Why your small internet business won’t grow
March 4, 2014
Nick Wood co-founder of Storage Boost and Chester Self Storage highlights the opportunities and pitfalls to consider when growing a small online business.
2014 brings an aura of positivity! Better GDP figures, unemployment decreasing. The glass is half full approach of recent years being eclipsed by the sound of optimism.
Prior to the 2007 financial meltdown, the growth in small, growing, online retailers was significant. From personal experience I launched an energy saving gadget website in 2005 and sold it in 2007. Having owned other retail businesses prior to this it seemed so simple by comparison. Little start-up cost, no landlords or crushing business rates! All in all a more comfortable way to get a business going.
Then Northern Rock collapsed signalling five years of layoffs and the high streets decline; against the backdrop of growing internet sales and an ever increasing number of small medium and large internet businesses. Selling every possible product or service, in most cases through Google, eBay & Amazon. At our storage centres in Crewe, Stafford & Chester we saw a huge increase in usage of our flexible offices and storage units by new and growing internet enterprises.
A great news story? Yes. However, internet businesses have their pitfalls. It isn’t just a walk in the Google Park. You still have to have apply traditional successful business practises if you want to grow and prosper and create a long term successful business and income stream. So what do you need to be aware off you may ask? In my experience have a think about these things:
I see many online businesses with low margins on the product and services they sell. If you’re a small, low volume, online business you are going to have problems moving from your home to the next level because you simply don’t have enough cash to pay for the next stage of your business, whether getting extra space, employing someone, buying more stock etc. Growing your online business is more than just “sell more” it’s important to look into your supply chain, negotiate better terms on price and payment and where possible find distribution rights; that is in my opinion the holy grail of an online retailer. Learn from the most successful retailers like Sports Direct, Top Shop and Primark. If you don’t think you’re big enough to do that then you’re not looking hard enough….get more margin!
There are very few businesses that don’t have competition, due to the nature of retail it is highly competitive. Traditionally you could protect your income by having a physical location where people could come and buy your product and build a personal affinity with you. Online is different if you haven’t already realised Google, eBay and Amazon are the biggest landlords in the world and you have little security of tenure. You only need some bright spark in California to release a new structure to the platform you sell your products on and you can be out of business in a week. Scary I know but it happens. I have spoken with numerous companies in recent times who have come a cropper to a Google algorithm change or a new eBay seller selling what you do cheaper!
Don’t Be BrandLess
The cost of living has risen in recent times, wages remained stagnant and the availability of credit reduced. In short there is less money around. It isn’t as easy as it used to be to start and grow a successful business, even online. So you have to raise your game and build a cloud of differentiation as I like to call it; with the people who you would like as your customers.
Building a brand doesn’t mean being the next McDonalds or Apple or cost billions, it means getting the right group of people/customers to have a relationship with you and your business. These customers will use you and recommend you because they trust and like what you provide. By building a brand you move away from just being a “me to business” one that just does what the next one does on Google and focusses on price.
So how do you build a brand? Show some love…start with your existing customers by getting them to come back to you. Use email marketing or social media, incentivise them to recommend you to others, let them learn more about your business and you personally. People buy from people, even in Cyberspace; take a look at some great tips from the U.S.A on building a brand.
Growing an established business in most cases is a lot easier than a new business, you understand how you got customers in the first place and can use this know-how to get more. For younger businesses you are less likely to know, therefore growing quickly increases the risks of getting things wrong. To avoid this it’s important to understand your business model as quickly as possible what works, what doesn’t, what keywords generate the most purchases, what type of social media post acquires the most interest. Personally I find it fascinating to sit down over a glass of vino and look through Google analytics or social analytics from SocialSignIn to see what works and what doesn’t.
Next it’s important to de-risk your growth if you are bringing on a new employee, take advantage of grants and programmes from universities where you can get a graduate for free like Unite With Business or if you are taking on a paid employee start them on a zero hours contract. Likewise if you are moving out of your home, go into flexible space, where you can grow and contract….the last thing you want if your sales drop, is a lengthy lease or five year telephone contract.
Hopefully these points are of value to you as well as others! Apply them to your online business and you will go from strength to strength. Feel free to get in touch and talk any aspect of growing a successful online business or call one of our team at Storage Boost or Chester Self Storage who can help you with any questions about our flexible business space.
Nick Wood is co-founder of Storage Boost, Chester Self Storage & Social Media Dashboard Company SocialSignIn.