E-commerce businesses in particular are one of the most overlooked investment opportunities. However, the opportunity is huge as the overhead is typically a fraction of the brick and mortar business, and these modern cash flow investments can realize returns on investment that outperform more traditional cash flow investments quickly. That said, there are many nuances within e-commerce businesses – it’s much more than just selling and shipping products. There’s start-up capital, cash flow, and diversification to consider, and with the fluctuating cyclicality of e-commerce business (sales have peaks and valleys and go through annual cycles), an owner is constantly challenged to keep a constant stream of cash flow in a manner that allows her to meet expenses and cover the valleys?
I have been capitalizing on the abundance of e-commerce opportunities through Amazon and most recently Walmart, for years and am now a seven-figure per year seller. Here are my suggestions on how to effectively manage your cash flow while dealing with the fluctuations of the e-commerce world.
Tips for Managing Cash Flow
- Calculate conservatively. Sure we all like to think and dream big, but when calculating cash flow and reserves, be sure to prepare for a bad day, month, even quarter. And don’t forget the tax!
- Automate bookkeeping and payments. This is key. If you can know what’s going out like clockwork each month, your accounting will be accurate so your cash flow calculations are on point.
- Reconcile weekly. This helps you to pick up any errors as close as possible to the time they happened – it gets much more complicated to untangle that kind of thing if time has passed.
- Get paid as fast as possible. Shorten the amount of time between a business expense and getting paid. If you need growth capital, I recommend getting paid through Payability, who can help increase revenue with instant access to capital and accelerated daily payouts. Instead of getting paid every 14+ days, sellers can get paid the next day, every day.
- Increase your Average Order Value (or AOV). If your average customer spends $35, figure out ways to bump that up to $50 – like by offering free shipping for orders over $50 or bundled deals.
