20 secrets of successful Shopify brand founders

June 29, 2023

Unlock the winning strategies of thriving ecommerce brands and set yourself up for success

Unlock the winning strategies of thriving ecommerce brands and set yourself up for success

As ecommerce accounting and ecommerce bookkeeping specialists we work with 600+ Shopify, Amazon and ecommerce brands, so we’ve seen the whole gamut of ecommerce accounting stories—the good, the bad, and the ugly. 

Here are the top 20 lessons we’ve learned from successful ecommerce brands.

Set yourself up for success: Fundamentals on how to set up your business 

1) Keep 3-6 months' worth of expenses in cash at all times

This ‘rainy day’ fund can mean the difference between weathering a storm or losing your shirt. 

2)Create a separate bank account for all of your taxes 

The pain of paying taxes isn’t as bad when the cash wasn’t yours to begin with. 

3) Assign your time a value per hour and consider the cost of you doing admin or back office tasks. If the economics don’t make sense, outsource it. 

Doing it yourself may seem like the cheaper option, but it’s often the most expensive one when you consider the time you aren’t spending on sales, marketing, operations, etc. 

4) Set your bookkeeping up to be as close to real-time as possible.

It’s the only way to make sure you are making data-driven decisions to grow your brand and aren’t flying blind.

5) When you have reached over $3 million in revenue and have cash to invest in growth, it’s time to hire a fractional CFO. 

Fractional CFOs take your numbers and provide strategic financial advice to make sure you are on the right path to your goal. 

Cash is king: When it comes to cash flow, timing is everything

6) Negotiate payment terms with vendors to extend as long as possible.

Doing this effectively turns your vendors into lenders. 

7) Pay bills on the last day.

Hold onto cash as long as possible. This includes using credit cards and paying the bill only when it’s due. 

8) When purchasing products, consider the minimum you need and don’t pre-buy extra. 

Negotiate the minimum order quantity (MOQ) with your vendor, so you get lower prices without pre-buying too much inventory. This will increase your available cash and decrease your warehousing and other inventory-carrying costs. 

Grow your revenue: Don’t leave cash on the table

9) Focus on customer retention and loyalty

It costs 5X as much to acquire new customers as it does to retain existing customers. Focus on retention by offering a loyalty program or discounts for returning customers. 

10) Increase LTV with a subscription model

Creating a subscription-based model results in higher recurring revenue, and a higher LTV. 

11) Don’t leave cash in the cart

Waive or reduce shipping fees to reduce the rate of abandoned carts. Consider alternative shipping models like buy-online-pickup-anywhere option (BOPA) which is usually 30% cheaper and enables shipping to commercial locations for pickup like grocery stores. 

12) Reconsider your product offering to fit today’s economy

Consider selling bundles or kits to add value, or changing your package sizes to keep prices consistent. For example, selling a 6-ounce package instead of an 8-ounce package. 

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13) Every marginal growth in sales needs to have an equivalent or even more than equivalent marginal growth in net profit

As you grow, you need to leverage it to reduce CAC, and inefficiencies in the logistics. For example, higher volumes means more negotiating power with your vendors. 

Reduce your expenses: Best ways to reduce costs and increase cash flow

14) You are probably paying for subscriptions you don’t need

Review all your subscriptions - cancel any subscriptions that you haven’t used in the last three months (you can always add them back later). 

15) Optimize your packaging to reduce fulfillment and logistics costs

Small changes can make a huge difference in shipping and logistics costs. 

16)  Negotiate everything

Shaving off dollars or even cents can make a big impact in the long term. See if you can negotiate with your supplier to reduce costs by $0.05 a unit or negotiate on merchant fees, etc. It adds up.

17) Get rid of SKUs that aren’t profitable

 If not, you’ll end up cross-financing your lossmaking SKUs with your profitable ones. 

18) Automate as many processes as you can

It will reduce labor costs and allow you to focus on higher-value tasks that can generate better returns for your business. 

Know your numbers 

19) Instead of focusing on your ROAS, think about your profit from ad spend (POAS)

How much money do you get back on your net bottom line per $1 you spend on advertising? Profit first, always. 

20) Know your gross margin at all times 

Unit economics should be at the forefront of your business decisions - how much does each sale cost you. Consider all costs related to the sale, including COGS, merchant fees, shipping costs, fulfillment costs, and pick-and-pack.

TL;DR

Now that these secrets are out, follow these tips to maximize your profits. Use Finaloop for AI bookkeeping and AI accounting to help you ensure that your financials are up-to-date and 100% accurate.

Sign up HERE to get your financials set up today.

About Finaloop

 

We are a technology company providing automated end-to-end accounting service to ecommerce businesses. Our system connects to your apps, syncs all your data and reconciles your books in real-time, replacing your bookkeeper, your accounting software, and your ecomm integrations. We offer reconciled books available 24/7, tax-saving insights, and a single place for all your financial data.

 

*The information provided on this website does not, and is not intended to, constitute legal advice. All information, content, and materials available on this site are for general informational purposes only. Readers are advised to consult with their attorney or accountant with any questions or concerns.*

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