Growing your online store: hobby business to big business

Published on May 04, 2012 Growing your online store: hobby business to big business

Even with a successful idea that’s starting to take off, many online shop owners struggle with the challenge of turning their hobby business into a full-scale business that can eventually allow them to quit their job. They quickly find out that even the most successful businesspeople of all time needed to put in a lot of hard work up-front to take their business to the top.

Besides the basics of managing cash flow and the life/business juggle, one of the main barriers that online store owners face in scaling up their hobby business is their mindset. In order to be a big business you have to think like a big business. So, what’s the difference?

One of the big things that differentiates a successful large business from a small one is whether that business could substitute its owner without the business falling over. Could another trusted individual with similar flair or talent be trained to run the business? And if so, is the business limited by the time the owner (whoever that is) has to put into it? A business that could be franchised, sold, grown or outsourced has immense value compared to one that is totally reliant on the owner’s time and input. That’s not to say that businesses that rely on the intellectual property of the owner aren’t valuable, but it does mean that if the business is reliant on the intellectual input of one person it’s risky – because if that person cannot work or needs to work on something else, then the business can’t grow or operate.

Even for the smallest of online stores, if you want to make it more successful, think from the start about how you would scale it up. Some things you can do are:

• Take a day to document what you do. Could any of the tasks you do be outsourced to anyone else (if the need arose)? How do you go about getting customers? retaining them? coming up with new products? Contacting buyers? Handling complaints? What is the core of the business and what makes you different from anyone else in the market? Could someone else replicate this? What can’t they replicate and how could you train someone else to do what you do? Document your supplier contacts and keep them somewhere safe in case you decide to sell the business or you are injured and cannot run it for some time
• Ask yourself how you can make your online store reliant on the role that you perform rather than you as an individual. Could you later train a protege to take over the day to day operation of your store while you started something else? Is there any part of your business that you could outsource to someone else to get more done without compromising the competitive edge that you have? Think about all the tasks you do in the business and rank them in importance. Mark the things that are not “mission critical” as these could potentially be outsourced
• Use processes and force yourself to use them. When there’s only one or two people in a business, the temptation is to not use the same types of business processes as a big business would use. Avoid that temptation and apply some processes straight away including the following (at a minimum):
  • Create a weekly to-do list and evaluate whether you achieved this list every week
  • Have a weekly progress meeting with your business partner (if you have one) and go over what you have in progress and coming up – what new products do you have to sell? what products are selling? what products are not selling? how can you stimulate sales for the products that are not selling? what promotions are you running and how successful have you been at the ones you’ve run previously? what is the state of your finances and cash flow? what goals do you want to set for the future?
  • keep good track of your budgets – if you have stock, have a system in place to help you keep track of your expenses
  • invest in accounting software and use it. Even if it’s a pain to set up, once you have something in place you’ll be thankful that you have
  • invest in good calendar software that has reminders and use it. What keeps many people in the corporate world ticking is their smartphone or MS Outlook calendar beeping at them and reminding them of something that they need to get done. you can do the same.
• Think about when you will say no, and to what. One of the biggest reasons that growing businesses fail is that they don’t know how to say no and their growth gets out of proportion with their sales. Think about a situation like this: having a thousand Facebook followers, the orders are flowing in but you are unable to fulfil any of them because you are overloaded (or your stock keeps selling out as you didn’t order enough). A thousand Facebook followers bad-mouthing you on Facebook and Twitter is not a great way to grow, because negative feedback can stay on the Internet for a very long time.

To grow your small business into a big business it’s not just a question of scale, it’s a question of mind set. Think like a big business if you want to be a big business and think about how you can make your business so it could be eventually ring-fenced, outsourced or sold. A self contained entity that does not require solely you to function is much more valuable and a way to grow your shop or portfolio of websites. Otherwise, it’s just like cutting yourself off at the knees.