4 Strategies To Stay In Business After Year One
Why did you decide to get into ecommerce? There are a myriad of reasons people have, from lifestyle to passion-related factors, but one reason that no one enters for is to fail.
Yet failure is common.
We know a large percentage of small businesses fail within their first year, though the exact figure on that number is debatable, depending on your data source. In the U.S. according to Gallup, a consensus seems to be that 50% of new businesses fail within 5 years, while Canada shares the five year figure at 50% and records a 15% failure rate in year one.
If you’re getting into ecommerce with the hope of doing well and not becoming a statistic, then you need to treat it as a serious business from the beginning. It helps to know a few truths about business and what you really need to do to be successful.
Why Do So Many Businesses Fail?
Ecommerce is one of the big, shiny objects of our time. People are drawn in with ideas like “open for business with a few clicks” or “build your business in a weekend”, but the reality is that statements like these mask the true effort that goes into creating a successful business.
The reality is that it takes more than “a few clicks” for a successful ecommerce business .
Failing To Plan
According to a CNBC interview, a lot of companies fail unexpectedly. The thing is, failure shouldn’t be a surprise at all. If you have good business planning in place, you should be able to put strategies in place early to mitigate risks. And if you still fail? Well, it won’t be a surprise then, will it.
Failing to plan tends to cover a lot of the common reasons given for business failure. These could include things like not investigating the product/market properly, not planning marketing and traffic generation, not adapting to changes in the market or growing too fast without doing enough preparation or research.
Poor financial management is the number one reason that small businesses fail. This can take many forms: lack of profitability, poor cash flow or failure to raise financing. Finances are also a key component of your business planning. What happens to your ecommerce store if you have a bad batch of something that you sell and it all needs to be returned?
Any scenario like that should be planned for and, like any larger business, you should be regularly staying on top of the books and knowing exactly how you are tracking.
Stay In Business Beyond Year One
So, we’ve established that businesses who survive tend to be those who have a good business plan and stick to it, along with careful monitoring of finances, but what other activities are going to keep you in business beyond year one? Let’s look at a few ideas:
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#1.Time To Action
For a large number of people, ecommerce starts out as a side-project, something they do outside of their regular job. The danger with side-projects is that if you don’t treat them as a serious business, your business will not grow to the potential that it could.
A suggestion to keep the momentum going in your business is to devote set time every week towards growth activities. Whether that means scheduling out social media posts, creating a new paid advertisement or doing one or two things to optimize your website, each of those small steps counts in the long term.
Besides growth activities, you should also set time for maintenance activities (for example inventory) and monitoring finances. It doesn’t even have to be a lot of time, but the point is if you do these things a little and often, they are less likely to become a big issue.
It’s about discipline really and creating good habits. Often diarizing or writing down to-do lists that you can physically check off are good motivators to keep people on track.
Shopify wrote an article recently that posed this question: “What if I told you that you can put yourself in a better position to succeed by simply sharing your time, either once a week or once a month, with other like-minded and motivated individuals?”
Their suggestion of joining a mastermind group is an excellent one for a couple of reasons:
- Many brains tend to be better than one—you can get some great ideas for your store.
- Masterminds tend to promote accountability. If you’ve said you’re going to get something done, you probably won’t want to face your team members having not done it!
If a mastermind group is not really your thing, then finding some kind of mentor or accountability partner may be for you. The idea is that you not only learn from the experience of others, but you have someone else holding you accountable for taking the action needed to create a successful business.
#3. Brand Personality
“Me too” brands are boring. Besides that, if you’re a young business and you look exactly the same as more established competitors, then you have nothing distinguishing you from the pack, encouraging customers to go with you.
Black Milk Clothing is an example that Shopify often uses. Yes, they have a very distinctive product, which automatically sets them apart, but they have also done an exceptional job with branding. This has lead them to develop their own “tribe” of followers who relate to them and their story personally.
The point is that personality sells. It’s also part of your targeting; if you are a bland, no-name kind of brand, then you’re not particularly targeted to any niche audience so your net ends up being cast too wide. Develop a distinctive personality and you can hone in on “your people,” with a much better chance of drawing in buyers.
Think your products are “too boring” to develop a distinctive personality? Just look at what Dollar Shave Club has done. They entered a relatively saturated marketplace with a very ordinary consumer product, but have been extraordinarily successful. Part of that success lies in their business model, but a large part is also due to their branding. Check out their site for quirky, irreverent content that draws in their followers.
If that level of content and branding seems overwhelming to you right now, start with those baby steps. Identify what kind of personality your brand wants to go for and note down a list of ideas that will bring that personality to life. Start by developing a good “about” page and go from there, adding design elements and content to your site.
Unfortunately, many ecommerce store owners still seem to have a “build it and they will come” mentality. Not. Going. To. Happen.
There are more than 1 billion websites in existence, so if you make sales purely through people finding you by accident, you are a very fortunate exception. Launching your store is simply step one in a very long journey, one that is going to require a lot of thought around marketing.
Your marketing ties in with brand personality as we discussed in the previous section. Black Milk Clothing say they didn’t spend anything on marketing; they simply spread organically by developing popular Facebook groups and other social media profiles.
If you are like them and would prefer to spend $0 on marketing, be prepared that it will be a lot of work for you to generate engagement through organic means. Here are some examples you could use for organic growth:
- Create engaging content. Yes, the content itself takes work, but actually one of the biggest jobs is getting it out further than your blog or wherever you have put it. You might choose forums, social media or syndication through sites like Medium or Business2Community.
- Regularly posting in social media groups. This means NOT doing a sales push, but participating to contribute something valuable that informs or entertains your target audience.
- Optimizing your website for SEO with keywords and quality backlinks.
Even if you’re prepared to spend some money on marketing, activities such as having a good social media presence and SEO strategy (which content can be a big part of) are still important for the growth of your business. It’s about building trust, presence and brand recognition outside of paid means, of which customers can often be cynical.
There are plenty more ideas we could talk about that can help you to stay in business, but here we’ve focused on four that are the often-neglected basics for small businesses.
The important thing is to have a plan and to be taking action consistently in order to put that plan in place. Even if it’s just doing a couple of small things often, this will have a better result than doing things irregularly.
If you can, then joining a mastermind group or otherwise having a mentor or accountability partner is a great idea for holding yourself to what you should be doing. It’s difficult to work in isolation, so wherever you can, mingle with others who are like-minded and learn what you can.
Author: Katie Joll
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