. Beware of high turnover and minimum fidelity situations.

Loyal loyal customers who become blocked by high switching costs are the dream of any investor and any smart business. Dating services quickly lose customers when they find a match – or when they can’t find a match. Look for a business opportunity with low potential for unsubscribing customers.

8. Avoid commercial areas that are not spotlessly clean.

Dating sites are marked as having historically high failure rates and a hint of commercial unrest, so they are avoided by professional investors. Others in this category would include online gambling, debt collection and work at home offers. Your new opportunity should avoid these qualms.

However, the online dating market, like all others, offers many new opportunities for entrepreneurs wishing to think outside the box. The most recent ones I have noticed include DoggiesMatch for dating with pets, OurTime for singles over 50 and SupernaturalDating for paranormal lovers. Even if it all sounds interesting, don’t ask me to invest.

I always tell entrepreneurs that even if you are starting out and not looking for investors, it is still important to apply the thinking of external investors to your new business. As a founder, you are still the biggest investors and must apply the same reality checks.

Related: 1 Billion Matches Later, Tinder Can Follow Its Growth On The Moon To Register For Sorority Girls

How well does your latest startup idea avoid the challenges described here? Your success and livelihood may well depend on it.

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