In today’s competitive marketplace, starting and building a successful eCommerce business is an uphill struggle. With hard work, a good strategy and, of course, a little luck, however, it can be done. But getting to that point is only half the battle. Once you are up and running and the business is profitable, you need to turn your eye towards the future and work to try and build some value into your business.
In order to get ultimate success, whether you’re a one-person company or have hundreds of employees, you have to keep your mind open to make continuous changes. Like your website, your business has to be dynamic. There’s no place for static business on the market. So, to make your business more valuable (read: profitable) we’ve come up with some tips.
Here are some thoughts on how to make your eCommerce business more valuable:
Keep excellent records
The first step in understanding how to make your business more valuable is to get an idea as to what actually goes into business value. There are a lot of factors, but the most common starting point for determining value is yearly revenue, with the rule of thumb being that a business is worth 2.5 times its yearly revenue.
Knowing that, one of the most important things you can do to increase your business’ value is to have accurate revenue records. Being able to demonstrate your performance over the years is extremely helpful, especially since businesses going through periods of growth are typically more valuable.
However, the reason for keeping records extends beyond being proof of how the business is doing. This is also a way to provide a snapshot of the business. Collecting and storing data about your audience and visitors to the site helps give you insight into where the business is heading. It will help you determine which avenues you are not giving enough attention to, as well as prevent you from retrying previously unsuccessful efforts.
The more data you can have on the business, the better, as this will lead to better decision making. As such, it helps increase the value of your business in two ways: by providing stats on performance while supporting sound decision making about the future.
Mitigate risks
You obviously can’t predict the future, but you can certainly plan for it. Every industry has a set of risk factors that can dramatically affect your business. Maybe it’s a pending piece of legislation or a geopolitical tension. Or perhaps it’s simply a weather disturbance or a change in customer interests. Each sector will be different.
But what holds true for all successful and valuable businesses is their ability to recognize what these risks are and to develop and implement strategies to mitigate them. The most common strategy is usually diversification; once you have success doing one thing, you need to start pursuing other angles so that you don’t become too dependent on one area.
This is smart business sense for both the short and long term. Should you decide to sell your business, investors will look to see how risky it would be to enter your industry. If you can outline this for them and then show them you’ve thought through a plan for working around these risks, you’re increasing the company’s value. But if you decide not to sell, this kind of forward thinking can only help you. See, a win-win situation!
Have a branding strategy
It’s no secret competition in the world of eCommerce is fierce. With so many options to choose from, customers can bounce from place to place to find the best deal. And while pricing is important, it’s even more important to develop ways to foster loyalty that goes beyond just being the cheapest. Always trying to win on price is impractical and will probably end up costing you more than it’s worth.
The solution: branding. By spending some time to define your brand and then market it, you are creating something that is unique to you, giving customers a reason to come back to you even if your products are a bit more expensive.
Maybe you are all about quality, or social consciousness, or sustainability. It doesn’t matter. There is something that makes you unique, and you need to make sure your customers are aware of this. Having a strong brand makes you more valuable since it makes your success more sustainable. Any loyalty you can earn in today’s marketplace is worth its weight in gold.
Develop robust lead generation
Because of high-competition, eCommerce is not a place to rest on your laurels. Achieving success and maintaining it are two totally different things, and for your business to be successful in the future, and valuable, you need to have plans in place for bringing in new customers.
You need to have an active lead generation strategy, and you need to have a plan in place to make sure it works and will continue to work. This is where your records come into play again. They allow you to look back and to see what works and what doesn’t, and they also help you develop the key “cost of new leads” statistic so that you can determine if your marketing strategies are giving you sufficient returns.
Having a plan in place for maintaining and expanding upon the success you’ve already had is key to increasing the value of your business, and this will only really come if you have a good plan in place for generating new leads.
Building value of your business is about far more than just setting up for its potential sale. It means looking at your business more critically so that you can shore up your strategies and position yourself for long-term growth. You’ve gotten through the first part of building a successful business. Now it’s time to go to the next level.
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This Post has been written by Jock Purtle.
Jock Purtle is the founder of DigitalExits.com and is an industry leader and expert in high growth internet companies, website valuations and website brokerage. He has been featured and quoted in publications such as CNBC, Forbes, Entrepreneur and Business Insider. He enjoys working to help others find success with their internet ventures.
