For all new eCommerce entrepreneurs, the number one thing I recommend is to prioritize profitability. Although it’s essential to have revenue, it’s not enough to keep your business afloat. If your expenses are constantly putting you in the red zone, it’s time for you to rethink what your business model is. Small businesses account for 29 percent of all those that go bankrupt. This is even though only half of them are profitable, while nearly 30% are losing money.
My eCommerce business has been in existence for more than 12 years. Looking back, I realize that I prioritized profitability, and my company has survived the inevitable downturns. The mythical belief that businesses can’t be profitable right away is false. They can, however, be successful over time. From my experiences, I know a lot about how you can create a profitable eCommerce business. Here are my top tips
1. Orient your product in what your target customer most wants
First, make sure you provide a product/service that customers want. If you don’t, your profits will be negligible. One story that I enjoy sharing is about a failed venture my brother, and I tried to start was a business. We noticed black face masks were trendy, so we created a line of gold covers. They were more luxurious than the ones in black. They didn’t work because we didn’t understand our target market.
Peter Drucker, marketing expert, and thought leader, once stated that “the purpose of marketing” is to get to know and understand customers so that the product/service fits them and sells itself. Only after they have conducted market research can entrepreneurs be sure that the product/service will sell. Talk to your target customers through social media. Qualitative research can be more beneficial than quantitative market research, as it can discover what customers think. We know that their thoughts and feelings drive customers’ buying decisions.
2. Learn marketing.
It is rare for entrepreneurs to know how profitable they are instant. Even if they have stumbled upon a new product or technology that is very successful, being able to sustain profitability for the long term and begin the process of scaling up requires that you take lessons from others who have done it before. It was my commitment to learning about marketing that made me successful. Marketing ranks first among all the skills you can understand. Because marketing is what will make or break your business. I found as many online courses on marketing as possible, which helped me learn how to market, build profitable businesses, and succeed in the eCommerce business. You can learn from many perspectives, and courses are a great alternative to hiring business coaches. Courses are usually cheaper than hiring a coach.
However, you must be willing to put in the time and effort to improve yourself. 77% of small-business owners depended on their savings first when they started. I started my own business and found ways to make ends work when I invested in marketing classes. These are more valuable than other investments if they’re credible courses that have helped others. Investing in your knowledge will help you run your business better
3. Partner with someone and hold each other accountable
When building a business, it can be hard to stick with the plan and work overtime, especially when there are not many wins. I feel grateful to have worked with my brother on my company. We hold each other accountable and support each other in business. That is precisely what you want in a co-founder.
Research also suggests that companies with more than one founder are less likely to scale quickly. I have found that having someone to talk to within the trenches helps me slow down and discuss strategy in detail. It also gives me a listening ear for new ideas and someone I don’t want anyone to disappoint. It makes me more present every day, which greatly benefits a business’s bottom line.
4. Stay lean
Prioritize profit and keep expenditures low. Also, follow the lean startup model. You might initially find it exciting to earn money. Your company may be able to purchase expensive business meals or pay you and a business partner a salary. Payroll is the most significant startup expense. It’s not a good idea to invest as much money back into your business as possible unless it’s essential.
This advice is beneficial if you are trying to raise money in the long term. Investors want to know how you saved money while building your business. Look at how you can trade and establish relationships to cut costs. And remember every cent matters.
If you keep costs low and focus on marketing products or services that customers want and need, your eCommerce business will be profitable. It would help to minimize the gap between revenue & expenses while still learning how to invest in yourself via online courses. The most essential lesson an entrepreneur can learn is how to make it profitable.