The dawn of social media was revolutionary. Platforms like Facebook (2004), LinkedIn (2002), and Instagram (2010) redefined how businesses connected with their audience. By 2012, academia and industry alike hailed these platforms as transformative tools for business growth. Consultants and self-styled experts emerged, creating entire industries teaching small businesses to leverage this “new normal.”
But here we are at the end of 2024, and we read the headlines yet again that a social media giant has arbitrarily and without recourse simply removed a viable business run by a talented husband and wife team from its platforms. With absolute immunity.
When I speak with owners of predominantly online businesses about realising their perceived value, the promised land is a mirage of complexity and risk. Let’s look at the facts.
Fact One: Social Media Platforms Are Your Landlords
Social media platforms provide a storefront—a digital “rental space” on a busy online street. They promise tools to connect with people and groups, but did you read the fine print when you signed up?
The typical user agreement (averaging 5,500 words) gives you few legal rights. Worse still, these platforms reserve the right to:
- Close your account at their discretion.
- Avoid dispute resolution or reimbursing you for damages caused by errors.
Imagine renting a physical shop where the landlord could evict you at any moment without explanation or recourse. Would you invest in such a business? Prospective buyers of your online business think the same way.
Fact Two: There’s No Insurance for This Risk
You can insure tangible assets—vehicles, tools, even business premises. But try getting coverage against Instagram shutting down your account or Facebook altering its algorithms to your detriment. It’s impossible. This non-transferrable risk makes online businesses uniquely vulnerable. Buyers know this, and it devalues your business accordingly.
Fact Three: Uncertain Tenure in a Digital World
AI and algorithm changes have turned many platforms into unpredictable landlords. Consider these recent headlines:
- “Aussie Business Owner Slams Instagram as Account Deactivated, Costing $50,000 in Lost Bookings.”
- “When Will Facebook Stop Killing Small Businesses?”
- “Ten Influencers Destroyed by Social Media.”
Sure, high returns are possible for online businesses, but those returns come with high risk—a classic example of the risk-return trade-off. The higher the potential reward, the greater the chance of loss. Buyers are acutely aware of this trade-off, making them wary.
What Are Smart Business Owners Doing?
Mitigating risk is key. Here’s what savvy entrepreneurs focus on:
- Owning Their Online Presence: Investing in self-hosted blogs, vlogs, and professional websites that are not subject to third-party rules.
- Building Independent Client Data Systems: Swiftly capturing client data into their own CRMs rather than relying solely on social media.
- Systematising Communication: Regular, low-cost communication strategies that don’t depend entirely on volatile platforms.
Conclusion
The rules imposed by social media platforms are vague and inconsistently applied. Nobody will tell you what their algorithms want, and AI-driven changes are adding to the unpredictability.
Here’s the truth: When risks can’t be quantified, your business becomes unsellable. Protect your online business by building its value off-platform and reducing dependence on entities you can’t control.
