Starting your own eCommerce business can be a bit daunting, especially with its fast pace and potential risks. Sadly, many online stores close down, as the Bureau of Labor Statistics suggests about 20% of small businesses don’t make it past their first year, and roughly 50% close within five years.
Various hurdles can trip up business success, such as rapidly shifting market trends, tough competition, or long-term contracts with vendors. The products people want change constantly, and new ways to reach customers crop up all the time. Because of this, businesses need to keep pushing forward with continuous effort if they want to grow. However, it’s essential to recognize that not every eCommerce entrepreneur is chasing endless growth. Some see their online store as more of a lifestyle choice. Once they hit their target income or profit, they might prefer to focus on personal ambitions, hobbies, or family.
This piece offers advice for those looking to expand their business further. If you’re interested in learning how to streamline your business to make time for personal growth, stay tuned for a future article.
Enhance Your Inventory Management
Partner with a 3PL service to manage your distribution network. Don’t depend on just one supplier for vital products or supplies. Set up a real-time inventory dashboard, especially if you’re selling on multiple platforms. Automate wherever possible and then automate even more.
Boost Your Cash Flow
Cash flow issues cause 83% of small business failures, according to U.S. Bank. Even if you’ve had a fantastic quarter, running out of cash the next quarter can spell trouble. Create spending plans, revenue forecasts, and strict budgets to manage your cash flow efficiently.
Ensure your funding aligns with your business cycles; don’t use long-term loans for short-term needs or vice versa. Credit cards can help earn non-taxable points, but be sure to clear balances promptly. You might want to use short-term financing products to pay off credit cards—benefiting from interest-free periods while minimizing borrowing costs.
For example, use a credit card to buy inventory early in the billing cycle. A week before the payment due date, draw funds from a short-term financing provider to cover the purchase. This gives you 30 to 45 days of interest-free borrowing and credit card points. With an average 54-day inventory turnover cycle in eCommerce, secure 60-day short-term financing, potentially reducing costs by 30% to 50%.
Although budgets and campaigns might shift throughout the year, having a general plan shields your business. Plan for emergency cash to handle tough times without panicking.
Keep Your Marketing On Track
Always promote your brand and products to stir demand. This includes paid ads, social media marketing, influencer campaigns, email marketing, and earned media initiatives. As sales stabilize, paid advertising becomes a recurring investment that short-term lenders can support. Use your credit card for points, drawing from your short-term lender when necessary. Drawing for 60 days helps save money while avoiding maxed-out cards and high fees.
Expand Across Multiple Channels and Go Global
With an online business, it’s easier to introduce products to a broader audience compared to a traditional store. To grow quickly and find more revenue streams, consider selling on multiple eCommerce platforms. If you’re on Shopify, try expanding to Amazon or a newer platform like TikTok to tap into fresh audiences. Relying on a single platform can be risky—platform changes could leave you without alternatives.
If your product has international potential, consider offering global shipping. It might seem overwhelming, but with the right software, it’s as straightforward as domestic shipping. Look for shipping solutions that provide discounted labels, tracking updates, and shipment fulfillment. Ensure your software partner can handle customs forms, calculate harmonized codes, and work with multiple carriers.
Shipping costs can consume 5% to 12% of your revenue, so consider funding this with a credit card to earn points, and use working capital financing to manage payments over time. Given the quick turnaround between shipping and receiving sales, avoid overextending yourself. Some costs should be paid directly, not borrowed against. However, if your credit card hits its limit, you might struggle to cover your next shipment’s label.
Upgrade Your Tech and Infrastructure
A solid tech stack enhances both customer experience and internal operations. Review your current tech tools to eliminate manual or outdated processes. Focus on automation and hands-free features, especially if you’re working solo or with a small team.
eCommerce is among the fastest-changing markets. It combines the constant evolution of tech and sudden shifts in retail. Keeping your online business moving continuously is crucial if growth is your aim. But remember, it’s okay to achieve a satisfying level of success and then focus on other life goals.
Whether you’re chasing your next big milestone or savoring your current success, these tips can help you manage your eCommerce business effectively.
