As many as, get this, 82%, yes 82% of all businesses fail because of mismanaged cashÂ flow.
One of the primary reasons, if not the primary reason, many businesses exist is to make money. And yet, this statistic claims most of them fail because they don’t manage their cash flow well.
It sounds amazing when you think about it.
If you’re a small business though, or even solopreneur, it’s a little more understandable. After all, you have your own personal expenses to manage beyond all your business expenses.
And if you’re the breadwinner, mistakes can happen.
Let’s take a look at what a few of those might be, and how you can prevent them from happening:
1. Spending Mistakes During Your First Growth Stages
It’s a common cliche to hear, but so many business owners fall into the thinking of “it takes money to make money.”
That is certainly true. You’re going to have to spend some money to start your business and keep it going during the early years.
BUT, just because someone charges highly for a product or service, and it works for other businesses, doesn’t mean that it’s going to work for yours too.
Remember, there’s plenty of predatory product and service providers out there happy to take your money and not give you any value in return.
Solution: Research everything you spend your money on wisely. Don’t sign contracts. Ever. There’s always a more the competent service provider out there who won’t require one. That way, you can back out if what they do isn’t working.
2. Not Setting Strong Policies on Unpaid Invoices
A good-paying client suddenly is 2 weeks late on their payment. Other clients have excuses as to why they haven’t paid when agreed upon.
You let it slide this time. Suddenly, 25 of your 30 clients haven’t paid on time, and you don’t have enough cash in the bank to pay your bills.
Solution: Set a clear line for payment collections that never bends for anyone – even great customers. They have 15 days to give you final payment, or you don’t give them anymore product. If you sell services to support your products, give a 5-10% discount for paying in full ahead of time. Or, charge a 5% late penalty after 5 days and cancel service after 30.
Stick to your guns no matter what.
3. Not Keeping Enough Money in the Bank During Growth Periods
When you’re growing, it’s easy to think the money’s going to keep coming. So you keep a month’s worth of cash, maybe 2 in the bank.
Solution: Keep at least 3-4 month’s worth of cash in the bank. 6 is even better. Additionally, if you have a customer trying to haggle reduced prices out of you, you’ll feel more secure in telling them “No.”
Follow those tips and you won’t find yourself paying interest charges, overdraft fees, explaining why you don’t have the money, or worse – going out of business.
Wouldn’t it be nice to make just a few clicks…and presto…you instantly sell more?
Well, now you can.
Ok, so maybe that’s a bit of an exaggeration.
But, still you get the point. Apps add just a tiny piece of functionality you didn’t have before.
So now, rather than creating or modifying a complex process, you do it in comparatively little time.
To sell more, check out some of these apps:
1. Take Advantage of the Most Engaging Social Network, Instagram, with Like2Buy
By many objective measures, Instagram carries the most engagement of any social network online. Â In fact, it completely blows Facebook (58x more engagement than FB) and Twitter (120x more) out of the water.
According to Pew Research, Â 53% of people 18-29 use it. 25% of those 30-49 use it. And the full range of incomes uses it too.
So it’s got quite a potential for landing you more sales. Like2Buy simply makes Instagram shoppable, when it wasn’t before.
2. Recover Abandoned Shopping Carts with an E-Mail Recovery Campaign
This statistic is shocking. Baymard Institute found 31 different shopping cart abandonment rates according to various reliable studies. Cart abandonmentÂ varied from 60-78%!
If your e-commerce site doesn’t already have an included app to help you with this, CartStack is an affordable app that pays for itself fast.
How much revenue could you make if you recovered just 10% of those lost sales?
3. StoreYa Turns Your Facebook Page into an E-Commerce Store Instantly
This sounds pretty cool at the start. But the real power of StoreYa isn’t in the fact that it makes your FB page a cool store.
It’s really in all the sales-boosting marketing tools it offers. For example, you can add a popup that gives your FB visitors a coupon reward just for browsing your store. You can offer group buying deals, similar to Groupon. You can even add a scratch-and-win game.
The best thing about StoreYa? It’s affordable for any budget.
4. Make Sure Your Website Captures E-mails
There’s a million ways to get people to sign up for your e-mail list. Pop-ups, Hello Bar, and so on. You know that most people who visit your website aren’t going to buy from you right away.
They need to take some time to get to know, like, and trust you first. And that’s going to be especially powerful in the future because more stores are coming online. So the market is going to be more skeptical about who they can trust.
On top of that, people who sign up for your list are going to be your best customers. They’ll buy from you over and over again.
And think of how much money you have to invest in e-mail: none. Just take a couple hours to compose and schedule it, and you’re off to the races.
Just follow those 4 methods…and watch the sales roll in.
Sometimes, rapid growth ends up being the downfall of businesses. But in most cases, it’s a good thing.
Regardless of how you look at it, it comes with a number of challenges.
AndÂ oneÂ of those is various tax considerations.
Here’s some tax challenges to consider as you grow:
1. Watch out for Having a “Nexus of Business” in Another State
In layman’s terms, a “nexus of business” is a “sufficient physical presence” in another state. If it’s determined you have a nexus of business in a state, then you have to collect sales tax in that state.
And what a business nexus is varies by state (This is getting fun, isn’t it?). Generally, at a simple level, a “nexus of business” is an office, place of distribution, warehouse, or storage place. You can own this place directly or hold it through a subsidiary.
It’s your job to know the laws for each state. So before you establish a physical presence in that state, learn the tax implications.
2. Contractors Versus Employees
Speaking of employees, in most states they qualify as a “nexus of business.” That simply means you’ll have to pay income and withholding tax based on their state’s laws.
It’s not a huge deal. But you will want to hire a company to do payroll for you in that state. Those laws always change, and so do their deadlines for paying.
Best to let accountants handle all that.
However, you can get around it with contractors. But, there’s some challenges with contractors too. For example, you can’t hire a contractor and then treat them like an employee.
If you do, the IRS can fine you big time. And they’re cracking down on this practice because it’s growing fast and they’re missing out on tax revenue.
3. Product Taxes Change Rapidly – Too Fast For Any Human to Keep Up With
For starters, 20 states can tax out-of-state businesses with their sales tax.
That’s just the tip of the iceberg. Did you know product tax laws change about 9 million times every year?
And then there’s 12,000 tax jurisdictions in the US. Then you have all your products, plus exemptions you may also qualify for.
Fortunately, there’s tax automation software to track and adjust all of this for you.
You Can Probably Handle All Your Taxes Now, But Consider Having an Advisor
As you grow, think about hiring an expert to advise you on taxes. It’s unclear and boring work anyway.
You’re best off learning from a pro and making decisions based on their information.
When you’re a small e-commerce company, you have to carefully plan your shipping and packaging process.
It can quickly eat up a lot of your time if you’re not careful.
Let’s work through some of the different ways to do it:
1. Do It Yourself
In the early days of your business, when you just start out, this may be your only option. It’s time-consuming, though.
And since you’re the business owner, you probably have areas where your talents would be better put to use. For example, you’d be better off figuring out the most efficient and low-cost shipping system, rather than assembling all the packages and taking them to the post office.
2. Hire A Family Member or Someone Else Locally
It’s important here to work with someone you trust. It could be a teenage son or daughter. Maybe it’s a part-time college student or high-schooler.
You can pay them a flat hourly rate, while they do the grunt work for you.
3. Consider a Fulfillment Warehouse
With this option, you keep all your inventory on-hand at a warehouse. Then, you integrate your shopping cart with them. As orders come in, they’re automatically picked, packed, and shipped.
The one potential downfall of this option is if you have a custom product and packaging that you want to use to enhance the customer’s experience of your brand.
Fulfillment warehouses are typically more concerned with volume.
4. Get Help from a Web-Based Order Manager
OrdoroÂ (disclosure: we have no affiliate/business relationship with this company) automatically dispatches your drop-shipment orders and sends your orders for on-hand inventory to your “shipments” page. Then you can batch process your shipping labels.
But the best part is they have a deal with USPS that reduces your costs by 15% (during their trial version) and up to 67% with one of their paid plans.
5. Use Uline for Great Rates on Shipping Materials
Uline.ca has – and this is no joke – a selection of more than 1,300 different types of shipping materials available. And they’re all at cheap prices.
So if you’re focused on volume and efficient pricing, that’s the route to go.
6. Test Out Different Shipping Methods
For example, remember that your packaging is the last interaction your customer has with your business. If you operate on volume and you’re small, it’s not worth your time to get overly elaborate with your packaging.
However, if you make a custom product, custom branding and packaging to go with it makes good sense. Test out different approaches to see what works best for your customers.
Try out those different shipping approaches, and you’ll find one that works for your customers – and you.
No traffic and just starting out? Logistics not your thing?
Few businesses get to successful places doing everything internally.
At some point, they reach out and partner with others.
It could be just what you need to get your business off the ground and running.
It’s tough though. How do you know if the deal’s fair? Will the other guy even follow through? How are you going to measure if the deal’s successful for you?
Reaching out and trusting another party is always a difficultÂ thing.
Here’s some simple tips for building partnerships with otherÂ e-commerce companies:
1. Get Media Exposure
You might have to pay for a placement somewhere in the press. Maybe you have to hire a PR consultant to do a simple job.
When you reach out to other companies, it builds a lot of credibility to have some coverage from the media.
2. Examine Your Own Assets
For someone else to want to partner with you, you must have something that benefits them. For many businesses, especially smaller ones, Â they spend most of their time and money marketing.
So simply giving them exposure to your e-mail list, assuming it’s for a similar customer that they would sell to, could be enough of a benefit for them.
3. Swap Services
You have to be careful with this one. You must have high trust that the other guy will follow through. Often, because there’s no direct benefit (like money) involved, one side ends up not holding to their end of the deal.
However, if you trust the other party profusely, there could be a fair trade somewhere. Maybe you know conversion rate optimization, design, or analytics supremely well and you could trade that for marketing.
This one will probably only work with micro-businesses though.
4. Choose Carefully
Have lunch, or at least a conversation or two with other website owners. Meet in person, if possible. Or get a video chat going. You learn so much about another person by seeing them.
Call a couple references. Ask for a written agreement laying out what each party is responsible for. Go to trade shows and do the same.
Read the customer reviews on their website and social media profiles. Google their name for other search sources.
You really can’t be too careful when choosing a business to partner with.
5. Choose for the Long-Term
It’s tough to find good, reliable partners. So pick someone you think you can work with for years. You don’t want to change partners every year, or even every couple years. It takes a lot of time…that you could use to grow your business in other ways.
So choose someone that you can help, and that can help you, for years to come.
Most SMB owners that take care of their own PPC campaigns don’t go far beyond the “broad match” option.
Don’t get down on yourself – you only have so much time.
But remember, Google makes a lot of money off those ads. So they don’t do a ton to help you reduce your costs.
That means it’s up to you to choose the most appropriate type, and to monitor your costs carefully.
Learn more about the most common match types:
1. Broad Match
So let’s start with the crux of most PPC campaigns.
Pro: About 20% of Google searches are completely new, never done before. Broad match gives you the best exposure to them.
Con: Because it can match the keywords you want in any way, including for synonyms of those terms, you can appear for many completely irrelevant searches, driving your costs up and out of control.
2. Modified Broad Match
How it works: Add a (+)Â in front of one or more keywords. You then only appear for searches that explicitly include the keywords that have that (+) sign in front of them.
Pro: Much more precise targeting and more efficient ad costs.
Con: You might miss out on some new opportunities. But then again, maybe you don’t care about that at this point.
3. Phrase Match
How it works: You want to appear for certain key phrases that specifically match a set order you determine. You can also come up for words and phrases that appear before or after yourÂ specifically set phrase.
Pro: More precision targeting and marketing than modified broad match, which leads to more efficient marketing costs.
Con: Again, you may push out some relevant keyword searches that could earn you sales.
4. Exact Match
How it works: Just like it sounds. Your ads appear for searches that exactly match what you set.
Pro: You’ll get good conversion rates…if you’ve chosen the most relevant keywords.
Con: You’ll close out all other opportunities. So you better pick the right keywords that will convert.
You Have to Try All 4 Approaches to See What Works Best
…That is unless you get obvious keyword types like “buy diamond rings online” because you know what people are looking for when they type that in.
Sometimes, though, you’ll be surprised. Others, you won’t have any real clue until you test and try.
But, PPC is one of the few sources of accurate and reliable data in online marketing. So once you figure out what works, you’ll be in great shape.
The Fed has caught on to businesses that try to classify what really are “employees” as “contractors.” The reasons the Department of Labor is so focused on this are:
â€˘ It costs the US government tax revenue
â€˘ Workers don’t get employee benefits like minimum wage protection, overtime, unemployment, and worker’s compensation
â€˘ Some businesses do this purposefullyÂ to cut their own costs and avoid spending time and money on complying with labor laws
You can also do this unintentionally, which costs you lots of money in taxes and fines. So it’s important to make sure you have it straight.
And you can experience bigtime penalties like:
â€˘ Having to pay all the past withholding taxes due
â€˘ Penalties costing 1.5% of the employee’s wages and 40% of their FICA taxes
â€˘ .5% for not paying taxes for each month the taxes were not paid, up to 25% of the total tax liability
You can attempt to read the Department of Labor’s report here. Or you can read our simple Plain-English comments below:
1. Who Determines If You Have Employees or Contractors?
You can classify your workers however you want. But, you don’t make the final decision on that.
States, the IRS, and the Department of Labor all have power in that decision.
The test that they use to determine if you have an “employee” or “contractor” is how much control you exert over their time. They may ask questions like:
â€˘ Did you tell the individualÂ when to do the work?
â€˘ Did you tell the individualÂ how to do the work?
â€˘ Did you tell the individualÂ where to do the work?
Under the Fair Labor Standards Act, the interpretation most often determines that employees are present.
2. Â Today, DOL Has Shifted to a 6-Factor “Economic Realities Test”
And basically, the factors they choose to analyze look like this:
1. Can you, the employer, provide your products or services without the help of the individual(s)? If no, they’re likely an employee.
2. Can the individual experience both a profit and loss? If yes, they look more like a contractor.
3. Do both the individual and company have similar financial investment? For example, if their profit and loss is approximately the same, the more the individual looks like a contractor.
4. Does the work required need special skills, and can those skills be used independently of the individual’s directions from the employer? If yes, the individual appears to be a contractor.
5. How long has the relationship been in place? The longer it is, the more the individual looks like an employee.
6. How much control does the company have? This is more from a financial perspective. For example,Â does the contractor have the ability to turn down jobsÂ andÂ set their own rates for accepted jobs?
If you’ve just discovered you’re doing this at your business, it’s best to take action right away. Talk to your lawyer or an accountant immediately.
It doesn’t get the attention of Facebook, Twitter, or LinkedIn. But if you have a female market, it’s a social media outlet you can’t afford to pass up.
This infographic from Shopify claims the average order value from Pinterest customers is $50 – greater than what you get with any other social media network.
Lately, however, the male user base is experiencing growth. Pinterest gets used more by the mobile crowd. And the user base is expanding substantially into foreign countries.
So there may be more opportunities for you to tap into other markets both now and in the future.
1. Pinning May Be the Only Type of Social Media Post that Lasts Long-Term
You can post rich pins, which contain extra information on the pin itself. So that’s where your product information goes.
Down the road…the typical pin gets repinned 11 times. And half of the clicks and views it gets happen more than 3 months after you originally pin.
Now that’s long-term value you’re not going to see on any other social media network. Plus, you don’t have to pay for it.
All you need is some good old-fashioned sweat equity.
2. Your Boards Have to Evoke Emotion
So regardless of what kind of product you sell, don’t simply show pictures of the product on a table or white or gray background.
That’s better than nothing at all if that’s what you can produce.
But, at the end of the day, people buy because of an emotional attachment to your product. And they get attached by understanding your product has the solution to their problem.
So if you sell coffee, for example, show people engaged in lively conversation over cups of coffee. Or show someone wrapped up in a blanket at home on a cold winter day enjoying a warm cup of coffee.
Now that’s going to help your product sell.
3. Create a “How-To” Pin
Another way to connect with potential customers is to give “how-tos” featuring your product. That could be how to do something with Â your product so your customers get more out of it (good).
It could be how to maintain your product so they don’t have to pay for repairs (better). Or you could show how your product solves a certain problem they have (best).
4. Make Sure You Have a “Pin-It” Button On Your Site
Okay, so save the easiest for last here. But it’s often overlooked…and especially so for new store owners.
Make sure people have the ability to share your product to Pinterest if they want.
The easier and more obvious you make things, the more likely people are to take the action.
If Your Market’s on Pinterest, Don’t Ignore It in Your Marketing Plan
Pinterest is a $7 billion company…and it just got an additional $225 million in funding last year. It’s on the rise internationally.
So it makes sense to account for it in your marketing plan.
“You never really know a man until you’ve walked a mile in his shoes. That way,Â Â you’re a mile away…and you have their shoes.”
Okay, so ignore the second sentence there. But, it is important to learn from others who have been there before.
Most businesses have nothing new, original, or innovative to offer. Most are copies or clones of the other who do things just a little better.
So it makes more sense to learn from those who are further down the path in their e-commerce journey.
Check out some of the most helpful things other business owners have to say, and see what you can learn from them:
1. Use Tools to Automate Processes So You Have Time to Grow Your Business
You’d be surprised what you can find out there. If you have a problem or time-suck at your business, odds are there’s an app or SaaS software that solves it.
Google your problem relentlessly until you find the solution. Go to Angel.co to find a startup that performs the service you need.
And if you can’t find the right app or SaaS software, you can hire the process out affordably. Just use Upwork.
2. Treat Your Customers Like…Human Beings You Care About
It’s easy to focus too much on the numbers, and think,”Oh well. This oneÂ doesn’t matter. We’ll get the next one.”
Throw that thinking out the window because your competitors most likely think that. Instead, work on making each and every customer a super-happy one.
Be fearless in picking up the phone. Make your marketing so personal customers feel like you’re standing right in front of them, talking to them in person.
It makes a difference in your long-term sales.
3. Make Money a By-Product of Running an Excellent Business, Not the End Product
You should love what you do each day, or most days. That means you’re in something you really care about. That gives you energy when things get tough. And it keeps you fun and enthusiastic to be around – a contagious attitude for your customers and employees.
Money’s important, no doubt. You can’t ignore it. But if you focus on personal customer service, great product quality, and exceeding customer expectations, money will come in whether you want it to or not.
4. Spend Lots of Time on Google Analytics
The great thing about the web and online business in general isn’t that you can instantly spread your message. It’s that you can get much more personal interaction and honest feedback from you customers.
This information took millions of dollars to collect back in the 1980s. So spend time on Google Analytics looking at your stats, and understanding what they mean. Test adjustments to your business. Your market will tell you what they like…if only you listen to them.
Successful e-commerce owners put these tips to use every day. Use them in your own business…and watch it thrive.
In business…it’s about getting every little edge that you can get over your competitor’s, isn’t it?
Don’t they always say,”The great ones pay attention to fine detail.”
Well, here’s something that I guarantee 99% of your competitors are not doing. In fact, most don’t even know about it.
It’s called “schema.” And it’s been in play for several years.
In a nutshell, schema helps search engines understand what your search result means, not just what it says.
And you’ll want to take advantage of it because it makes your search result more attractive than your competitor’s search results for specific searches. So you can get some more clicks that maybe you couldn’t in years past.
Here’s how you can make the best use of it so you snatch traffic away from your competitors:
1. Use Microdata
There’s actually several forms of metadata. Google’s only concerned about Microdata. So that’s all you need to deal with.
And since there’s a deal among all search engines to support microdata, you’ll make all the major ones happy when you use it.
Google supports rich snippets for reviews, people, products, businesses and organizations, recipes, events, and music. Since you most likely sell products, you’re good to go there.
2. If You Have WordPress, There’s Plugins to The Rescue!
If you have Genesis 2.0 or later, there’s great news: it automatically takes care of your schema microdata markup for you.
But if you don’t, there’s plenty of plugins to help you out. WP Social SEO Booster may be the only plugin that supports the “Article” markup. “Article” markup helps your blog posts be more visible to Google. It also supports Open Graph markup for Facebook.
The WP Rich Snippets plugin is a good one to use if you don’t mind paying $49. You can add all sorts of Â functionality to your website, like star ratings, prices, hours open, votes, and others.
3. If You Don’t Have WordPress, I Don’t Have Good News for You…
Unfortunately, without a simple plugin, schema is tough to implement. And it takes much more time and space than we have here. A good guide to use is this one from KISSmetrics.
Just know that once you have schema microdata implemented on your pages, you’ll get more clicks and sales.
Should you go out of your way to implement it at all costs right now? No.
Should you add it in step-by-step slowly over time to improve sales? Absolutely.