April 1, 2020
How to Make Your Ecommerce Business Profitable – 5 Tips for Knowing Your Numbers

How to Make Your Ecommerce Business Profitable – 5 Tips for Knowing Your Numbers

hi I’m patti scharf the co-founder of
catching clouds and today we’re going to talk about how to make your e-commerce
business profitable five tips for knowing your numbers a lot of ecommerce sellers forget that
what they’re doing is they’re actually running a business so if you’re gonna
run a business you need to run it like a business and running a business is a lot
like running a football team which brings me to tip number one which is
keep score keep score of the game you don’t see a lot of coaches who just
turn their back to the field but you’ll see tons of people who will just
gather up receipts and things like that bring it to their tax preparer at the
end of the year and even worse if they’ve extended their tax return maybe
it’s in September so you’ve got a whole year’s worth of information on your
business that is nine months stale by the time you go get your taxes done
that’s not the way to run a business and it’s not the way to run a football game
you know you don’t find out the score of the Super Bowl in October you know you
you find out what’s going on real time so tip number one make sure that you’re
keeping score and that brings us to tip number two how do you keep score if you
don’t know the rules of the game so what you need to do is learn the basics learn
the basics about business learn the basics about anything that’s going to
affect your business so a lot of people they just focus on the sales and
marketing aspect how do you get more clicks how do you convert your customers
your convert people who are visiting your site into actual customers but they
completely neglect all of the back-office stuff you still need to pay
attention to finance to admin to HR to accounting basically anything that any
other business would need to be healthy and operational is something that you’re
going to need as well so one of the rules of the game is going to be score
keeping score keeping is accounting and the way you’re going to be able to tell
how you’re doing financially is by looking at your financial statements I
know it’s super painful I know it’s really boring but just trust me it’s
gonna get a lot less boring once you understand how to read them you’re going
to want to pay attention to the income statement balance sheet and statement of
cash flows those three documents are what makes up your financial statements
and I’ll have lots of other videos talking about what those all mean and
to read them and things like that but it’s enough for you to know that these
are things that you should be paying attention to because these are the
things that are telling you how your business is doing which brings us to tip
number three keep non-players off the field you don’t want the football
players’ kids and cheerleaders and random people cluttering up the works don’t run
your personal money and your business money through the same accounts you want
to keep that stuff separate a couple of months ago as talking to somebody who was
saying they didn’t want to outsource their bookkeeping they always had
problems with it because how would the bookkeepers know if they are going out
to dinner if that was a personal expense or a business expense and I started
talking about how well you know once you get to know your bookkeepers
they kind of know and start asking questions and if they’re
confused they’ll ask you about it or whatever and then I stopped and went
wait a second why do you have personal expenses running through your business
don’t do that that’s not good and if you talk to any attorney any CPA they will
tell you exactly the same thing when you set up your business if you set it up as
an LLC or S corp or something like that and you’re running personal expenses
through there it’s called piercing the corporate veil and when you pierce the
corporate veil that means that that legal protection that you thought you
had that you had set up this separate entity for is pretty much obliterated
because they’re seeing that you’re using the company funds like a piggy bank so
keep it clean keep it separate and keep non-players off the field tip number
four build the right team okay so when you’re looking at a football game you
don’t just have one person out there running around and nobody else is
involved you’ve got quarterbacks and running
backs and linebackers and blah blah blah and off on the side of the field you’ve
got you’ve got offensive coordinators defensive coordinators you’ve got people
who are selling tickets and beer you know there’s a lot that goes into
running a business make sure that you have the right team even if you
have a really small business and it’s just you wearing 18 billion hats
make sure that the tools that you’re using are meeting your needs that are
serving its purpose to give you the information you need to make good
decisions all right so when I’m talking about building a great team I’m talking
about employees I’m talking about independent contractors I’m talking
about tools that you’re using that are helping you leverage the work that you
would otherwise have to do by hand so anything that will help you do more with
less is what you’re looking for and you want to build a set of core tools or
core people who are really just knocking it out of the park because if you can do
more with less that’s going to have a direct impact on
your bottom line so that’s what you want to really focus
on and you’re going to want to find the right people and then treat them well so
that they want to stick around because if you have high rapid turnover it
becomes a real drain on your business so take care of your team and work together
as a team and you will have great results so that’s why tip number four is
building a great team and that brings us to tip number five keep working out this
is an ongoing process you don’t just get in shape run a game and be done you’ve
got another game coming up pretty soon so just work out get in shape learn
everything you need to learn so that you can run your business and especially in
e-commerce the field is… the game’s always changing we’ve
tons of tools that are changing all the time when you’re trying to get data it
switches around and you think you want this tool but ooh! a new a new tool came
that you can play with and you know it’s it’s just a very quickly evolving
industry so so if you’re just starting out in business here are a few books
that I would recommend financial intelligence for entrepreneurs is one my
husband and partner Scott loves this book gives it to everybody that he can
think of because he is not an accountant you just kind of plays one on TV I’m
really the CPA and this helped him really understand the financial aspects
of what’s going on another book that I just read I really like is simple
numbers straight talk big profits I’m going to be doing another YouTube video
too circling back to this one so I can talk about a few things there are a
couple of things I didn’t agree with but the vast majority and definitely the
main premise I’m a huge fan so if you haven’t read this go check it out and
then the other one I want to recommend was profit first I think we loaned out
our copy so I can’t hold it up for you but I’ll put the information down in the
description so that you can link to it and again I’m going to do another
YouTube video talking about that one the it’s a pretty interesting case and I
want to chat about it and then those are some great business development
financial books that can kind of get you started if you are in a time crunch and
you want to hit the ground running we have a couple of courses one is
accounting for Shopify and one is accounting for Amazon which you can link
to down below in the description and that should show you beginning to end
kind of how to handle the accounting for these complex channels and if you have
not subscribed yet please subscribe to my youtube channel we’ve got lots more
business development topics coming up as well as e-commerce and accounting so if
any of that is of interest to you please subscribe so you can be notified
when we’ve gotten new videos which come out every Tuesday and Saturday thanks

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