There are four approaches to emphasise profitability right from the start.
My first piece of advice to any aspiring ecommerce entrepreneurs is to prioritise profitability above all else. It’s fantastic to have revenue, but if your expenses are consistently pushing your company into the red, it’s time to reconsider your business plan. Despite the fact that 29% of small businesses fail due to a lack of cash, less than half of small enterprises are successful, and over 30% are actually losing money.
I’ve been running an online firm for almost 12 years, and in retrospect, my focus on profitability has kept my company afloat during unavoidable downturns. There’s a fallacy that businesses can’t necessarily be profitable right away, but they can – even if they’re bootstrapped. In my experience, I’ve learnt a lot about how to create the groundwork for a profitable ecommerce business, and here are my top advice for new entrepreneurs.
1. Orient your product to what your target customer desires the most.
First, you must ensure that you have a product or service that your customers want, or you will not make any money. A storey I like to tell about a failed business venture that my brother and I tried is along similar lines. We noticed that black face masks were becoming increasingly popular, so we created a line of gold face masks that we marketed as more opulent than the black ones. They were a flop because we did not fully comprehend what our target client desired.
According to marketing thought leader Peter Drucker, “the goal of marketing is to know and understand the customer so well that the product or service suits him and sells itself.” Until an entrepreneur conducts market research, he or she cannot be positive that a product or service will sell itself. Communicate with your target clients, whether through social media or by forming a Facebook group. Because the definition of qualitative market research is aiming to understand what the customer thinks, it can be more useful than quantitative market research. And, as we all know, these ideas and feelings influence a customer’s purchasing decisions.
2. Devote time to learning about marketing.
There isn’t a single entrepreneur that knows how to be profitable straight away. Even if they’ve discovered a novel technology or product that sells well with little effort, establishing long-term profitability and starting the scaling process necessitates learning from those who have done it before. I believe that one of the main reasons I was successful was because I emphasised learning marketing to the fullest extent possible. Marketing is the most important skill set you can develop, because it can make or break your business. To learn, I enrolled in as many online classes as I could find, where I studied about developing profitable businesses, ecommerce success, and marketing. Because you may learn from a variety of perspectives, courses are a popular alternative to hiring a business coach. Courses are also typically less expensive than hiring a coach.
Regardless, it’s critical to be willing to invest in yourself from the start. When they first launched their businesses, 77% of small business entrepreneurs relied on their personal savings. When I first started out, I sought methods to make ends meet by enrolling in marketing courses. These are more valuable than other investments if they are credible courses that have assisted others, because investing in your own expertise allows you to manage your firm more efficiently.
3. Form a collaboration with someone and hold each other accountable.
It might be difficult to stay the course and continue to work hard after working overtime in the trenches of growing a business, especially if there are few wins along the road. Personally, I am happy for the opportunity to collaborate with my brother on my business. In company, we hold each other accountable and always have each other’s backs, which is precisely what you should look for in a co-founder.
According to research, companies with at least two founders are less likely to scale too quickly. I’ve discovered that having someone in the trenches with me allows me to slow down, talk strategy in depth, have a sounding board for fresh ideas, and have someone I don’t want to disappoint. It enables me to be present every day, which has an indisputable influence on a company’s bottom line.
4. Maintain a slim physique
Profit should be prioritised before expenses, and the lean startup strategy should be followed. It can be wonderful to bring in money at first, and you may believe that your firm can now afford lavish business meals or to pay you and your business partner a salary right away. Payroll, on the other hand, is one of the most expensive startup fees. Consider putting as much money as you can back into the firm until absolutely essential.
This is also helpful if your long-term goal is to raise funds. Investors want to know how you bootstrapped and saved money during the construction process. Consider how you can offer exchanges and establish partnerships to save a few pennies here and there, and keep in mind that every penny matters.
You may build a thriving ecommerce business by keeping costs low and focusing on marketing a product or service that buyers have stated they actually want and need. Keep the revenue-to-expense ratio as large as feasible while still recognising when to invest in yourself through online courses. The most critical lesson you can learn as an entrepreneur is how to be profitable.