Congratulations! Your e-commerce business is a success! Now what? In many ways, companies are like sharks; they must keep moving forward. How do you make those moves strategically and allow your business to grow and thrive? The first step is having access to up to date complete financial information so that you can make better business decisions. While many considerations must be contemplated by a business owner looking to expand their enterprise, there are three types of business decisions that should include your bookkeeper’s input: Expansion, Acquisition, and Workforce. Below we discuss why these decisions should be vetted by your bookkeeper.
1) Expansion – Do we have the money to expand?
Once e-commerce companies have mastered their domain, the next logical step is to expand, either through moving into a new marketing place or adding new products or services. Expansion is an investment in the future or your company. Still, it doesn’t come without financial risk, so you need a thorough understanding of your company’s financial health and stamina before you proceed.
When it comes to expanding into a new marketplace, some obstacles must be acknowledged. For example, taking your product internationally will trigger a new set of tax regulations and increased shipping fees. Marketing can also be a challenge because the message that resonates locally may fall flat on a broader audience. The use of new platforms and services will require additional resources, training, and staff. Of course, the challenge is to weigh these costs against potential rewards, including expanding your customer base and increasing order revenue. For example, according to Business News Daily, domestically, the average checkout on an e-commerce transaction is $40. Internationally, that average increases to about $200 per checkout.
When considering expanding into the global marketplace, a few tools can help with the transition. For example, Google Trends can help you see how your product might sell in another country. Using an e-commerce site like Shopify allows you to analyze web traffic so you can see which regions look like good candidates for expansion. And, of course, there is always Amazon fulfillment services, which let you, partner, directly with the company to store and ship your products. Of course, no matter how good an opportunity looks, the bottom line is that, if you don’t have accurate financial information to back up your decision, you’re just guessing – and that guess could put your entire enterprise at risk.
Whether it’s expanding your marketplace or expanding your product line, you won’t be able to make an informed decision without accurate financial information. That means you’ll be operating blind and unable to see how your actions may impact your company’s profitability down the line. That’s why it is so important to include your bookkeeper when making these types of considerations.
2) Buying or building?
For most businesses, the question is, do we have the financial health to acquire real property, either through buying or building? With E-Commerce, many of the building-related questions are related to warehousing inventory and fulfilling orders. The first step is to compare the costs associated with doing in-house fulfillment against using a third party service. When handling inventory in-house, you will be responsible for all the expenses related to insurance, labor, rent, software, supplies, and utilities. On the other hand, outsourcing means paying for call support, customer service, order fulfillment fees, receiving and returns fees, storage fees, and more. When making this decision, it’s not enough to base your choice on general information. You need to have accurate financial information about your own business to determine which solution is the best fit for your company’s present situation and future goals. To make an informed choice, you need a bookkeeper who understands e-commerce to help you navigate this decision.
3) Hiring new employees
Of course, any growing business will need a workforce to match output. For an e-commerce business, the decision to hire new employees needs to be based on the skills you need, and the strengths and experience candidates bring to the table. The types of employees e-commerce companies may bring on include administrative assistants, product sourcing specialists, digital marketing strategists, social media managers, content writers, data entry specialists, and customer service representatives. There is no “one-size-fits-all” formula for the perfect workforce. In the end, who you choose to add to your team will depend on the unique needs and challenges faced by your business.
The type of employment agreement you have with your new team member should also be considered. Both full-time and freelance employees can offer a different benefit to an e-commerce business. For example, freelance workers come with little overhead and a lot of flexibility. Still, the low costs associated with hiring a freelancer must be weighed against the challenges of limited training and supervision. Additionally, if a freelancer ends up being a very good fit, it might make more sense, in the long run, to transition them over to a full-time position. With a full-time worker, you add expense, but you also gain access and oversight. Ultimately, there is a lot to consider when bringing on a new employee, and you need to discuss your needs and strengths when deciding who to hire. A bookkeeper can help provide financial insight to help you make the right decision.
Anytime you need to make a significant outlay of money over a period of time, you need to base that decision on your current financial reality. A bookkeeper can help you make these decisions. To find out whether the team at AIS Solutions can help you with your cloud-based bookkeeping, schedule a free consultation by sending an email to email@example.com.