A key piece of advice that we pose to all burgeoning e-Commerce entrepreneurs is prioritising probability first. Of course, it's excellent having revenue, but if your expenses are continually putting your company into the red zone, then it's time to reevaluate your business model. As much as 50% of small businesses fail in two years of operation, due to cash flow issues.
There's a common misconception that businesses can't always be profitable from the start, but they can be, even if they're bootstrapped. Let's explore some tips for beginner entrepreneurs.
1. Align your product with what your target market wants most.
The first step is ensuring that you have a product or service that your customer desires, or you’re likely to have fewer sales and lower probability of any profits. Perhaps a restaurant opens up with authentic Vietnamese cuisine? Another potential restaurateur decides that Vietnamese fusion might be a gap in the market. However, he quickly realises that people loved the authentic place more. His restaurant fails because he failed to understand what people really wanted. Most of the time conducting focus groups, or doing the right research first will set you apart from your competition and improve the probability of success in the long run.
2. Invest in the time to learn about marketing.
There is no new entrepreneur who is able to foresee profitability from the get-go - without experience. Regardless of whether they've come across a new technology or product which does fly off the shelves with minimal work, securing profitability in the long-term and the start of the scaling process requires that you learn from others who have done this before. Many successful businesses will tell anyone that they succeeded in part due to smart marketing. We rate marketing as one of the best skills you can learn because it can really make or break your business. Consider taking online courses, webinars, read books and consult with friends who have been down this path before.
3. Consider partnering with someone accountable.
When building a business, it can be challenging to stay on course and continue working way into overtime hours, especially if you achieve some important goals along the way. We recommend working with someone whom you trust and can hold each other accountable with when hitting your milestones or missing them. It's common knowledge that businesses with at least two founders are less likely to scale too fast. By having someone in the trenches with you, it will help you slow down, develop in-depth strategies, and you'll have a sounding board for new ideas. By having a dependable partner, you'll feel the need to rock up every day with a zest for your business, and this will in the long-term have an undeniable effect on your company's bottom line.
4. Remain lean.
Prioritise your profit margins by keeping your expenditure as low as possible and consider using the lean startup model. Initially, you might you're excited about bringing in cash, so you'll be led to believe you can afford business expenses such as expensive business meals, and paying yourself and partners a decent salary from the start. However, payroll is one of the most expensive costs for startups. Until such a time where it's of absolute necessity, consider putting as much cash back into your business.
Moreover, this is useful if your long-term goals include raising funding. Investors are always interested in seeing you have bootstrapped and saved capital while in the building process of your enterprise. Think about how you can offer trades and foster relationships to cut costs everywhere possible and remember that every rand counts.
By succeeding to keep down costs and focusing on marketing the right product or service, which your target market genuinely desires, you'll have a starting point with a higher probability of profitability. Ensure that your gap between revenue and expense is as wide as possible and always know when to invest in yourself with additional skills.
The follow industry experts can assist you based on the above article:
WhyFive Insights for Business Research and Insights.
OnlineX for educational webinars to improve your understanding of digital.
Barrk Marketing for marketing and social media services.
Legalese for partnership agreements in case you decide to partner with anyone.