Various researches in past have indicated that most small eCommerce businesses fail within the first five years of their launch. This is unfortunate for all those who begin their business at a small scale hoping to generate an outcome. Most entrepreneurs fail to understand that running an eCommerce business is similar to running a business otherwise. There are various pitfalls that one needs to avoid in order to make their small business run smoothly. There are certain areas where you need to focus and spend more money. Whereas, some expenditures must be avoided on the whole in order to be successful. We have covered for you the unnecessary expenditures that could hurt your small eCommerce Business, along with a few expenditures that can save your eCommerce business.
Excessive Overhead Cost
A major issue that occurs for small businesses is the mismanagement of cash flow. An important factor for this is the excessive overhead expenditures. Companies give their employees perks that are nice in the beginning but prove to be a threat later. Another big expenditure is utilities that destroy the monthly statement. You can reduce your costs by installing power-saving devices in the office and maintaining the office temperature. Heating and cooling costs can also be reduced if you use multi-zone thermostats. There are small expenses in your office that you can reduce such as excessive use of paper. You can also regulate the costs of your plans and pay only the amount that you need. Moreover, better updates to your system can make you more efficient and cut down on costs.
Spending Unnecessarily on Sales
A major business failure is the weak marketing strategy developed by small scale businesses. Most companies providing eCommerce development services will discourage you from spending excessively on sales. Although it is important to allocate a certain amount of budget on sales at the same time, you need to keep a balance. There is a need to extract important pieces of information like spending how much money will generate you, one customer. If this cost is exceeding your budget then you may need to re-plan your marketing strategy.
Another factor of consideration is customer lifetime value. This can also be defined as the revenue generated through a particular customer throughout their lifecycle. These figures can be easily calculated through different formulae’s. Find out your Customer Acquisition Cost by simply dividing your sales along with the market expenses with the new customers acquired. To calculate your Customer Lifetime Value all you need to do is take out an average revenue per customer and divide the value by the churn rate. These figures can help you identify the problem areas. Timely action towards these problems can help you save your business.
I’ve been using Cloudways since January 2016 for this blog. I happily recommend Cloudways to my readers because I am a proud customer.
Absence of a Social Media Strategy
An important aspect of digital marketing is a social media strategy. In this age of technology and the widespread use of social media platforms, it is important for a business to make their social media presence. According to a recent report, Facebook is connecting almost 50 million small to medium scale businesses to their customers. Many people believe that advertising their product or service through social media will cause an unnecessary burden. That is where they fail. Having a sound social media network is essential to a business, whether it is big or small. Invest in an automated social media tool that will help you measure social media performance and help you post your products on your Instagram, Facebook or Twitter.
Failure to Implement a BPM System
A Business Operating System (BPM) is basically a tool that is used to analyze data, measure statistics, and optimize data to make improvements. A BPM software will basically improve the performance of a business and optimize the data in order to give better results. You can manage business procedures in a better and more structured way through this software. You can also integrate various technologies in order to gain more fruitful outcomes. This system will help eliminate human error and increase efficiency. A BPM system will help you run your business in a more efficient way and effectively assign tasks to different members of the project team. Moreover, it will help you track the performance of your employees and highlight the key areas of concern. Not having a BPM system can play a significant role in destroying your business. You will be spending more time and money on planning processes that can be easily taken care of by using a BPM system. This system will compensate for different shortcomings that you may be facing during the project and help you deliver results in a better way.
Lack of a Real Investment
The eCommerce industry definitely has its pros and cons. The pro is that you can launch your online store with very little money. The con that is soon to follow is that for your business to sustain itself you need to spend a considerable amount of money on the labor and overhead expenses. For businesses who have just opened an online shop for their business. They should think of the expenses like those of opening the shop at a new location. Just relying on the fact that your product or service is already famous and will not be needing any marketing is a big mistake. You will have to allocate a certain amount of your budget to your eCommerce website for it to work efficiently. Failure to invest in your eCommerce business can cause it to stumble.
The majority of people who start their eCommerce business fail to understand that patience is the key to a successful business. No matter what product or service you are trying to sell, it will take time to reach the targeted audience. You need to be patient with the outcome and the profit. It may even take a few months before you can actually hit the breaking point and start to generate the profits. Even then your prime focus should be to produce quality products that earn you a good customer base.