Budgeting Tips For eCommerce Businesses
Budgeting Tips For eCommerce Businesses
A common mistake made by young entrepreneurs is to not have an efficient budget plan in place for their eCommerce business. The first fallout of this mistake is not knowing where you are overspending or where you are spending less than required. This impacts resource management and results in you underachieving your business’ strategic goals.
For an eCommerce business, the website is everything. It drives sales and marketing while establishing a 24/7 presence for your brand. How much you invest on your eCommerce website will determine the amount of money you will make. So, even though this article talks about budgeting tips, we won’t advise cutting short on making your website spectacular.
Budget preparation is a continuous process and should ideally be done frequently. Yes, there will be a lot of guesswork involved but the more you review your budget, the easier it gets to manage budgetary concerns.
Here are some budgeting tips to move your eCommerce business in the right direction.
- Analyze and predict your expected total revenue
Analyzing your revenue for the immediate period ahead is an important task while planning your budget. This might appear easy if you are running your eCommerce business for quite some time. But if you are a relatively new with budgets, then you might need help to determine your expected revenue.
You can calculate expected revenue by understanding how much you can earn for:
- Selling products on your website (retail)
- Selling bulk products (wholesale) or
- Ads displayed on your website
Accurate calculations of your revenues is important because you will use this money for variable and fixed costs.
- Deduct fixed costs from your expected revenue
Fixed costs are compulsory expenses regardless of whether you have made any sales or not. Here are some fixed costs for eCommerce businesses:
- Hosting and domain renewal
- Warehouse/office rent
- Repayment of loan
- Salaries of staff
- Insurance and taxes
- Software maintenance
Once you have calculated the fixed cost, deduct it from the predicted total revenue.
- Understand your variable costs
Variable costs depend on your business activities. They are not easy to predict and will change based on the amount of products you sell.
Here are some variable costs for eCommerce businesses:
- Sales commissions
- Cost of acquiring goods
- Promotion
- Shipping costs
- Utilities
An understanding of the variable costs you will incur will help to prepare your budget better.
- Keep aside a contingency fund for unforeseen expenses
You never know what to expect tomorrow and your business may face several hiccups in the next few months. It’s important to be prepared for unexpected costs such as:
- Break-ins
- Damage to goods and equipment
- Other emergencies
- Build a loyal customer base
A lot of eCommerce businesses fail to get their marketing right. They often spend a huge amount from their budget for promotions but fail to get the desired results. This is because they don’t have a loyal customer base they can showcase their products to. Use the power of content marketing, SEO and social media to gain access to your target audience. Keep them engaged through Facebook groups or blogs so that they are keen followers of your eCommerce business.
This will help ensure that your marketing money is spent well.
- Connect with influencers
Do you feel that your business still hasn’t been able to connect with a chunk of your target audience? Why not connect with influencers who cater to your target audience. They charge nominal fees to promote a product or link but the visibility you gain will be phenomenal.
At KServe, our Finance & Accounting team has helped many eCommerce businesses drive their growth through the right budgetary practices. If you are looking for a finance BPO service provider or a vendor who offers eCommerce call center outsourcing, then we are the right choice for you. Through exceptional back office support, we can help your eCommerce business reach newer heights. We look forward to hearing about your requirements soon.
