3 Tips For New eCommerce Ventures

We are contacted daily about unique projects, new ventures, migrations, custom development, and other eCommerce-related jobs. In talking with these companies, we learn quickly about the potential client’s aspirations but we also discover the same sticking points drag down the majority of these projects. Here are some areas to define before any contact is made. Getting off on the right foot can firmly set an eCommerce project on the road to success.

#1 It Takes Money to Make Money

The absolute first thing is budget. We are not suggesting that all project managers have an exact dollar amount (though that would be nice) before reaching out to a development agency. We understand how it goes — it’s sometimes very difficult to pinpoint. We are simply suggesting to start those internal talks now…right now. Is it $2,000, $10,000-$20,000, or $100,000-$500,000?

To arrive at any range, smart companies try to gauge the anticipated return. If you budgeted $100K on a new Magento site, then your CFO expects that money to be returned at some point through additional sales and will want assurance that all the new features will eventually pay off. The most successful organizations understand there is almost always a period of time that elapses before your new site can to pay for itself. You should factor that iin as well. Bottom line? Everyone should have a budget (or at least a range) – everyone.

Here is some math (sure, it’s a bit simplified):

Let’s say you have a site that generates $4,000,000 in gross revenue per year. Right on! After overhead, cost of goods sold (COGS), office expenses, salaries, marketing and various other expenses you have about $100,000 left. Ok, not bad but you want to earn more (who doesn’t want more?). Only problem is that your current system is limited by feature set, database, or marketing possibilities. You have come to the conclusion that you have hit a wall of $100,000 profit per year.

$4M gross revenue – overhead = $100,000 net

You check your bank account. Ah, after the month’s bills, you have about $100,000 right now. Again, not bad! With the anticipated profit and existing cash reserve, you should budget about $200,000, right? Probably not. Maybe $100,000 would be a better web development budget for that year. Then you have a decent amount of latitude since that’s half your business account and half your net revenue. That’s your budget cap. Hooray! Now, you don’t have to spend the whole kit and caboodle, but at least you now know where the line is drawn. Great, let’s move on.

#2 People Make the Difference, Even in the Ether

The next biggest piece is appointing an eCommerce manager. Who’s going to be attending this project? It’s not something you can really do between meetings. Are you, the boss, very technically savvy? Are you intimately familiar with every single moving part in your company and do you have 25 hours in a day?

The answer is probably clear. You need to find a promising current employee to take this responsibility or hire a new person who has a functional knowledge of shopping carts and how they work. This person or these people will have flexibility to dedicate substantial time to QA, provide feedback, and conduct the internal project management. It’s true that today’s eCommerce platforms handle transactions very well but they don’t run themselves. A dedicated employee or a focused team can make the difference between prosperity and failure.

So conjure in your mind the ideal eCommerce manager. Even if it is a family member, a buddy, or Jack from shipping. Start deciding which people can really get behind your idea and turn the wheels of commerce for your company.

#3 Start Writing the Plan

Write out your idea or project. Get it down in some way — email, napkin, voice recording, photos, and/or sketches. Spend hours, days or even weeks on it. Illustrate it to the best of your ability. All along the way, just ask yourself this question: “What do I want this site to do?”

The point of this exercise is not for you to spend months toiling over a large product requirement document (that’s what an agency is for), it’s to cut away some of the latency in the discovery process and get you thinking critically about the project which will be a huge time-saver.

Once you have these pieces in place you can go to work Googling, asking for referrals, scanning through Linkedin, and find a reputable, honest agency that can help you find success. With your thought-work, you can confidently outline your idea in an email, over the phone or in person. That feels great.

You may find that many times your idea may not meet your supposed budget, but at least you know where that line is drawn and you have options:

  1. Dial the requirements back a bit
  2. Roll out a different idea
  3. Borrow funds to cover overages
  4. Find another agency

The most crucial component of all three steps, start the thinking now.