How do I know if a product is viable? When is it time to grow my team? Which developments in the broader industry are most important to keep track of?
At times, running a business can feel isolating. It can be tough knowing who to turn to with questions. With so many competing voices in the ecommerce space, a lot of founders end up feeling lost.
We get it. We know it can be exhausting trying to juggle as many ideas and wear as many hats as you do.
We’ve collected together some of the most vital small business questions that you are (or should be asking). Then, we’ve broken them down between the early phases of starting an online business, the process of scaling over time, and the broader shifts on the horizon.
The small business questions you need to answer today:
1. What problem does my business solve?
2. What’s the profile of my ideal customer?
3. How long will it take to become profitable?
4. What parts of my business aren’t working?
5. How can I build my marketing?
6. How can I expand my product line?
7. What’s next in ecommerce?
Small Business Questions for Getting Started
The beginning phases of running a business can be particularly stressful. You’re constantly making decisions that will steer your business through a fragile part of its lifecycle. This early stage is where you start defining your brand and building the framework for how you interact with your customers.
The good news is that there’s a ton of space to grow and change over time. You aren’t necessarily locked into the choices you make here- after all, you will probably rebrand, revamp your product line, and gradually find your footing as you go.
The answers to these small business questions will help you shape your early decisions and find a viable, profitable approach right from the beginning.
What problem does my business solve?
Every great product works (and sells) because it’s the answer to a question, the solution to a problem.
Spotify, for example, became a multibillion dollar company by solving a simple problem. In the words of co-founder Daniel Ek, “I realised that you can never legislate away from piracy… The only way to solve the problem was to create a service that was better than piracy and at the same time compensates the music industry.”
Keurig K-Cups made it easier for office workers to make a quick cup of coffee and get back to their desks. Scott McCoskery created one of the first fidget spinners because his habit of clicking his pen during meetings bothered his coworkers.
That said, a new product can be similar to an existing one and solve a new problem. For example: K-Cups have a large environmental footprint. So, a competing product with an eco-conscious approach might have an audience.
The trick here is realizing that novelty only goes so far. For a business to grow and succeed, the product needs to fill a meaningful role in the customer’s life.
What’s the profile of my ideal customer?
Most businesses break down their ideal customers based on two different metrics: demographics and psychographics.
Demographics explain basic factors about your audience- income, location, age, etc.
You can use demographics to answer small business questions like:
- What can my ideal customer afford to pay?
- How far will I be shipping my items?
Psychographics, on the other hand, have more to do with your customer’s desires and their ideas about themselves. What do they want? What do they aspire to?
You can use psychographics to answer small business questions like:
- What kind of marketing does my ideal customer respond to?
- What do they value in a product?
Both forms of data are particularly useful for targeted advertising online. For example, if your combination of demographic and psychographic data shows that your customers are generally young and health-conscious, you can use that information to create Facebook ads and Google Shopping listings tailored to their needs.
Understanding both will help you narrow down your niche and find the customers you have the best chance of connecting to.
How long will it take to become profitable?
First thing’s first: this varies really widely from business to business and industry to industry, but on average, it takes two to three years for a business to become profitable.
That said, online businesses have the massive advantage of significantly lower overhead costs than traditional brick and mortar stores.
The biggest factors will be the cost of creating or purchasing your product, fulfillment and inventory storage, maintaining your site, and advertising.
Pay-Per-Click (PPC) Advertising, in particular, can get pricey, and finding a balance will likely take time. It’s important to invest in this channel, though, because early on your organic reach will probably be really limited.
The most important thing to remember is that it takes time to build up momentum. Don’t worry too much if things seem to be moving slowly. In the words of Twitter and Medium co-founder Biz Stone: “Timing, perseverance, and 10 years of trying will eventually make you look like an overnight success.”
Small Business Questions: How to Scale a Business
Once a business starts making more sales and moving more inventory, things tend to get more complex.
Paul Graham, founder of Y Combinator (an investment group that helped launch AirBnB, DropBox, and other big name companies), famously recommends doing things that don’t scale early on to build an audience.
Basically, he’s talking about going above and beyond to create an unparalleled customer experience. From here, these customers become advocates for your brand.
And while that personal touch really matters, it’s important to build new processes to meet the expanding demand for your product. These small business questions will help you find a balance and grow more smoothly over time.
What parts of my business aren’t working?
Speaking of things that don’t scale, one of the most important questions to ask as you grow is where you can trim back to keep your business streamlined.
Social media, for example, can be a great top-of-funnel channel for getting the word out about your brand, but it can also be really time-intensive. As you grow, look at your social channels, see which ones garner the most engagement and tie most closely to your sales processes, and cut back the others.
Fulfillment, while a vital part of running an online business, can also be really costly. Use bundles and offer discounts on larger orders to increase your average cart value and decrease the number of individual shipments you make over time.
Take a look at your manufacturers and suppliers and consistently compare their rates to the competition. Even small changes here can have a big impact down the line.
How can I build my marketing?
The ways that your business markets itself will necessarily grow and become more complex over time, and it’s important to invest wisely in the channels that you choose.
Content marketing can be tough to maintain early on, but it’s incredibly important for growing businesses. There is a huge range of ways to approach content, so don’t feel like blogging is the only option. Videos, podcasts, and webinars are all modern forms that can reach huge audiences when done right.
While you’ll likely want to focus on just a couple channels, connecting with influencers on social media and leaning into user-generated content are great ways to build your following. Look for ways to reward customers that engage with you online.
Blume, for example, offers Blume Bucks for customers anytime they place an order, follow the company on social media, or leave a review. Shoppers can redeem these points for branded merchandise, simultaneously creating happier customers and massively expanding the reach of the business.
Finally, remember that paid advertising is a necessity for today’s crowded web. Gradually increase your investment over time, and consider working with a consultant to finetune your targeting.
How can I expand my product line?
Building a brand experience that meets a range of related needs is vital to a healthy growth process. Expanding your product line comes back to understanding your ideal customers and crafting your business around those needs.
Bringing together a range of complementary products can also increase the size of each sale, especially if you bundle together different kinds of products.
For example, a coffee roaster can sell their beans online, but they can also carry mugs, brewing equipment, and filters. From there, they can create video and eBook content to educate their customers about best practices for making the perfect cup, and even start hosting coffee cuppings in their local area for die-hard fans.
Right there, they’ve dug into a niche and become a one-stop-shop for coffee fanatics. The digital products can become passive income over time, while the in-person events offer opportunities to introduce a new audience to the brand and build deeper connections with other businesses in their area.
Coming back to psychographics- think about the broader desires that your ideal customers have in relation to your product and look for ways to fill those needs.
Business Questions About the Future
What’s coming next in ecommerce? Well, a lot. After all, ecommerce is an incredibly dynamic, fast-moving sector, and progress here is the cutting edge of modern business and technology.
Let’s end by taking a look at some of the biggest trends and upcoming developments that will shape the industry in the next couple years.
One of the most important shifts over the last few years has been more and more platforms opening up for sales online. Multichannel selling is vital to connecting to a broader base of customers. Selling on Facebook, selling on Instagram, and listing your products on WordPress and Blogger gives your customers more chances to purchase seamlessly, without interrupting their other online habits.
Optimizing these channels for both engagement and conversion takes a lot of fine-tuning. After all, you still need these sites to be compelling enough to draw potential customers in, and too many hard sells can undercut that goal.
Focus on providing value and building a community and make your products a consistent presence without getting pushy.
What does personalization mean in the context of ecommerce? Chatbots, for example, are a popular way that online stores are helping their customers find exactly what they’re looking for in less time.
Harnessing user data to provide an experience tailored to their needs is a growing theme in the ecommerce world. Again, it comes down to psychographics- understanding what a customer wants in a broad sense, and building a shopping experience that increases their chance of conversion.
In fact, 49% of shoppers decide to purchase something they didn’t initially intend to buy because of personalized recommendations.
As machine learning improves, we expect to see a lot more tools that harness the power of data for small businesses as well as enterprise companies.
On average, most people send about fifteen texts a day, and millennials in the US spend triple the amount of time texting than they do calling or emailing.
So it’s a channel where consumers are really, really engaged, which is why SMS is creating a lot of buzz in ecommerce circles right now. Used right, texting can allow for instant back and forth between a customer and a business, offering huge opportunities for customer service, product personalization, and streamlined fulfillment.
There are a lot of regulations around texting and brands are still figuring out the best approach. More than anything else, the trick will be respecting the personal nature of your customer’s phone and avoiding spamminess at all costs.
Keep an eye on SMS in the next year, and start thinking about ways that your business could harness this new tool.