It is one of the biggest challenges for any small e-commerce start-up. How do they find an operating model that supports dynamic growth. How do they ensure that when they take their product to market they maximise sales and drive up revenues without having to sacrifice equity in the business that many traditional investors ask for? Here, we provide our top tips.
Tip One: Treat e-commerce with the respect it deserves
Owners of small e-commerce start-ups are often single-mindedly focused on the new product or invention that they are building their business around. They frequently treat e-commerce like a number in the business plan. It’s not. It is the number one determinant of whether the online businesses will be a success.
The challenge is that it actually requires a lot of work. Often, small business start-ups have neither the knowhow nor the capital to drive ecommerce and turn their solution from a great idea into a commercial success. They need to start treating e-commerce with respect and consider tapping into the skills and expertise that external partners could deliver.
Tip Two: Do your groundwork
‘If you fail to plan, you are planning to fail’ as the saying goes. This is certainly true in the world of e-commerce. Online start-ups need to research the market and work on their PR, their social media and their market reach. They need to make sure their positioning is right. If possible, they should look to monitor and measure their performance in these areas. All this planning is key for any new start-up. If they go out there on day one, focusing purely on making sales, the business will not be sustainable over the long-run.
Tip Three: Keeping yourself cash flow positive is key.
It is something of a truism but small e-commerce start-ups that have a positive cash flow are in a much better position than those that do not.
Cash flow management is one of the biggest issues facing businesses of all sizes, but particularly small and medium-sized enterprises (SMEs). A study from the payments platform WePay found that just over 40% of businesses said they had experienced cash flow problems over the past year. For many of them, a cash flow crisis can sound the death knell even if the business is going reasonably well. Around 80% of those businesses which do fail do so because of poor cash flow management.
It is key to concentrate your attentions on this area and give it a serious amount of budget and time, because if you have a positive cash flow, you can be more creative and more experimental, you can test out ideas and experiment because you know you have a lot of space for error.
Tip four: Make sure your product is ready before you launch
You will only frustrate your customers and potentially alienate them if you go to market before the product is ready to ship. You need to ensure that you have the product available and have a defined shipping in strategy in place that enables you to get it to customers to fulfil orders on time.
Tip five: Make sure you have access to specialist skills and knowhow
To give your ecommerce start-up the best chance of success, you need to tap into all available sources of specialist skills available to you, whether they are internal or external to your business. You can and should get your data analysed, your audiences compiled, your key markets researched. All this will help your business grow but remember it all costs time and money. Plan ahead – because you will need to get all of this in place before you start making any money out of it.
Tip Six: Find out your biggest barriers to business growth
These will be different for every company. For one organisation, it might be about finding a way to scale the business quickly, for another it might be finding a geographic market that will support dynamic growth. In an ideal world, you would want to test out a range of scenarios until you found the answer. By running multiple projects at the same time, you can find what does and does not work, whether it be the creatives, the campaigns, the audience or the channels. The challenge is the money that this costs. Start-ups would need a ready source of capital to make this kind of an approach a realistic proposition.
Most entrepreneurial e-commerce start-ups are from their earliest days focused on dynamic growth and how best to accomplish it. But these targets are challenging for any business to achieve. Success can be elusive but it can be attained by determined ambitious e-commerce SMEs. If they follow the top tips above, they will have a much better chance of reaching their goals.