Six Elements of eCommerce Business Success

This year has been especially rough for eCommerce businesses. After the explosive sales of 2020 and the cash infusions in 2021 and 2022 from government programs, rising inflation and interest rates have once again changed consumer behavior. Unfortunately, all the changes are putting a squeeze on profitability.

Now more than ever you must run your business effectively. While eCommerce businesses can still offer many nontraditional benefits like short work weeks from any location, they are not automatically cash cows.

So how strong is your business? Consider the following six elements of eCommerce success to see how you stack up and take our Business Performance SmartAssessement to help identify action items and next steps.

Six Elements of eCommerce Business Success

Six elements make up a successful eCommerce business. Much like a house, these elements start with a strong foundation and proceed up when you exit.

1) Strategic Planning and Goal Setting

Planning and setting goals are vital for any business endeavor. By defining where you want to go and what your priorities are, you can more clearly focus your efforts and say no to all distractions. The time you invest in planning provides returns every day as you focus on the important items and let go of the busy work that may feel productive but actually is keeping you from the high-leverage activities.

Related reading: 8 Sneaky Ways Amazon Gets Your Money

2) Financial Systems

Financial systems work to give you the vital information you need to make decisions. Not everyone is a financial wizard, and you don’t have to be. Small business activity isn’t that much different than your household finances. You do need systems, however, to be sure that the important tasks are handled promptly, so you have data to make decisions.

Consider this activity to be a systems activity, not a numbers activity. We’re not looking for math to get us to the moon. We simply need the basic functions of adding, subtracting, multiplying, and dividing to tell us how things are going.

3) Cash Flow

Your cash flow position is the single most important data point that tells you if you can stay in business another day. It’s not always easy to figure out by looking at your business checking account. There are some great tools, such as Profit First, that make your cash position easy to understand simply by looking at bank balances. Our guide provides many resources that will help you get started and will help if you get stuck.

4) Financial Forecasting

Financial forecasting is your window into the future. Bookkeeping looks backward at what has happened already. Profit First allows you to understand your current cash flow position as of today. Financial forecasting is what you need to help set your plan for the future. Forecasting determines how strategies and tactics will impact your bottom line and your bank account. No one has a crystal ball, and when you start forecasting it does feel like guessing.

But as you build that muscle you start to understand the drivers behind your decisions, and you get better at predicting their likelihood of happening. As you gain confidence with the process you can create multiple forecasts based on the most or least probable scenarios.

5) Effective Business Operations

Business operations are just as important as planning and numbers. In operations, the plans are carried out for ordering and tracking inventory, advertising, and fulfillment. Larger operations may have warehouse or customer service personnel.

Operations can take all your time, so you want to ensure you build the systems so the business will support your life. Once your business cash flow can support it, team members to lighten your load are critical to allowing you to work on the business and have time for your personal and family life.

6) Exit Planning

Exit planning may be the next thing on your mind when everything starts to hum. Many eCommerce business owners want to build up a great business and then sell it. Ensuring that your business is built to sell starts with strategy and goal setting and continues with each element. When you’re ready to put your business on the market, you want to ensure you can present it with confidence.

Working with brokers and buyers and answering questions during due diligence all while continuing to keep the business running well is a tall order. When done successfully, it allows you to achieve personal financial goals and build wealth for your family. It really is a time to celebrate!

What Are Your Weak Points?

Do you have all these areas humming in your business? It’s a lot to juggle, so we are pleased to introduce our eCommerce Business Performance SmartAssessment. We have worked with eCommerce businesses for nearly 10 years and have helped hundreds of clients understand their numbers and improve their profitability. Now with this SmartAssessment, you can diagnose the health of your business and use our Business Performance SmartAssessment Guide with actionable advice and tools specifically so you can address weak areas.

You’ll get the results by email with specific actions to improve on a weak area. If your results show you need a lot of work, don’t fret. Start with the first section and work on a couple of areas. Once you have that solved, move along to the second section. The elements do flow based on their order of need, based on our experience.

We wish you a very profitable Q4 so you are all set to kick off 2024 and make your eCommerce Business a success. As always, reach out to the bookskeep Team for all your advisory and bookkeeping needs!