Mastering Your E-commerce Apps: A Guide to Auditing, Updating, and Profiting

In this post we’re diving into the world of Shopify and e-commerce apps, and I’ve brought in our resident expert, Claudia Howard. She’s a Klaviyo pro and the best email strategist I know.

Apps can be a double-edged sword. We all love finding that shiny new tool, especially if it’s free. But before you know it, your store becomes a playground for apps, and you might not even be using half of them.

Read on to get the details, or click to listen to the episode

Why Auditing is Crucial

• Cuts Unnecessary Costs
  You may be paying for apps you aren’t even using, and not even know it.
• Improves Site Speed
  Leftover code from unused apps can slow down your site load time, driving away potential customers before they even have a chance to see what you sell.
• Relevance Check
  Sometimes you have an app installed that’s no longer necessary. Since Shopify and other platforms are constantly being updated and improved, often the apps you needed a few months ago are now included in the price of your site.
• Return on Investment (ROI) Evaluation
  Evaluating the cost vs. benefit is just good business. Taking the time to honestly assess how much (and what type of) value your apps are adding can give you clarity on what you really need and what you could do without.

5 Steps to App Audit

So, you’re sold on the idea of auditing your apps. But how do you actually go about it? Claudia breaks it down into five simple steps.

Step 1: Quick Review and Cleanup

• Head to your Shopify admin and check the list of installed apps.
• Ask yourself: Are these all active, and am I using them?
• Uninstall any unused apps.
• Email the developer to ensure all code is removed. App developers are required by law to remove old code upon request, so don’t be shy about messaging them to ask for a clean-up on the back end.

Step 2: Update Check

• Review installed apps for available updates (some apps may notify you within their dashboard, but others you’ll need to check).
• Keep the app code updated for bug fixes and added features.

Step 3: Feature Duplication Check

• Assess if features you bought an app for are now available elsewhere (e.g., through Shopify or other services).
• Look for duplications and streamline your toolkit.

Step 4: Revenue and Time Analysis

• Conduct a cost-benefit analysis.
• Consider if the app saves you time, enhances customer experience, or generates revenue.
• Create a chart weighing the benefits against the app’s cost.

Step 5: Decision Time

• Decide if the app is truly worth it for your store.
• Factor in time saved, customer experience, and revenue generated.
• Conduct a cost-benefit analysis using a simple spreadsheet.

Q&A: Addressing Common Concerns

Q: If an app is free and unused, why bother deleting it?
Some code can slow down your site, even if it’s free. Deleting it now and reinstalling later may get you an updated version.

Q: How do I know if new features are available if I ignore most of my emails?
App dashboards usually announce new features, so you can just visit the provider’s page to check for any new additions. Additionally, community forums (like our Inner Circle) are great for staying informed.

Your App Audit Journey

So there you have it—a practical guide to auditing, updating, and profiting from your e-commerce apps. Don’t let those apps run wild in your store; take control with a once to twice yearly audit.

Remember, it’s not about having the most apps; it’s about having the right ones that contribute to your success.

BONUS: The 5 Must-Have Apps for Profitable Stores

We often get asked about the best apps for e-commerce. Claudia and I compiled a list, but we didn’t stop there. We’ve created a free course that not only gives you the list but shows you how to make the most out of these apps.

In this course, you’ll get:

• Training on each app.
• Practical usage examples from successful Inner Circle members.
• Step-by-step guidance on maximizing these apps for profit.

Tap HERE to grab your free guide today.

Unlocking Growth By Reducing Customer Acquisition Cost

Let’s dive into a success story that might just change the game for your e-commerce business. Imagine putting an extra $21,856 in your pocket over the last year. Intrigued? Let’s break it down.

In our last post Melissa, the owner of bikepretty.com, spilled the beans on her mission to reduce marketing costs by increasing organic traffic. Now she’s generously breaking down the nitty-gritty details that led to a whopping 44% reduction in customer acquisition costs (and some other big wins too).

Read on to get the details, or click here to listen to the episode

The Cost of Acquiring a Customer: Why It Matters

Let’s address the elephant in the room – new customers don’t (usually) fall from the sky, they cost money to acquire. And if you want your business to grow, you need to ensure a healthy balance of new and repeat buyers. If you’re like Melissa, meeting your revenue goals but wondering why the needle isn’t moving, you might be spending too much on acquisition to turn a real profit. If you’re unclear about customer acquisition cost, you can learn all about here.

Building On A Solid Foundation

The following strategies are best implemented by stores that have demonstrated proof of concept, meaning you’ve sold products to people who aren’t friends or family, and you’re doing so consistently–at least one sale per day over a period of months. If you’re not there yet, check out this podcast episode to learn what you should be focusing on at the stage of business you’re in now.

Melissa’s Game-Changing Strategy

Melissa’s journey began with a commitment to reduce both overall marketing costs and the cost of acquiring a customer. She recognized that paid social media ads were an effective way to reach new customers, but she also understood that you can’t control what you don’t track and measure. Here’s how she met her goal of reducing marketing spend to 15% of her revenue:

Sales Attribution: A Holistic View

Melissa took a holistic approach to tracking her return on marketing spend. Instead of looking at each platform (Facebook, Google ads, Etsy, Pinterest, etc.) independently, she combined them with the paid apps she was using like social media schedulers and email service providers, and looked at the overall impact on her business. This allowed her to see the interconnectedness of her marketing efforts–she might be bringing in new site visitors with her Facebook ads, but then Google was re-targeting them, and she was using email to follow up with the hottest leads. If Melissa had isolated any one of these channels, it might have looked as if her money was being wasted. But like a football team, each player was contributing to the sales funnel in its own way.

Customer Acquisition Cost Calculation

The real magic happened when Melissa started calculating her customer acquisition cost (CAC). By dividing her total marketing spend by the number of first-time buyers, she could pinpoint the cost of acquiring each customer. This simple yet powerful metric became her guiding light.

And what she found was that her cost of acquiring a new customer came down over time. Melissa suggests looking at results over a period of months, not weeks, to get a more accurate sense of whether or not your strategy is working.

Amp Up Your Funnel With Organic Traffic

After getting a handle on her numbers and setting a goal, Melissa got serious about lowering her cold traffic ad spend. Using an adapted version of our Build Your Funnel training, she crafted an organic social media strategy that boosted her traffic without taking all of her time. You can learn all about it HERE.

Color-Coded Analysis

Melissa’s meticulous approach involved color-coding her data in a spreadsheet as she tracked her numbers week to week. This visual representation allowed her to identify trends over time. Red lines indicated periods when the cost to acquire a new customer was high, while soothing blue hues marked lower/more successful times. The patterns that emerged guided her decisions for the future. Melissa noticed that while there were times that she spent more aggressively (red) those efforts inevitably led to weeks of blue/low-cost results. Like a flywheel, money, and energy up front produced results that continued to build over time.

Email Marketing Amplification

Melissa knew the potential of her email list, that it was the source of her most interested customers, and that the relative cost of sending emails is very low. So she intensified her email marketing efforts, sending weekly campaigns to her list of engaged subscribers. Ultimately email contributed a whopping 58% to her overall revenue, so Melissa was really making the most of the money she had already spent to get those subscribers on her list in the first place.

A New Way To Set Goals

Melissa is a coach in the Inner Circle, and so she knows how difficult most online store owners find annual goal-setting. Choosing a number out of thin air doesn’t feel all that actionable, and can even be discouraging. She suggests that instead, we choose specific metrics to focus on–do you need to acquire more customers? Get more organic traffic? Send more email? Examine this year’s data closely, and you’ll know exactly where you should be putting your focus to meet the sales numbers you want. More about goal-setting HERE.

The Results: A 44% Reduction in Customer Acquisition Costs

Melissa’s year-long commitment to tracking, analyzing, and optimizing paid off – literally. Her strategic approach resulted in a staggering 44% reduction in customer acquisition costs. But this wasn’t just a financial win; it brought clarity, direction, and a sense of control over her business.

The Real Deal Results

In summary, here are the 3 actions Melissa took to grow her sales and lower costs, and the results they yielded.

1st Action

Melissa set up weekly tracking for the metrics she wanted to change

Outcome

• Marking cost reduced to 15% of sales
• Cost of acquiring a new customer down by 44%

2nd Action

Melissa adapted the Sales Funnel training and applied what she discovered to her marketing strategy

Outcome

30 Day snapshot

• 2022 Audience: 433k
• 2023 Audience: 1.1M (154% increase)

Traffic

• 2022 – 34162 site visitors (43% organic)
• 2023 – 19,839 site visitors (84% organic)

3rd Action

Melissa shifted her advertising budget from the middle and the bottom of the funnel, and instead, used the $ to build the top of her funnel. She focused on building her email list, and used her Reliable Revenue plan to convert her “big pool of warm people” into buyers via email.

Outcome

Conversion Rate

• 2022  .66%
• 2023  .65%

Average Order Value

• 2022 $157.09
• 2023 $166.32 (6% increase)
  

Your Path to Lower Customer Acquisition Cost

Melissa’s journey is a testament to the transformative power of strategic tracking and optimization. Whether you’re a seasoned e-commerce entrepreneur or just starting out, the lessons from Melissa’s story apply. Take control of your marketing spend, understand your customer acquisition costs, and let the insights guide your path to success.

Ready to unlock real, sustainable e-commerce growth? Dive into the numbers, embrace strategic tracking, and watch as your sales and profits soar.

Related Links:

Check out Melissa’s website www.bikepretty.com

The Stress-Free Content Plan That Built a Huge Audience
https://thesocialsalesgirls.com/the-stress-free-content-plan-that-built-a-huge-audience-episode-190/

Do You Know What It Costs To Acquire A New Customer?
https://thesocialsalesgirls.com/do-you-even-know-what-it-costs-to-get-a-new-customer-episode-187/

The Powerful Work That Will Get You To Your Goals
https://thesocialsalesgirls.com/the-powerful-work-that-will-get-you-to-your-goals-episode-159/

Become A Marketing-First Store Owner
https://thesocialsalesgirls.com/become-a-marketing-first-store-owner-episode-160/

Revolutionize Your E-Commerce Game: Melissa Davies’ Journey to Marketing Success

Have you ever found yourself staring at your bank account, wondering where all your hard-earned money went? We’ve all been there, scratching our heads and questioning if all that ad spend is worth it.

Let’s dive into the inspiring journey of Melissa Davies, the brilliant mind behind Bike Pretty, a collection of straw bike hats. She faced the challenge of skyrocketing marketing expenses but couldn’t afford to put a dent in her growth. What did she do? Melissa’s story is about to drop some serious wisdom on mastering the art of organic social media and slashing marketing costs (without compromising growth.)

Read on to get the details, click to listen to the episode

The Shocking Reality Check: Calculating Cost of Customer Acquisition

Melissa, a seasoned business owner, recently attended a mastermind session with Susan Bradley. The topic on the table – the elusive Cost of Customer Acquisition. Now, Melissa had been running her business for nearly a decade without ever crunching these numbers. Susan dropped a formula, Melissa plugged in the digits, and BAM…the cost was through the roof.

Sales were happening, but the advertising expenses were draining Melissa’s bank account as soon as funds came in. Melissa knew she had to fix the hole in the bucket, fast.

Setting the Goal: Slashing Marketing Expenses Without Sacrificing Growth

Melissa took a step back, surveyed her financial landscape, and set a formidable goal – cutting marketing expenses from 30% of revenue down to a lean and mean 10%. That’s not an easy feat, especially when your customers aren’t frequent flyers (Melissa’s customers either don’t purchase from her again, or purchase years later.)

Melissa set herself a specific target. She wanted to bring her marketing spend down to 10% of revenue. Ambitious? Maybe. Achievable? Melissa was determined to find out.

The Formulaic Approach to Organic Social Media: Melissa’s Three-Step Strategy

Now, here comes the magic – Melissa decided to pivot to organic social media (cue the collective gasps.) Organic social media? Isn’t organic reach dead?

But Melissa cracked the code and made it formulaic. She let go of the grand visions of a perfect social media world and embraced a structured approach.

Here are the three game-changing steps she took:

Step 1: Calling to Account – Tracking Every Marketing Dollar

Melissa got down to business and meticulously tracked every penny she spent on marketing. No more setting and forgetting ads on platforms like Facebook, Google, and Etsy. A simple spreadsheet became her best friend, helping her monitor weekly expenditures on various channels.
Why? Because those seemingly insignificant recurring spends can pile up, and before you know it, your hard-earned cash is disappearing into the void. Melissa took control. It’s not about throwing your money at Facebook or Google and praying they put it to good use; it’s about being the captain of your financial ship.

Step 2: Embracing Organic Social Media with a 30-Day Audience Booster

Melissa didn’t have a mint to throw at ads. Instead, she revisited an old friend – a Social Sales Girls training module called the 30-Day Audience Booster (available to Inner Circle members, you can learn more HERE. This training, curated by Susan Bradley and Patricia Manso, gave her a clear plan for daily posts on social media.
The goal? Three posts a day, and not just any posts. These were engagement posts designed to make people happy, inspire them, and build a community. Melissa didn’t have a massive following initially, but she leveraged the power of consistent posting. Silly memes, relatable jokes – she started with one post a day and worked her way up.

THE 30-DAY AUDIENCE BOOSTER FORMULA

Commit to posting 3 times every day. You’ll post 3 types of content:

1. Post an “inspirational” or “proof” post, that your audience is likely to engage with by “reacting, commenting, or sharing”
2. Post 2 product posts, and tag the products in your posts.
3. Share your posts to stories daily (and link product Stories to your products)

Step 3: Layering in Product Posts and Inspiration

Melissa was keeping her followers entertained, but likes don’t pay the bills. She knew she had to seamlessly integrate product posts into the mix– the dreaded “selling” posts. But she had a trick up her sleeve. Instead of judging these posts by likes or comments, she focused on link clicks – the golden ticket to organic traffic.
As she gained confidence, Melissa added another layer – inspiration posts. These weren’t just about selling; they were about creating a brand, a community. Beautiful bike tours, historical snippets, and fashionable outfits became the foundation of her fantasy bike lands.

A Stress-Free Content Batching Strategy

Melissa doesn’t have time to post 3x a day on the fly, so she started batching her content and planning everything out 28 days ahead of time. She dedicates about half a day each week to scheduling content, following the Audience Booster template. This was a lot of work up front, but as time went on she started using her analytics to see what worked best, and repeated those high-performing posts.

The Results: Melissa’s Triumph Over Marketing Costs

Ready for the results? Drumroll, please. Melissa not only achieved her goal of reducing marketing expenses to 12% of revenue, she decreased her cost of customer acquisition by almost half. Her ad spend is down 75% (saving her $21k+ per year) and her organic reach has increased 1,450%. The bottom line–Melissa took control of her marketing narrative. She turned the tables on those sneaky expenses, embraced the power of organic social media, and transformed her e-commerce game.

To re-cap

• Batch creating and scheduling content saves time and stress
• Reposting and repurposing existing content eliminates the need to constantly create new material
• Shift your mindset: treating social media as a volume game keeps you from getting bogged down by perfectionism or hesitation.

Your Turn

We asked Melissa what is the #1 piece of advice she would give to store owners hoping to get results like hers. Her answer was hands down the Inner Circle training “Build Your Funnel,” which is an exercise she does each month. She says it gives her a snapshot of where she is so that she knows what content she needs to make next.

So…what’s stopping you from taking the reins of your marketing destiny? Melissa’s story is a testament to the impact of a formulaic and strategic approach to organic social media.

Dive into your numbers, embrace the 30-Day Audience Booster, and start posting with purpose. Melissa Davies’ success story is your invitation to get organized with your social posting. The struggle is real, but so are the opportunities!

Related Links:
See Melissa’s website here: https://bikepretty.com/

Get Social Media Made Easy: https://classroom.thesocialsalesgirls.com/offers/PtLkpup2/checkout

Do You Even Know What It Costs To Get A New Customer?
https://thesocialsalesgirls.com/do-you-even-know-what-it-costs-to-get-a-new-customer-episode-187/

The Best Strategy For Organic Growth
https://thesocialsalesgirls.com/the-best-strategy-for-organic-growth-episode-119/

Organic Results That Will Shock You
https://thesocialsalesgirls.com/a-year-of-results-that-will-shock-you-episode-120/

Skyrocket Your Store’s Visibility
https://thesocialsalesgirls.com/skyrocket-your-stores-visibility-episode-129/

Build a massive audience with a brand Video
https://thesocialsalesgirls.com/build-a-massive-audience-with-a-brand-video-episode-162/

The TikTok Strategy That Exploded Sylvie’s Sales
https://thesocialsalesgirls.com/the-tiktok-strategy-that-exploded-sylvies-sales-episode-106/

So, you’ve embarked on your e-commerce journey. You’ve put in the hours, made the sacrifices, and maybe even taken a few risks. But…what if you’re ready to move on? What if you want to sell your e-commerce business and start a new adventure?

It’s a big decision, fraught with questions, risks, and uncertainties. You’re not alone; many e-commerce entrepreneurs face these dilemmas. And in this post we’re going to talk you through it with Ethan Alexander from Quietlight, a leading voice and authority in the emerging niche of selling and buying profitable online businesses. Ethan is a serial entrepreneur who has successfully built numerous multi-million dollar companies.

Read on and we’ll break down five key areas that can either make or break your e-commerce business when it comes to selling it

Inside A Buyer’s Mind
Almost every potential buyer’s goal for a business is to grow it. So if your business doesn’t have room for growth, it’s like a ship with a leaky hull. Fewer people want to hop on board, and that can drag down your business’s value.

But here’s the silver lining: different buyers are like superheroes with unique superpowers. Some are marketing wizards, some are operation gurus, and others are pros at specific sales channels like Amazon or Shopify. The secret sauce to attracting the right buyer for your e-commerce gem lies in highlighting what your business needs to thrive.

For example, if your marketing game is weak, there are buyers out there who can sprinkle magic dust on it. If your operations are a mess, someone with a knack for streamlining processes can work wonders. And if you’ve just scratched the surface with platforms like Amazon, buyers experienced in that arena can take your business to the next level. So, it’s all about finding that perfect match based on what your business needs. Regardless, there’s likely a hero out there waiting to team up with your business.

Turning Your Business into a Valuable Asset
So many people think there’s very little, or even no, value in their business. But let’s break this down in plain English. There are two main ingredients that cook up your business valuation stew: SDE (seller’s discretionary earnings) and the elusive multiple.

SDE: What’s in Your Wallet?

SDE is a measure of the earnings of a business and is the most common measure of cash flow used to value a small business. Imagine your Profit and Loss statement. You’ve got your income, your expenses (like cost of goods sold), your operational costs, and voila…your net profit. Then there’s another section—addbacks. These are operational expenses (like owner’s salary or health insurance–not technically necessary for the business) that we claim for tax purposes because we can. They’re like little bonuses that won’t dent your valuation. So your SDE is the total of your pre-tax net profit, plus your addbacks.

The Mysterious Multiple
Now, let’s talk about the ‘multiple’. Think of it as the proprietary spice blend for your business stew. It’s everything else that makes your business unique. Your business’s age, industry, brand strength, size, and even your personality all come together to give your business a multiple (of your SDE.) Most e-commerce stores fall between two and four on the multiple scale. 

Making it Tangible
Let’s put this into perspective. If your Seller’s Discretionary Earnings (SDE) for the last 12 months are $200,000, and you’re looking at a multiple of three, that puts your valuation at around $600,000. Simple, right?

The Inventory Conundrum
Now here’s the deal with inventory: most buyers want you to have just the right amount–the ideal is around three to four months’ worth of inventory per SKU–valued at your landed cost of goods sold.

So, if you’ve got $50,000 worth of inventory, add it to your valuation. In our example, that’s $650,000 in total deal value.

Business Value = (SDE * Multiple) + Inventory

See, it’s not rocket science! Your e-commerce business is a valuable asset. Now that you know the recipe, you can start cooking up a fantastic valuation. 

Now onto the 5 key areas that can make or break the sale of your business.

1. Financials: Don’t Let Your Books Be a Hot Mess!
First up, financials. I know, numbers can make your head spin, but they’re the backbone of your business’s value. If your books are a hot mess, it’s time to clean up your act. Specifically, make sure your COGS (that’s Cost of Goods Sold) is done on an accrual basis, not a cash basis.

Here’s the deal: Accrual basis means you record your COGS when the product is sold, not when you buy it. Why does this matter? Because it gives you a true picture of your profitability. Cash basis may keep your cash flow in check, but for valuation purposes, accrual is the way to go. So, if your finances need a makeover, start with this.

2. Risk: Your Business’s Safety Net
Let’s talk about risk. We’re not talking about your skills; we’re talking about your business’s safety net. Buyers want to invest in a business that’s not a ticking time bomb. Ask yourself the question, “what do I really depend on for this business?”Consider things like your sales channels, your marketing channels, vendor relationships, employees. If any one of those went away, would your business still be ok? If your Etsy shop, or your ads account suddenly got shut down, would that take you out? Could you survive if your main supplier went away? If you’re on the knife’s edge, it’s fixable if you work on it now. Make sure you’re diversifying your income streams and minimizing risks. Buyers love a business with a safety net.

3. Growth: Show Them the Money…Potential
Growth is your golden ticket. But not just any growth, profitable growth. We aren’t talking tech companies that grow and grow and grow at all costs, that’s a different business model. Buyers aren’t just buying your business for what it is today; they want to know what it can become. Show them the money…potential!Highlight your growth trends (ie. the past 12 months compared to the prior 12, as well as each month vs. the prior year’s month,) marketing strategies, and expansion plans. The best time to sell your business is when your growth rate is steady. Consistent, profitable growth beats big, impressive numbers.

4. Transferability: Can Your Business Run Without You?
Buyers want to know if your business can run without you. Are you the heart and soul of your operation, or can it thrive with someone new at the helm? Are your vendors loyal to your company, or just to you?To boost your business’s transferability, document your processes, create standard operating procedures (SOPs), and delegate tasks. Make your business a well-oiled machine that doesn’t rely solely on you. Buyers love a business they can slip into like a well-fitted glove.

But what if you’re the face of your brand?
So many store owners in our community are truly the heart, soul, and FACE of their brand, and it’s both a blessing and a curse. If this is you, you’ve likely built a thriving, profitable e-commerce business, and everyone knows you as the face behind the brand. People love what you do because they love you, but will a potential buyer be able to replicate your results without you in the picture?

Let’s use an example–Dave Ramsey. He’s been the heart and soul of his financial advice brand for ages. But recently, Dave has started introducing new faces and voices to his brand. He expanded his team, and now you see others hosting podcasts and taking on more prominent roles. It’s like he’s gradually passing the baton.

Now, why would he do that? It could be because he’s looking to retire, take more time off, or even sell his business. And if it’s the latter, he’s making the right moves. See, when your business is synonymous with you, it can be hard to sell it unless you transition out of the spotlight.

Make no mistake, building your brand around yourself is a smart move. It helps you leverage your audience and supercharges your growth. But once you reach a certain point, it’s time to rethink your strategy.

So here’s the plan: Find a way to gracefully shift the spotlight from you to your brand. Introduce new faces, promote your team members, or focus on the brand itself. This way, your business remains sellable, and you’re not tied to it post-sale.
Start the transition process a few years before you even think about selling. Shine the light on others within your organization, experiment with your branding strategy, and don’t rush the process. It’s a marathon, not a sprint.

5. Documentation: Don’t Be a Data Hoarder
Last but not least, documentation. Don’t be a data hoarder. Buyers want to see your business’s history and performance. Keep records of everything – financials, contracts, supplier agreements, customer data (while staying GDPR-compliant, of course), and anything else that matters.So, what should be in your documentation treasure chest?

First off, we’re talking about the intellectual property (IP) stuff – patents, trademarks, etc.. For instance, if you’re in the Amazon FBA game, having a trademark for brand registry is practically a must-do nowadays. And even for Shopify-based brands, having a trademark can add some extra sparkle to your shine. It won’t magically inflate your business’s value by thousands, it’s more like a security blanket, making your business more trustworthy and resilient.

But the real MVP of documentation is your Standard Operating Procedures (SOPs). Think of them as your business’s how-to guide. Whether you’re a wordsmith or prefer talking things through, recording your processes is essential.
The key is to make knowledge transfer a breeze for the buyer. Whether it’s your expertise or your team’s, having it documented, either in writing or through video, ensures that the wisdom and know-how your business runs on can be seamlessly handed over to a new owner.

That way, even if someone else takes the driver’s seat, your business can keep on truckin’ without missing a beat.

Why Hiding is Not an Option
Ok so you’ve decided to sell your e-commerce business, and offers are starting to roll in. At this stage, everything you’ve presented to buyers is considered true and accurate. But, here’s the thing: once you accept an offer and enter due diligence, buyers will be like Sherlock Holmes, digging into every nook and cranny of your business to verify that everything checks out.

If they feel misled or discover something fishy, the deal could go south faster than you can say “ecommerce.” So, hiding stuff is not a winning strategy.

Now, sure, honest mistakes can happen. Maybe you misunderstood a question or misstated something. That’s human. But once trust is lost, it’s tough to rebuild. 

Selling a business isn’t just about the numbers; it’s also a people business, especially as you get closer to closing the deal. It’s not all about spreadsheets and financials; there’s a lot of heart involved. 

As you approach the finish line, you’ll find that it’s more subjective, more about emotions and relationships than you might expect. That’s why confidence and mindset play a massive role throughout the process.

Timing Is Everything
You might be wondering how long it takes to sell an e-commerce business. While the industry average is around 90 days from listing to sale, it can vary widely.

Most businesses aren’t ready for sale right after the initial conversation. It often takes six to 18 months to prepare. And you know what? That’s perfectly normal.

The key is to understand where you are and where you want to go. Your timeline depends on your goals and how quickly you can get your ducks in a row. It’s all about having a clear roadmap.

So there you have it, five key areas to focus on to make your e-commerce business a hot commodity. Clean up those financials, minimize risk, showcase growth potential, ensure transferability, and be a documentation guru. With these in your toolkit, your business will be more valuable than ever. 

Remember, even if you’re not thinking of selling right now, these improvements will make your business stronger, more profitable, and ready for whatever the future holds. Every e-commerce business is unique, like a puzzle waiting to be solved. But with the right mindset, preparation, and guidance, you can make selling your business a reality and embark on your next exciting adventure.

Connect with Ethan
If you’re feeling overwhelmed or have burning questions about selling your e-commerce business, don’t hesitate to reach out. Ethan is here to help you navigate this journey. Email him at [email protected], and he would be more than happy to chat.

Related Links:

How to calculate SDE and identify add backs: https://quietlight.com/3-types-of-addbacks/

Overview of the entire selling process: https://quietlight.com/guide/process/

Testimonials from businesses Ethan has worked with: https://quietlight.com/advisors/ethan-alexander/#testimonials

Want to Sell Your Business? Here’s Where To Start: https://thesocialsalesgirls.com/want-to-sell-your-business-heres-where-to-start-episode-142/

How To Sell Your Business and Reach Big, Scary Goals: https://thesocialsalesgirls.com/how-to-sell-your-business-and-reach-big-scary-goals-episode-8/

Supercharge Your E-Commerce Business: A Friendly Guide to Boosting Profits

So, you’ve got your shiny new e-commerce store up and running. You’re selling products you’re passionate about, and customers are starting to trickle in. But, there’s this nagging feeling in the back of your mind – “Am I making enough money?”
Today, we’re diving into one of the trickiest questions that can haunt the dreams of anyone running an online store – Gross Profit. Clear as mud, right? But trust me, it’s super important and can make or break your business. So let’s break it down in a way that’s easy to wrap your mind around.

Gross Profit = Dollars in Your Pocket

A while back, we had a podcast episode where Karen, one of our fellow e-commerce rockstars, shared her cash flow struggles. Sound familiar? She was working tirelessly month after month but felt like she was chasing her own tail, not sure why she wasn’t getting ahead. The answer was simple – not enough Gross Profit.
Now, Gross Profit might sound like jargon, but it’s just a way of saying, “how much actual money are you making after covering your product costs?” If that dollar amount isn’t high enough, it’s like trying to fill a bucket with holes in it.
Many of us start with a product, think, “I’ll sell it for twice what I paid,” but forget about all the other costs lurking in the shadows – Shopify fees, email service providers, advertising expenses, and more. Suddenly, that $5 profit looks more like pocket change.
So, we did a follow-up episode #167 (if you want to check it out) where we ditched all the confusing percentage-based pricing strategies and focused on the cold, hard dollars – Margin Contribution Dollars. Margin Contribution is simply the selling price per unit, minus the variable cost per unit.

Alison’s Journey to Profitability

Our podcast guest, Alison, who runs a successful e-commerce business (and happens to be an e-commerce coach in the Inner Circle,) had the same question many of us have – what’s a good Margin Contribution Dollar target? She’s been in the game, mastered Facebook ads, Google ads, and all the things, but finance still left her scratching her head.

Alison sells all sorts of products on her site, from high-margin socks to lower-margin walkers. Her socks might have a whopping 100% margin, while walkers are hanging out at 25%. But here’s the kicker – the actual dollar profit on walkers might be higher!

So, what’s the magic number? Well, there’s no one-size-fits-all answer, but here’s a trick – set a minimum Margin Contribution Dollar you’re willing to accept for a product. For Alison, it was around $20. If it doesn’t meet that threshold, she’s not interested.

A Bird’s Eye View of Your Finances

Before you start scrambling to redo your entire pricing strategy, take a breath. Instead of drilling down to individual products, focus on the big picture. What’s your monthly run rate? Let’s say it’s $12,000. You need to generate enough Gross Profit to cover that and leave some sweet cash for yourself. How much is up to you.

Get Your Financial House in Order

First things first, you need an income statement every month. Yes, just like clockwork. This is your financial compass, helping you navigate the e-commerce seas.

Some folks out there do their accounting on a “cash basis.” What does that mean? Well, if you receive a massive order of socks, for instance, they expense the whole shebang in that month. You can’t run an e-commerce ship that way. It’s a big no-no.

What you need is “accrual accounting.” Fancy term, but it means your cost of goods is only what you sold that month. This will give you a much clearer picture of your expenses.

If you’re working with a bookkeeper who hasn’t navigated the e-commerce waters before, they might mess up your numbers big time. Imagine them pushing that big order through every invoice. That’s a recipe for disaster, skewing your cost of goods and margins.

So, step one, make sure you’re working with someone who has e-commerce experience. And step two, get that accrued income statement every month. It’s your financial lifeline. 

Putting Data to Work: Analyzing Your Sales

Here’s where it gets exciting. Don’t be afraid to get down and dirty with your data. What products are your heroes? Which ones are playing hide and seek? Anything below, say, 10% of your total sales? Well, they might as well be invisible because they’re not making a dent in your profits.

Now, imagine this – you’ve got your sales data in one hand and your expense report in the other. You can see the pieces of the puzzle coming together. You’re not just throwing darts in the dark. You’re making informed decisions based on your business’s unique needs.

The Great Outsourcing Dilemma

But wait! You’ve analyzed your data and your expenses are creeping up. Maybe you’re using a 3PL (Third-Party Logistics) to handle your shipping, or have been paying a Virtual Assistant to manage your social media posts or customer service. Wouldn’t it make sense to bring it all back in house?

It’s tempting…but that move might not be the best for your business.

The truth is, slashing expenses won’t necessarily lead to long-term profitability if it’s going to drain your time and energy. If you have to take a course to understand Quickbooks and it still takes you 3 times longer than it would to hire out your bookkeeping…it’s not worth doing yourself.

If you sell a high price-point item and your buyers expect white glove customer service, is it worth the risk that you won’t be able to answer their questions in a timely manner?

Avoid making knee-jerk reactions to cost-cutting, and take the time to consider your long term profitability. Your focus should be on growing your business, not on menial tasks that someone else could do better and faster.

Overcoming Pricing Paralysis

Have you ever struggled with pricing your products? It’s common, especially in the e-commerce world where competition is fierce. Here’s a secret: Pricing isn’t all about being the cheapest.

Sure, some shoppers hunt for bargains, but others value factors like fast shipping or excellent customer service. Especially in the high-end market, customers are less likely to spend hours comparing prices.

Stop stressing about a couple of bucks and focus on delivering value beyond price tags. Your unique selling propositions, like superior service or unique product features, can be the reason customers choose you over a cheaper competitor.

Facing the Hard Decisions

As your business matures, you’ll need to make some tough calls. Whether it’s discontinuing a product that isn’t performing or parting ways with an underperforming team member, remember: It’s about what’s best for your business’s growth.

Don’t hold onto things that aren’t moving your business forward. Consider the data, analyze the numbers, and make informed decisions. Sometimes, you’ll need to try different approaches a few times before finding what works best.

Crushing Your Debt and Raising Your Profits

If you’re juggling business debt, focus on a plan to pay it off. That debt won’t disappear by itself, but once it’s gone, you can re-allocate those payments to give yourself a nice raise.

Map it out on a spreadsheet: Set a target date for becoming debt-free and visualize that financial freedom. Take responsibility for your financial results and don’t let past mistakes weigh you down. You didn’t know then what you know now, and that’s okay!

Remember, every business has startup costs, and not everything will bring immediate returns. Think of it like making a down payment on a house—it’s an investment in your business’s future.

Don’t Overcomplicate Things

It’s easy to overthink unfamiliar territory, especially when it comes to finances. You don’t need to understand every single detail, but you do need a grasp of the essentials.

Focus on the part that directly impacts your bottom line: making profit. Once you embrace this mindset, you’ll find that financial management becomes more enjoyable and less daunting.

Keep Your Eye on the Prize

Set clear financial goals and track your progress. If you want to pay off debt, give yourself a raise, or boost your profitability, start by visualizing the outcome. Create a plan, and don’t be afraid to adjust it along the way.

So, what’s the next step for your e-commerce business? Keep hustling, stay focused, and watch your profits soar. The struggle is real, but so are the opportunities. Don’t be afraid to dive into your numbers, make data-driven choices, and, most importantly, give yourself a raise when you deserve it!

Related Links:
Find Alison’s website here: www.easeliving.com

Pricing to Maximize Profit: https://thesocialsalesgirls.com/pricing-to-maximize-profit-episode-167/

The Secret To Getting Paid: https://thesocialsalesgirls.com/the-secret-to-getting-paid/

How To Have a Business That Pays You Well: https://thesocialsalesgirls.com/how-to-have-a-business-that-pays-you-well-episode-2/

Ditch Your Decision Fatigue: https://thesocialsalesgirls.com/ditch-your-decision-fatigue-im-giving-you-my-framework-its-brilliant-episode-186

The Customer Acquisition Game

Let’s cut through the jargon and dive straight into something crucial for your business: customer acquisition cost (or CAC.) Yes, it sounds funny, but it’s actually a pretty big deal. Let’s break it down.

The Basics of CAC

If you’re running your e-commerce store, or just starting out, you’re likely hustling hard to get those first sales. And you’re probably relying on organic efforts (like social media or word-of-mouth) to bring in customers. The good news? It doesn’t cost money! The bad news is, it does cost time. Potentially lots of it. And unless you’re a natural social media wiz…there might be a steep learning curve.

However, when you’re ready to kick things up a notch and scale your business, you’ll likely need to put some money into marketing, like ads. This is where the customer acquisition cost (CAC) comes into play.

CAC, in a nutshell: Ad Spend/New Customers
Imagine you spend $1,000 on ads this month, and you get 100 new customers. Your CAC is $10 (that’s $1,000 divided by 100 customers). This simple number is a game-changer.

Why CAC Matters

Why should you even care about CAC? Well, it’s like a reality check for your business. It reminds us that growth isn’t free. You might have been frustrated, wondering why your sales weren’t soaring. But now you know—it costs money to acquire each customer.

Knowing your CAC gives you power. You can compare it to different platforms like your website, Etsy, or Amazon. This helps you make informed decisions about where to focus your efforts.

Customers > Sales

Let’s shift gears a bit. Instead of solely chasing sales numbers, let’s talk customers. This is super important. Sure, you can sell more to your existing customers, but they likely won’t keep buying forever. Everyone has a limit. Eventually, you’ll need new customers to sustain growth.

Picture this: You’re looking at your sales numbers, and they’re good. You can boost them by selling more to your current customers, but deep down, you know you need fresh faces. That’s where focusing on customers, not just sales, comes into play.

Beware of Magical Thinking

Now, let’s talk about something that can sneak up on all of us—magical thinking. It’s when we set goals and create plans but forget about the nitty-gritty details.

You need to connect the dots between your goals and your CAC. Say you want to increase sales by $25,000. Awesome! But you can’t just wing it. You need a marketing budget that aligns with your goal. Don’t fall into the trap of thinking everything will magically fall into place.

How to Calculate Your Acquisition Cost

Ready to tackle your CAC? Let’s break it down in a few simple steps:

1. Start with a significant timeframe, like year-to-date. Take your total ad spend, including platforms like Google, Facebook, and Instagram.
2. Find out how many new customers you’ve gained in that timeframe. Divide your total ad spend by the number of new customers. Voilà! You’ve got your CAC.

Remember, this is just the beginning. To dive deeper into the nitty-gritty details and apply it to your business, grab our free downloadable workbook HERE [LINK TBD]

Putting It All Together

Now, it’s time to connect the dots. Let’s say your CAC is $14.69. That’s your starting point. If you want to boost sales by $25k, divide that by your average order value. This tells you how many orders you need.

But here’s the kicker: Not all of those orders should be from existing customers. You need new blood to keep growing. Adjust your marketing budget accordingly. In the end, you’ll have a clearer picture of what growth truly means for your business.

Figure out your cost of Acquiring with this workbook:

Related Links:

Want More Sales? You Might Be Missing These 3 Things: https://thesocialsalesgirls.com/want-more-sales-you-might-be-missing-these-3-things-episode-179/

The 10-Minute Checkup – A quick, 10-minute guide to understanding customer metrics and benchmarks: https://thesocialsalesgirls.com/a-10-minute-checkup-you-should-do-today-episode-157/

How to Have More Cash in Your Business: https://thesocialsalesgirls.com/how-to-have-more-cash-in-your-business-episode-164/