post by:
Donna Cohen
Scaling your ecommerce business may seem like the right thing to do, but there are many variables to consider before deciding on this move. It’s easy to make mistakes, so you need to prepare prior to delving into your scaling strategy.
Is your ecommerce startup doing well? Do you think you’re ready to scale? If so, you need to consider the possible things that could prevent you from executing this plan. We know that you’re eager to get started, but without proper preparation, you can end up losing money and damaging your business’s health. With this said, let’s delve into the reasons that could prevent you from scaling, so you can make an informed decision of your own when deciding on your store’s future.
What Is Scaling?
Scaling is increasing your business’s revenue with minimal spending. This is not to be confused with growth, which essentially means “you need to spend money to make money.” Growth is for things like expanding, whereas, scaling is after all the startups costs have been paid and now, you’re maintaining while slowly building your business. Scaling involves advertising or price increases. And the time to scale is when you see positive cash flow and future demand, not before.
1. Faulty Products
You may think you’re ready to scale by increasing advertising and rates, but this can bite you in the bum later on. If you have products that still have errors, don’t just assume that they’ll work themselves out later. You never know what can come of these little nuisances, so make sure your products are worth your customer’s time.
2. Lack Of Direction
Know who your consumer is before scaling. If you try to scale before this is established then you won’t know if the market will provide sustainable demand for your products. You can also miss out on campaign opportunities because you’ve missed a whole market of consumers who would’ve bought your goods. Think long-term relationships, not short-term.
3. Working With The Wrong People
Your employees, investors, and suppliers are all a reflection of your company. Know your culture and find people that can benefit your business. Hire people that have scaled before, so you have their expertise during the process. Again, think about long-term relationships, not short-term.
4. Thinking Short-Term Instead Of Long-Term
We’ll say it again. Think long-term. Short-term thoughts are only going to get you so far. Demand, consumers, and relationships all require thought. Find out what your company’s core values are and only make decisions that will benefit those values. Plus, if you ever need funding, the investors will need to know the answer to that exact question. In short, think your strategies through.
5. Competing With Price
Cost should be the least of your concerns. Customers prefer quality over anything. Goods, interactions, and customizability are what to strive for. Ramping up production, while slashing prices to keep up with competitors doesn’t always work. If you fight with other businesses on price, it’s often a race to the bottom than the top.
6. Ignoring Problems
Don’t ignore problems that occur. When growth happens, it can often throw things out of proportion. Personality and product issues can cause long-term damage to the company if you don’t address it right away. Remember, you’re a leader. Lead your ecommerce business in the right direction.
7. Failing To Adapt
As your company develops, things change. It’s important to stay on top of those changes and “trim fat” if needed. If something that used to work isn’t working anymore, then cut it, whether that’s employees or products. Don’t think that because you have it all figured out now that you will a year or even a month from now. Adapt with the changes to guarantee a successful scale.
8. Lack Of Inventory
Nothing affects your scaling more than lack of inventory. You can’t make sales without goods to send, so make sure you are stocked well in advance. If this means switching to a supplier that will get you your inventory on time, so be it. Remember that the customer has little patience when it comes to getting their purchases. Don’t give them the opportunity to go somewhere else.
9. Lack Of Funding
Scaling doesn’t take much funding, but it does require it. When you plan to scale, the money you put toward it can eat into your cashflow. Make sure you’re not stretched too thin during the process. Funding is essential for businesses who need to keep up on inventory, payroll, and rent. Plan your scale strategically, and you will succeed.