eCommerce budgeting is always tricky, but especially so for newer owners and startups. As an entrepreneur, you’ve got a million things to balance and your available money only goes so far. The five tips directly below can guide your thinking as you move forward. You’ll want to avoid common spending traps, maximize your ability to reach people, answer questions, and have enough capital to invest in reliable products and processes.
1. Go Slow with Your Ad Spending
You’re still learning about your eCommerce business, its budget, and its customers. Even slight differences in region, age, and other preferences can impact the success of your messaging. Top eCommerce leaders suggest that new businesses start with a small amount of ad spending across different channels. See where your audience is and what speaks to them.
Consider starting with a series of $5 to $10 daily ad campaigns on Facebook or other small purchases across Instagram. See how people respond. Continually A/B test to find the best messaging and hook. Once you’ve been able to accurately determine interest and generate some engagement, scale up that budget.
2. Answer Questions Before Anyone Asks
All eCommerce stores face customer demands. The challenge for smaller businesses is that you’ll likely have a bare-bones team for handling service requests and other needs. You can protect your time and allow people to focus on putting out the big fires by adding a robust FAQ section to your website. Make your FAQ easy to find and repeat some of that information on your sales pages, too.
Take a look at the top competitors in your space to see what information works best for your industry. This information might include things such as a size chart and clear photos of every available color for hoodies. Jewelry buyers will want specific information that might not come across clearly in photos such as a piece being crafted from sterling silver. That’s why if you want to buy or sell jewelry, you’re better off sticking with a physical shop and finding your local jewelry buyer to get a clean deal. The more that you can address common questions ahead of someone asking, the less you’ll spend paying staff or third-party customer service agents to do so.
3. When Setting Up eCommerce Budgeting, Separate Business and Personal Assets
New eCommerce store owners put a lot into their business — blood, sweat, tears, and definitely a good amount of money. However, the best way to protect your budget is to keep your personal and business finances separate. The best first step is to get separate bank accounts and credit cards for your business.
Charging personal and business expenses to the same account, for example, can make it nearly impossible to ensure all charges are sorted appropriately. Plus, that habit can turn into a mountain of work if auditors ever come knocking on your door.
Treat your business spending the same way you would treat it for an employee. If they need to turn in receipts, so do you. You wouldn’t let them charge coffee or personal dry cleaning to your business account, right? You shouldn’t either.
4. Consider a Virtual Assistant for Your eCommerce Business
Speaking of employees, you’ll likely need some help running your eCommerce business and will want to budget for that. There’s always something to do, from sourcing products and establishing relationships to handling requests for tracking details. In some cases, you’ll want dedicated staff to handle these tasks and be available during business hours to help your company grow.
However, you might have some more temporary needs or positions where hours can vary significantly from week to week. Assistants are one area where this is common. If you don’t have tasks that fill up a 40-hour workweek, or you’re not yet comfortable making permanent hires, consider implementing a virtual assistant.
You could hire someone on an as-needed basis through platforms such as Upwork and give them tasks as they come up. If your eCommerce budget is limited, you could try capping hours each week or month. This helps ensure that you get the support you need and can afford. Look for someone with the experience that you think you’ll need most. These might include posting to social media, updating your product database or information on Amazon, or something unique to your business.
Hiring contractors generally means they have access to a computer and headset, allowing them to provide the support you need even if it includes making phone calls. You’ll likely only need to provide the software required for specialized activities or cost-saving measures. These might include virtual call forwarding that can help with eCommerce budgeting by requiring all employees to use a more affordable, single-user plan.
5. When eCommerce Budgeting, Compare Total Costs Against Outsourcing
If you’re not sure about hiring staff, you might want to consider outsourcing different aspects of your business. Some of these might be related to tasks, while others could assist with core business operations. Traditional outsourcing for any small business looked like hiring an accountant or bookkeeper. Specific to eCommerce budgeting, you could choose to run a drop-shipping business. That way, you don’t need to worry about handling order fulfillment or maintaining inventory and storage space.
If you make your own products or use your selection as a competitive advantage, you might be able to outsource warehousing and fulfillment to a third-party logistics (3PL) partner. You’ll want someone who can perform the task well — prompting few to no customer complaints — without eating up too much of your margins.
After you find partners that specialize in your industry or product type, ask them to compare total costs. 3PLs should be able to give you proper estimates that discuss their pricing against the typical costs in labor, equipment, lease, insurance, and other areas that you’d face running your own fulfillment operations.
Ask about any partner’s ability to save you money compared to performing operations on your own. After that, look to see if they can solve issues and deliver extra savings. For fulfillment, if a partner can improve your order accuracy and reduce returns, the ROI can quickly trend positive.
6. Prioritize What’s Effective for Your eCommerce Business
You can spend a lot of money on your business, but the most expensive options aren’t always the best. Regularly review your tactics and tools to see if they’re most effective for your audience or if there is a more innovative option available.
One classic example of this is the simple act of asking every customer to leave a brief review. Follow up every order with an email asking for a review and thanking customers for their business. If your website features product reviews, give someone a link to the product page. If you’re mainly selling on social media, ask them to leave a review on your Facebook page or tag you in a tweet.
Reviews build trust and can help improve your future sales. In many cases, the request is free to make, and many of your customers will oblige you with a short review. If you want to sweeten the deal, offer a coupon to anyone who leaves a review, whether positive or negative. An incentive such as that has the added benefit of giving the customer a reason to buy from you again. After you collect these reviews, leverage the favorable ones in your marketing. You can natively share them — such as via retweets — or grab a screenshot and share that way. Leverage reviews on your website, social posts, and email marketing with minimal effort.
Finalizing an eCommerce budget for your business is hard work, but there are smart options available to help lessen the burden. Keep your eyes open for simple and effective tactics so that you have more time to tackle complex challenges.
Related Post: Use a Budget Binder
