One simple ecommerce business tip can help you become more successful as a new small business owner. When someone starts a small business they work so hard to get that first sale which never matters how much money that first sale brings in, it is the reward of seeing incoming revenue which just feels like there is a chance for success in the future. The number one ecommerce business tip is to leave that revenue in your bank account and do not pull it for anything but reinvestment in growth in your business.
As an ecommerce business, you need to keep spending money on new products to grow your offerings, you need to spend money on advertisements and getting out on more ecommerce marketplaces and sales channels to create as many possible ways for you to drive growth. All of these things cost money. So as you are starting to get your first sales, turn that revenue into buying more products that you can make more money on it. If you are happy with where you are at from a product line perspective, take that money and invest into advertisements to drive growth on your website or marketplaces to sell more products.
The simple ecommerce business tip follows a simple logic that if you buy a product for one dollar and sell it for five dollars after all of your fees, let’s assume your profit was three dollars. Great, now go buy three more of that product and get them listed. When you sell those three products, you know made nine dollars. Take that nine dollars and buy nine more of the product and get them listed. Overtime that investment translates into twenty seven dollars profit after your transaction or marketplace fees. You see the simplicity of the ecommerce business tip. It is to let your initial cash investment do the work for you to grow your business by constantly reinvesting your sales revenue into products to grow your business.
Too often business owners want to pull their cash out of their profits to show that they take some chips off of the table and walked away up money. This is a bad move and will stunt your growth immediately. As part of your ecommerce business plan you should allow for a long enough run way with your initial investment to allow a constant reinvestment of your gains back into your business to keep expanding products, expanding your advertisement and marketplace reaches to grow your business as quick as possible with out having to constantly reinvest more dollars into the growth.
Every small ecommerce business owner has good bets and bad bets when it comes to buying up product lines and early on you will have many more bad bets than good bets as you start to learn about your customers what they are interested in buying and at what price points. You need to leave any cushion you have in your bank as you make sales to account for missteps in your initial growth. Allow for failures and having the cash in the bank to test into new markets to see what opportunities you can find. This will only work however if you follow the simple ecommerce business trick of just constantly reinvesting your gains over the first few months or longer to understand what your winning formula will be and how to win in ecommerce.