What I love about the E-Commerce industry is that it provides opportunity for everyone. It’s a great business leveler.
The continual innovation of technology and product can provide infinite scalability for an Online Retailer. Plus there’s an industry wide openness and willingness to share what they have already learnt with those new to selling online.
Personally, Entrepreneurs fascinate me…. I love being around their enthusiasm, optimism and tenacity. I love hearing the stories behind their business.
It’s never been easier and there’s a lot of information available to start an Online Business. The learning curve for a new business owner is huge. You have to become the resident expert of all things business and you need to work to sustain profitable growth of your E-Commerce business.
Unfortunately, every week we read about a start-up, with a fantastic idea, who despite having amazing initial take-up, makes the heart wrenching decision to shuts it’s doors. So let’s talk about growth and longevity of selling online. Specifically, let’s talk Profit and what can be done to maximize it in the short term.
To do this, I sought out E-Commerce industry leaders to share their top tips on selling online – Profitably.
So what can you implement quickly to increase profit
Tip 1: Invest in Conferences to Stay Current and Make Valuable Connections.
Phil Leahy, CEO Retail Global is passionate about making connections and has founded 2 major annual conferences for digital retailers. The Retail Global conferences were launched to cater for new businesses who will potentially become the large E-Commerce businesses of the future. Targeting entrepreneurs who are at the “Start-up to Scale-up” sector.
The conference content is information rich, without the pitch. Offering 7 streams designed to cater for businesses at every level. If you are considering selling online, this is a great event to get you started.
Phil is adamant that the most profitable information and connections are made from the people you meet over a drink. He refers to an Online Retailer who recently sold his $20 million business, telling Phil that he wouldn’t have been able to scale and grow profitably, if he hadn’t invested in attending conferences and making connections.
Phil says “In the E-Commerce industry, innovation is key. Profitability relies on keeping staff low and sales high, so being up to date with the tools available to cut workload will help online businesses be competitive. These days Online Retail businesses need to be multi channeled, so stay up to date with selling opportunities provided by eBay and Amazon, as well as the other sales channels like Marketplacer, CatchOfTheDay and Facebook.”
Irene Falcone has had mega success following her passion for health and wellness and living a toxin free life. Her business grew out of her personal journey, which she turned into a blog, which then evolved into a hugely successful online retail business Nourished Life, now set to turn over $20 million in it’s 5th year.
Her tip is to “Keep it Real”. Everything she does is with authenticity, from how she communicates to her market, to how she manages her staff. Her other tip, regularly portion money away to cover costs and taxes AND make sure you don’t spend more than you make. 5 Stars Irene!
Tip 3: Choose Proven Products – Learn the Process of Analysing Data.
Neil Waterhouse, founder and host of multiple Aussie eBay and E-Commerce Sellers Meetup Groups, advises start-ups to focus on proven products with a track record. He teaches methodology on how to pull data and look at the numbers. “Everything should be about the numbers, taking out the guesswork”.
A common mistake for new eBay sellers is focusing on small cheap items with small margins. Others think they need a large cash investment to import inventory, however you don’t need that, you can run a cash flow positive business using other strategies, like drop shipping. The other common mistake is that they use a best guess marketing strategy. So it’s important for them to choose a strategy based on data – there is no need for guess work.
Neil suggests you look at products with a minimum 90 day history, analyzing 2 Key product data areas when choosing E-Commerce products to sell: Profit (sell price – cost price – fees) and Velocity – how many times does that item sell per month.
He says, “The difference between a small eBay business and large business is how many of those items you have, that regularly turn over. Neil’s Blog is a rich source of industry specific information, full of ‘how to’ blogs and videos.
Tip 4: Get Real About Expenditure and What your Product Actually Costs.
Row Murray recommends asking yourself, what costs are really going into getting my product to my customer? “Online Retailers have a dream vision of how they want their product to look when arriving on the customer’s doorstep, however often the fancy packaging and presentation can double the actual cost of the product, blowing away any margin”.
Another common mistake is that they fail to factor in their time. As a business owner, you need to be really honest with yourself. She told me of a well-known clothes designer, who did this exercise only to discover he was working for $2.80 an hour. Why would you do that? Row Murray – Founder, and Digital and UX Director of Kenobi and Board Member on Vic ICT4.Women
Tip 5: Always Look to Automation Tools to Improve Productivity and Profitability.
Nathan Huppatz, an online retail trailblazer, has learnt a lot since he began back in 1999. He recommend, “small online retailers need to find ways to be more efficient to optimize their time. Time is often the thing that limits their growth. They spend too much time doing operational stuff and not enough growing their business. Look at software to automate the business, software to manage inventory etc. All those tools to really make their business hum along”. Throughout his online career, he has always looked to technology to optimize and problem solve.
He also adds that medium to larger businesses, should look at increasing their average sales $ amount. Look at ways to offer the buyer more perceived value to get a higher order value. Over the course of a year this can make a massive difference to overall margin. The process of buying from you needs to be easy and streamlined.
Tip 6: Make Sure you and your Product can be Found Easily Online.
Tim’s first tip – use well researched Product Key Wording. “Having good product data sitting behind the product is like the foundation of a house. You need to understand your customer and ask yourself what will a buyer call this product?” Cosmetics are a classic example of missed opportunity due to improper Product Key Wording.
He also recommends supporting your sales channel(s) with a web site, even if it doesn’t have its own sales funnel, it will increase credibility and perceived value. Tim believes customers are increasingly placing a value on the buying experience, which if it’s good creates trust. Trust equals repeat sales, but you must ensure your Multi-channels have consistency of price and product.
Tim advocates getting an independent critique of your site. Ask someone you trust to give an honest opinion. Have them look at your site with fresh eyes, focusing on your site’s credibility and missed sales opportunities of related products.
Tim Davies – Principal Consultant at Zellis and President of PeSA (Professional eBay Sellers Alliance)
Tip 7: Consider Selling Internationally.
Edward Wiley of OFX – a global money transfer company, believes that if you’ve established your business in Australia, it’s not a huge step to enter the international market, which opens up a whole new customer base of 100’s of millions. Of course, look at saving on foreign transaction fees by using money transfer services designed specifically for Online Sellers.
He also adds “The trick to optimizing online sales is to grow a brand around your central product. Optimize affiliate sales if you can’t afford to import other products yourself.”
Neil Asher’s tip is to start thinking of the business’ expense lines, such as people, marketing, sales and branding as business assets. Look at reinvesting in these areas to get a return. His suggestion, start with marketing, specifically focused toward your ideal customer.
He also points out that it’s essential that your shopping cart is an easy experience for your customer. His motto – test, test and test your shopping cart. Similarly make sure your shipping policy is straightforward and easy to understand. Having too many options will confuse your customer.
My best advice, seek help early for the money management side of your business to form good money habits which will carry you and your business through start-up to scale-up and make sure you pay yourself.
Entrepreneurs are people with great ideas, can spot an opportunity a mile off, they are big on action and run their business on energy and enthusiasm. Let’s be realistic, sitting down to do the accounts, read a Profit and Loss, is a drain on that energy. Very rarely is the financial side of operating an E-Commerce businesses the most favorite task for online entrepreneurs. In fact it’s the most procrastinated task of them all. Yet “Cash Flow issues” are nearly always the reason Online Retail businesses struggle.
“Our problem wasn’t convincing business owners that it is important to manage the financial side – it was finding a way they can manage the cash, which is in tune with human behavior and their unique personality traits”.
Tanja Woods and her husband Alex, own Thinking Cloud. As Profit First Professionals, they are on a mission to support Online Entrepreneurs by providing Profit and Growth Expertise. They want business owners to experience positive outcomes, like a sense of control, gains in confidence and reduction of stress, which all come from proactive decisions. They implement and teach a proven strategy that ensures Online Entrepreneurs are actually paid by their own business. It’s a proven system for money management based on human behaviour, called Profit First. Contact them at firstname.lastname@example.org
Running a successful remodeling business is more about numbers than it is about bricks and sticks. Of course, producing quality work is important; but I can assure you – there are companies out there that produce quality work but go bankrupt because they are not focused on profitability.
By definition, profitability is “the degree to which a business or activity yields profit or financial gain.” However, this is not just about performing projects for profit; it’s about performing projects at a level of profitability to provide growth, sustainability and stability. Depending on your personal and business goals, the level of required profitability can vary from business to business, and owner to owner.
So what are some of the most important things remodelers should focus on to have a healthy and profitable 2017? I had the opportunity to interview some of the top thought leaders and consultants in the remodeling and building industries, and here is what they had to say:
Tip 1: Contractors should view reports for their businesses the way people look at the dashboard of their vehicle. There’s a multitude of gauges, but there are three to five that should be always looked at. (Mark Richardson)
As long as you pay attention to these reports, you can steer your company towards the right direction. Balance sheets and P&L statements help contractors monitor their overall financial performance, showing comparative data on assets versus liabilities, capital, gross profit, and so on. Budget versus actual numbers allow for variance analysis, which comes in handy for planning strategies and setting goals even through variable changes. Reports on overhead percentage, percentage of completion, leads and lead conversion (sales) are also crucial to keep in check.
Tip 2: Before even dealing with reports, understand and internalize the business basics. (Joseph Stoddard)
It’s important for remodelers to have a strong understanding of the Key Performance Indicators (KPIs) that facilitate a successful business in order to ultimately realize their financial goals. Gross profit, markup versus margin, salary versus profit, break even point in dollars versus number of projects, current assets versus liabilities, cost to complete – all these are merely a handful of the KPIs that are instrumental to sustainability and growth.
Instead of “taking whatever walks in the door,” you need to understand your numbers first. Focus on the type of work that creates the best return for your company, and plan the number of sales you need to make. Tip 3: Most contractors are misguided when it comes to reviewing reports, and are comparing apples to oranges. (Shawn McCadden)
When it comes to which reports to review and understand, the P&L (profit and loss) statement usually gets the most attention. Also on the top of the list is job costing. Accurate job costing allows for the comparison of data in budget versus actual, creates validation, and provides an opportunity to make improvements.
Contractors must understand the baseline information on these reports, and have accurate data to compare apples to apples. For example, if you have a masonry line item for 10,000 on your budget, but the actual cost on your report was inaccurately recorded, then your overall gross profit number would also be incorrect. Comparing budgeted GP versus actual without the right data would be an apples-to-oranges parallelism, where validation is lost and you can’t make improvements to your numbers.
Tip 4: Businesses fail due to lack of focus, lack of commitment, and lack of capital. (Mark Richardson)
Working capital is critical. Remodelers should never be in a position to make decisions based on what’s in the bank account. Always look to build with your client’s money – not your own. Always keep a pulse on what’s in your treasure chest. Cash flow management systems depend on having cash flow, so make it a priority.
Tip 5: Once you’ve focused on the right kinds of projects, monitor the “budget vs. actual” performance in several key categories. (Joseph Stoddard)
“Roll-up” reports allow remodelers to examine performance in key categories such as lead generation, sales, money (costs and cash flow), time of construction, and quality. With these summaries, you can identify and maximize your opportunities, attend to issues accordingly, and avert crisis while you still can.
Of course, waiting until the end of the year for a performance review would essentially defeat its purpose. It’s a must to account for the time to 1) draft the reports, 2) review, 3) plan for solutions, and 4) take action successfully.
Tip 6: Cash is King. It’s important to create good cash flow – airlines don’t let you pay for your ticket after you land, so why should remodeling be any different. (Shawn McCadden)
Most remodeling companies don’t pay enough heed to their cash flow. This is a huge no-no for profitability. When remodelers fail to control this part of their business, they dig up a hole to fall into when the stress of chasing payments comes in. When you let prepayment discounts fly out the window, and when you use lines of credit or loans to finance your client’s project, profit margins erode quickly – and before you know it, the company crumbles along with it.
Some remodelers have a misconception that it’s acceptable for clients to control the flow of money – it’s not. You need to get ahead of the financial needs of the project, and organize your billing accordingly. If you’re not getting compensated to finance it, then you have no business doing so. Never borrow money to build projects – always use the client’s money.
SHAWN MCCADDEN: A remodeling industry consultant, speaker and educator – Shawn McCadden is one of the most prominent names in the industry nationwide. As President of Remodel My Business, Inc., he provides business coaching to aspiring remodelers, as well as LBM and construction-related product manufacturers and suppliers. He is also an award-winning monthly columnist for Remodeling magazine, and a speaker for trade events and industry conferences such as The Remodeling Show and JLC Live. On top of that, he offers customized training as an MA and EPA RRP Certified Renovator Instructor. He covers RRP implementation training, systems development, and compliance documentation, and other related areas.
Tip 7: Contractors should be in “making hay” mode. (Mark Richardson)
Economic indicators are showing that the remodeling industry has at least a solid two to three-year run ahead, and contractors should be in “making hay” mode. It’s high time to focus on making profits healthier, and be more aggressive in getting the projects that are right for your business. Of course, pricing needs to be right, but there are opportunities to increase margins. Know you market niche. Know where to invest, and where to cut costs. Know which clients to take on, and how much work you can handle. Maximize productivity by hiring skilled staff members or training your current team in project management software, digital marketing, and bookkeeping. Don’t wait another five years to step it up. Take advantage of the economic opportunity, and start now.
MARK RICHARDSON: Renowned across the country, Mark Richardson is a business growth expert and pioneer in the development of professional standards in the residential remodeling industry. His feats have earned him a seat at the NAHB’s (National Association of Home Builders) Hall of Fame, recognition as 2006’s Ernst and Young Entrepreneur of the Year, and best-selling book status with How Fit Is Your Business. He continued sharing his insights in his following book Fit to Grow, and contributed to publications such as HGTV, Money, The Washington Post, Fortune, Professional Remodeler, and Professional Builder. He also lectures for MBA programs, and serves as a board advisor for Harvard, the Better Business Bureau, GE Capital, and Revere, among many others.
Tip 8: Commit to gaining knowledge, learn to sell against low-ballers, and find your market niche. (Joseph Stoddard)
Aim for superior knowledge, and do the work needed to get you there. Getting your numbers right is one thing; knowing what to do with them is another. Enriching your knowledge in the types of projects you choose to take on, while expanding it further into sales, marketing, business, management, human resources, and so on – this will help you gun for the most profitable strategies in the different facets of your remodeling business.
Putting in the time and effort to elevate your knowledge will also help you identify ways to effectively present the value of your work. When you get to the point where selling against low-ballers comes naturally, you’re already on the right track. Keep going, and “find your market niche where you can sell at the markup you need.”
It’s all-too-common that remodelers struggle with maintaining a healthy level of profit for their businesses. Running a remodeling business is inherently difficult even when profitable, so running an unprofitable remodeling business is like trying to climb Mount Everest without a rope.
The truth of the matter is, remodelers don’t get into business to lose money. For many, it comes as a natural progression from being a tradesperson to eventually opening and running a remodeling business. Inevitably, since much of the focus is on getting clients and performing the work, some of the most important things like profit get neglected.
Being in the industry for almost three decades has ingrained key points for sustainable profit into my business practices, and I’d like to share with you a couple more things to keep in mind as you aim for a more profitable year ahead:
JOSEPH STODDARD: Joe Stoddard is a sought-after voice in the building and remodeling industries. He champions the development of business improvement processes and software, and helps contractors get on the right track as a founding partner and principal of Mountain Consulting Group LLC. A true advocate for progress, Joe shares his expertise further as a contributing editor at Journal of Light Construction and Tools of the Trade. He is also a monthly columnist at Remodeling, a frequent contributor to Builder and Pro Deck Builder, and a speaker at industry conferences such as The International Builders’ Show, Custom Builder Symposium, JLC Live, SMA Leadership Conferences, and NAHB’s Builder20.
Tip 9: Utilize a cash flow management system that includes a safety net for your profit, owner’s salary and tax payments. (Mike Bruno)
The construction business is unique in the sense that contractors typically receive large payments from clients before the work is completed. If they are not disciplined in managing those payments, this can quickly lead to financial trouble.
All-too-often, contractors run their businesses based on what’s in the bank account, without fully understanding where that money needs to go. In addition to the project expenses or cost of goods sold (COGS), there is overhead, which needs to include the owner’s salary, taxes, and last but not the least – profit. It’s good practice for contractors (and any business for that matter) to make sure they are secure for profit, taxes, and owner pay from every dollar they receive.
Tip 10: Clearly define your profit goals. (Mike Bruno)
The key to successful profitability is defining what that means to you and your business. Are you happy making $50,000 a year, or do you need to make $150,000 a year? Are you 30 years away from retirement, or do you only have five years to go? Do you have high overhead or low overhead – one truck or 30 trucks… and so on. All of these variables are contributing factors to defining the level of profitably you need to reach your goals. Once you have clearly defined what that means to you, it would be necessary to align your goals with key performance indicators, and to ensure every project you take and every expense you make are aligned towards reaching those goals.
In a nutshell, while profit is essential for keeping operations afloat, prioritizing profitability in your business practices, strategies and decisions is key to growth, sustainability, and stability for your company. Remodelers who have already taken this to heart may be leagues ahead in the industry, but with strong dedication to your trade, you can also achieve new heights for your business. The steps have been laid out for you. Get on the path, remodel your numbers, and build your profit for 2017.
MIKE BRUNO: A Profit First Certified Professional, Mike is the founder of Contractor Business Solutions – a back-end office support, bookkeeping and consulting company that caters to construction and service companies. For over 27 years, Mike has been in the construction industry, and still runs a successful design-build-remodeling company, and a real estate development and investment firm. Mike is QuickBooks Certified, and is a member of the American Institute of Professional Bookkeepers, and the Institute of Certified Bookkeepers.
Every practice feels the pressure from reduced insurance payments, and the rise of corporate dental practices, but there are untapped opportunities in your office right now that you can turn into revenue and growth. Check out these great profit hacks, that you can put in place today, this week and this month.
Mine the untapped resource of inactive patients currently within your practice management system. Set an office mandate of scheduling at least 5 patients per week, offer an incentive program for the front office to get these patients in and pay the incentive when the patient shows up for service. –Dr. Steve Rasner, well known speaker on practice management and implant dentistry. http://realizingthedream.com/
Cultivate Google reviews, teach your team how to cultivate Google reviews, at the morning huddle (you DO have a morning huddle right?) look to see which patients have Gmail accounts, decide who will ask, (note-this should not be the dentist), and have a cheat sheet ready to hand the patient with step by step instructions on how to submit a review. – Dr. Gary Takacs, producer of the Thriving Dentist podcast. http://www.takacslearningcenter.com/thriving-dentist-show/
Establish a “Cheers Bar” atmosphere, where everyone knows your name, the front office should have a homey feel. –Dr. Steve Rasner
Embrace whitening, not just an offering but a part of as a part of your practice culture. Patients that whiten their teeth are focusing on their teeth and it becomes a gateway service. – Dr. Gary Takacs
Know your numbers! Ask your bookkeeper or accountant to walk you through your profit and loss statement and balance sheet until you understand your current financial situation. –Connie Jacox, Certified Profit First Professional https://www.blbksolutions.com/
Improve your skill set take the time to become licensed to do oral sedation, to attract the “phobic patient,” the word or mouth marketing is huge. –Dr. Steve Rasner
Pick a service you are excited about. Find something you are excited about and get more training. Add more of this service to your practice whether it’s implants, adult ortho, or cosmetic dentistry. –Dr. Gary Takacs