Tag Archives: business

Christmas Preparations

indexThe busy season for those of us who deal with games / toys and other knick-knacks that fit under the tree is coming up.  If you don’t think it’s time to start prepping for the season,you are definitely wrong.  Christmas can be as much as 50% of a business’s sales for the year, certainly for Fortress Geek, we see a significant (like 100-200% increase) in monthly sales volume.

What can you do to make your Christmas Season flow well? Here’s a few suggestions:

  • Advertising banners and on-site, in-season designs should be started immediately.  You want them ready for the Christmas season to put shoppers in the right mood and remind them to purchase what they need now!
  • It’s too late to start shipping Amazon for Toys & Games, but it’s worth considering places like eBay  and other 3rd party sites.  The bump in traffic during this period is definitely worth planning and grabbing at.
  • Get your shipping area ready.  Pick up all the necessary boxes, packing materials and tapes that you will need.   You don’t want to have to slow down / stop shipping just because you forgot to buy paper for the printer.
  • Pre-pack some of your best-selling items to prep for shipping.  If you know you sell 100 copies of the same item, all in single lots, you can pre-pack these to speed up shipping.
  • Make sure to organise multiple pick-ups / shipments as necessary with your courier company
  • If you are hiring extra help, make sure all documentation and processes are already in-place.  If possible, assign people to specific tasks that they can do continuously such that they can get good at that single task (pulling, packing, etc.) without having to learn the rest of your processes.

Do you have any other tips for e-commerce business’s during the upcoming business season?

Developing different forms of income

It’s interesting, with our business model, we’re beginning to generate different kinds of income.  We’ve begun to take service income for logistics / kickstarter fulfilment, 3rd party sales income from selling on eBay & Amazon, income from in-person sales at conventions and at our open hours, consulting income and even passive income from our Youtube videos.  Of course, our main income source is e-Commerce still and it’ll probably continue to be our main form, but it’s certainly interesting playing around with different forms of income.

The other aspect of these different forms of income is that it helps smooth out instability in other areas.  We get advertising income from our Youtube videos and that should, over the next fewyears, continue to generate a decent amount of funds.  It’ll never be a large amount of money since we develop our videos for a niche audience in our niche business, but it’s a nice addition and often seems to be quite stable.

Perhaps the area that we’d love to exploit and develop further is service income, from our Kickstarter Fulfilment to consulting.  It’s something we’ll have to slowly develop, between working on our other businesses.

Building a site – the cost of using Magento

Over the years, we’ve built multiple e-commerce sites.  We first started on osCommerce and then moved to Magento when it was still pretty early – 1.3 I believe.  Since then, we’ve built over 8 sites on Magento so I thought I’d write about our experience and the costs involved.

The Cheap

Let’s start with the basics – a basic installation of Magento should only cost about $500 with a theme purchased from another company and an installation by the developer.  It’s easy to install the basic system and Magento has a lot of basic, good functionality at that price.

The Basic

So, next up we have what I would consider a basic installation.  A purchased responsive theme, a few minor adjustments to the theme to make it to your liking, a new Search module, social button integrations, Mailchimp integration, Gift card modules and that should be it.  Perhaps add a one page checkout to the system too.

This looks something like Fortress Geek right this moment.  Lots of nice designs and additions, looks professional but isn’t too expensive to set-up and run.

Total cost: $2,000 – $3,000

The Complex

Here, we start looking at a custom theme and design (easily $3 – $5k to start), social button integrations, reward point integration, gift cards, a one page checkout, custom reports, custom product page design and automated upsell / crossell modules.   We’ve also got bestsellers lists, an integrated WordPress blog, multiple payment methods and a shipping module.

That’s what Starlit Citadel is.

We’ve spent over $20,000 easily over the course of a couple of years on this site.  We’ve upgraded, tweaked, upgraded again.  That’s a lot of money, but we think it’s worth it.  These days, we don’t spend much on the site though – it’s just upkeep.

It’s Not All About Price

I recently had a discussion with another redditor about pricing.  Specifically, someone asked what kind of margins other e-commerce owners had and what their markup should be. Instead of answering, the redditor posted that they should stop focusing on price as a number and the only way to compete and as a reflection of their brand.

I don’t disagree with that – it’s actually a decent way of looking at it.  However, it’s also worthwhile understanding that when you develop your business model, it’s not just about deciding on where you want to position yourself (and thus the price) but also the underlying business industry you are working in.

It’s even more important to understand this and your business resources when developing your business.

Let’s give an example – you sell Widget A. If you and your competitors are all selling Widget A, then you cannot afford to price yourself too far off from your online competitors. If they sell it for $10, it’s really, really difficult for you to sell it for $50 or $30. You might be able to pull off $20. Part of how much you can afford to price yourself away from them is based off how knowledgeable / fractured your market is. For example, if a significant portion of your market reads 2 magazines, and your competitors all advertise there, you can’t be too far off. If, however, your market is extremely fractured, then you can afford to price yourself at a higher rate.

Developing a brand will allow you to price at the $20 range and get customers – the number of customers really depends on the demand curve.  How brand (in)sensitive are your customers? How brand loyal?  If you sell sugar – the answer is almost negligible.   If you sell high end clothing, the answer is extremely high.

In addition, you need to take into account the various services and your resources – a high price generally requires a high level of service.  That level of service generally dictates a higher cost in time and money.  If you are a one man show with very little money, you might not be able to handle a lot of business – so your markup better be really, really good.  Again, at the higher ends it’s viable at the few hundred dollars and more range. If your product is only selling at $30 but that’s a 300% markup, things might get tricky.

In addition, there’s also the question on time.  Getting a $50 customer will likely take longer than getting the $10 customer.  In e-commerce terms, it might be the difference between a 1% conversion rate and a 0.01% conversion rate.   When traffic is hard to get, that 0.01% conversion rate might be a killer.

E-Commerce – A Real Business

So. you want to run an e-commerce store eh? Well, if you do you should start thinking about the various parts of the business you will have and how you wish to handle them.  Specifically:

  • Web Development / IT
  • Hosting
  • Administration
  • Accounting & Bookeeping
  • Legal
  • Human Resources
  • Stock
  • Shipping
  • Customer Service & Sales
  • Marketing
  • Purchasing

We’ll talk about each of these factors one by one, but you’ll want to think about how you want to handle each of these areas if you have an e-commerce business.

Doing what you do best

We’re an e-commerce company.  We plan the site, add new products, manage the logistics and ship our products to customers.  Our focus and our specialisation basically falls into:

  • B2C Marketing
  • Logistics

It’s what makes us good and what keeps us successful so far.  What we aren’t are:

  • a B2B company
  • a publisher or manufacturer
  • a video production company

Both require expertise in areas that we do not have.  Focusing on what we do best generally generates the most profits – pushing out to areas where we don’t have expertise in, while good in terms of diversifying risk can also leave customers (current and future) unhappy with us.

It’s often better, especially when  you are small to focus on what you are best at.

Friends & Family – Working Together

So you own a business.  Now you’ve grown to a point where you might want to hire or outsource some parts of your business.  And oh, look – Bill’s an Accountant.  You like Bill. He’s been a friend for the last 5 years.  Maybe you should hire Bill…

Maybe not.

The Pro’s

  • Culture fit.  Sure, people are different in a professional vs social situation; but you have a good idea of his personality already.  And theoretically you socialise well together already, so he should fit your culture (if you brought your own personal values into the business that is).
  • Less ‘search’ time required – hiring someone new always involves a level of ‘searching’.  This way you cut that out.
  • 3rd party references might already be something you have – friends of friends, your sister, etc.
  • Backdoor access. Sometimes, some of the most talented people out there are happy with their current jobs / workload.  However, as a friend you might be able to drag them out of their comfort zone to work for you.

The Con’s

  • Social =/= Professional.  Just because he might be a stand-up guy in a social setting does not always translate to a professional setting
  • No skill assessment.  As you know them on a social level only, you haven’t assessed them on their actual workplace skills.
  • Future awkwardness.  What if you have to fire them? This could easily ruin your non-professional relationship.
  • Fraud.  A lot of fraud happens because we apply different standards for ‘friends’ compared to employees.  Things we would jump down an employees throat for, we might allow in a friend, which can create situations when fraudulent activity could easily take place.
  • Favoritism.  This is a dangerous one, especially if your friend is mildly more competent than your other employees.  You can start favoring them significantly more than other employees, over and above their actual skills because of this.

So, what should you do?

Hire them the same way you’d hire a total stranger.  Ask for references.  Get their resume (and check it over!).  Do an interview.  Treat them as if they are any other potential employee.  This not only sets the tone of your professional relationship, it also ensures that you have done as much as possible to ensure that they are the right people for the job.

Business Mind

I’ve been talking (and have talked) to a few people about running their own business or taking an idea or current business to the next level.  The more recent pair already had existing businesses and were looking at expanding to a more formal setting.  It was interesting discussing matters with them, partly because I own and run a mildly successful business and partly because of how it illuminated the things I had learnt the hard way.

I never had a mentor when I started this business, partly because I felt I knew or could learn everything I needed to run it and partly because I had a strong network of friends who could provide guidance and information when I needed it on specialised topics.

One thing they didn’t teach me was the title of this post – a Business Mind.

What Is It?

Ever walk into a restaurant / grocery store / other business and then, just for fun, start scanning the business as an entity? Do you count the number of customers? Guess at their average transaction value? Take a stab at their expenses to figure out their revenue and expenses? Maybe even consider what processes / sales / marketing approaches you’d take.  All the with knowledge that this is idle speculation?

Yeah, that’s what a business mind is.  It’s a way of looking at the world that sees dollars and cents, processes and people and it’s something that’s hard to shut off.  Even in a random conversation with strangers, I find myself falling into that state of thinking.

For the Greater Good

When you start analysing businesses, especially those outside of your own area you are attempting to pick up new ideas.  Oh, sure – you might want to invest in those businesses later if you are rich and successful.  Mostly though, as an entrepeneur you are looking at these businesses for ways to make yours better.  It’s why it’s hard to turn off – any little good you can eke out can be applied to your business.

In addition, it’s a puzzle.  Perhaps because I’m a Geek, my mind likes puzzles.  Business is the biggest, most challenging puzzle there is.  The rules constantly shift, the players are numerous and unknown at times and there’s no set ‘win’ condition.  You can just keep playing.

Pieces on the Chess Board

Unfortunately sometimes you get too carried away.  You get drawn into your own world, and start forgetting that the people you are analysing are more than chess pieces.

You forget that not everyone has the same win conditions in their mind as you do.

And as a businessman, you always look for the downside.  You are always looking for the problems.  Which can be weird when you are talking to friends and family who just want some help.

Sometimes, turning it off is your best call.

 

Those Who Know, Do

And those who don’t, consult.  Or teach.  Depending on who you ask.

A lie, of sorts.  There’s a million reasons why someone would consult or teach.

  • Lack of capital to start a business
  • Lack of desire to learn the other areas of business (e.g. logistics or accounting or HR)
  • Enjoyment of the act of consulting / teaching
  • Insufficient time to run a full business
  • Using consulting / teaching to boostrap capital
  • etc.

Yet, like most things there’s a grain of truth in there.  Be careful about the consultants and teachers you find, always check their previous references and check what they’ve done.  Many aren’t able to run a business because really, they just aren’t that good.

Launching new businesses

So we’re in the midst of launching a new business, which not surprisingly takes a lot of time. It’s amazing what you need to get done to get a new business up. Here’s the various areas that need work just to get going:

  • Business name
  • Domain name
  • Business logo
  • Dedicated IP address & Server
  • SSL Key
  • Merchant account
  • Sourcing of distributors
  • Website with Shopping Cart
  • Site Design
  • Upload of product information including description & images

And that’s just to get the site launched without any optimisation.  We get to skip a few steps too like Canada Post / Shipping options because we’ve got an existing ecommerce business.