So you want to start an online business. Maybe you lost your job, want extra income or aspire to join the ranks of web entrepreneurs who are getting rich. Maybe the image of Yahoo workers getting called back to their cubicles after working from home has you determined to chart your own course and be your own boss.

The opportunities for online business are seemingly unlimited. Recent studies indicate that 78 percent of the U.S. population is now online, and virtually all affluent Americans use the Internet. But creating a successful web-based business requires more than a dream, an idea or wishful thinking. How you market yourself online is key.

Say you’ve developed a product or service and have signed up for all the social media sites. But you’re struggling to convert all those fans, friends, followers and subscribers to dedicated customers. Though you’re spending a lot of time and energy on email and social marketing, your sales are flat. You wonder if marketing via social media is just a lot of hype. Is anyone actually reading your posts? Doubt creeps in, and you wonder if you should have started a brick-and-mortar small business or, like those Yahoo workers, gone back to a cubicle.

Don't despair! I teach small business owners to build what I call “audience businesses.” These can be online or offline, but they all have a strong and dedicated following. Recently, I had the privilege of coaching William Cowie, a Denver personal finance expert who has started several companies and worked more than 25 years as a CEO and CFO. We talked about a few pitfalls of building a business online and how to avoid them. They may surprise you!

Pitfall No. 1: Signing up for the latest social media site

Instead of spreading yourself thin across every site you can find, focus all your online communications on one hub: your blog. Think of your blog as your office. It's where you source all your business communications. Many online business owners spend a lot of time on Facebook, Twitter (and recently sites like Pinterest and Instagram) but completely neglect to build a blog. Your blog is the place where customers and clients come to get to know you so they can figure out if they want to do business with you. You can see a great example of this on Cowie's blog.

Pitfall No. 2: Avoiding the competition

Online communities spread like wildfire. Instead of avoiding your competition, like many of us were taught or learned in business school, seek out others in your space and comment on their blogs. In Cowie's case, I suggested he introduce himself to his industry's leaders and ask to write guest posts on their blogs. Soon he was recognized as a leader in the industry because of the company he was keeping. You can do the same and keep opportunities and new customers flowing your way.

Pitfall No. 3: Keeping it too professional

There's the old saying: "In business, keep it professional and leave the personal at home." Cowie learned that was a mistake online. In the world of online marketing, getting a potential client to give you her email addresses is the equivalent of a handshake—think of it as a digital handshake! To “shake more hands,” I coached Cowie to share more about his personal life so potential online customers could get to know him and relate to him. He did a great job in this interview. When you share a funny story about your weekend or post insights you're having that can educate others, people are more likely to want to shake your hand. Just like when someone visits your “real” office. Now that William has learned how to "shake hands online," he's quickly become recognized as an expert in his field. This will give him a great advantage as he builds his online business.

So how are you doing with digital handshaking? Share your thoughts and ideas by contacting me.

Audience engagement expert Danny Iny (@DannyIny) is a co-author (with Guy Kawasaki, Brian Clark and others) of Engagement from Scratch! (available on Amazon, or as a free download). He also teaches marketing that works for small business owners at Firepole Marketing.