Be Profitible From Day 1
I have been running e-commerce sites for a number of years and have been fortunate enough to have done well. In each of my businesses, right from the start, we have been positive cash flow where most businesses loose money in the first year.
Of course you have to lay out some money and time to get these up and running, but once the ads go out and the site goes live, I was making money. As you can imagine this is a HUGE help to any business. No need to lay out large sums of cash when you aren’t sure if your concept will work, it takes a lot of stress out of things and allows you to focus on making your offering even better.
Some of my success has to do with the following approach:
Design a scalable business - By putting certain components in place that can adjust to sales in correlation with cost, a business can adjust costs to scale to good times or bad (due to seasonal or economic influences (recession)). These can include things like establishing contracts based on volume with critical suppliers. In down times, this can save you a lot of money and keep you in the game for the long run. At all times, keep your costs low. This is ultimately where the buck stops. Look at all the recent lay offs at high tech start ups trying to extend their lives.
Market right the first time - Jumping out of the gate with the right business model that is strategically priced gives you instant appeal to your customer and a reason for them to try you. This means knowing your competitors and the market habits of the customers you are trying to draw.
Be creative - Offer something unique that differentiates you from the others, better return policies, draws or something else that might appeal to your demographic. (Zappos.com offers free overnight shipping and liberal return policies).
Anticipate - If your company begins to make progress, anticipate what the competition or the market will do. If you are a success, they will hear about it and react. In both my e-commerce sites that is just what they did. You may start with an edge, but how do you keep it?
In addition, your competitors are restricted by certain parameters which they may or may not be able to change easily. For example, if they are a very large, they will have trouble changing, they may have old technology not easily changed.
Listen to your customer - No matter what, you will get some customers if you market correctly. Once you’ve started, you will earn a lot from your customer, listen to them, learn their pain and develop the solution. This is your bread and butter.
Leverage technology - Wherever you can, technology can allow you to be much larger and more powerful then a traditional business could ever be.
There are still other ingredients to success like marketing efficiently, logistics etc, but the core ideas that I try to follow are above.
When we launch Jigantus.com we will be trying to find a way to do all these things.