Let’s be honest: despite their ever-surging popularity, eCommerce businesses are no easy feat to run. In particular, one aspect is so crucial that it can become almost overwhelming: making sure that finances are in a good place.
This is even more important for those business owners with ambitions to scale up their eCommerce store. With unstable, unreliable cashflow, in fact, growing any kind of business is pretty much an impossible venture to throw yourself in.
So, whether you are currently having trouble managing your finances, or if your finances are in a decent place but you are worried they might not stay like that throughout an upcoming business expansion, then our article right here can help.
Keep reading to find out the top 15 ways in which you can achieve financial discipline for your eCommerce store – and maintain it in the long term, regardless of what life throws at you.
Financial Discipline: What Is It, Exactly?
Before we jump into the core of our guide, it’s worth pausing for a minute to consider the expression “financial discipline” in order to try and understand what it refers to, and why it’s such a vital practice for your eCommerce business.
Financial discipline refers to the practice of managing your finances in a positive, realistic, and empowering way by putting in place certain plans, reviewing them regularly to ensure they deliver the results you expect, and turning them into an easy-to-follow habit that will accompany you for life.
There are many reasons why practicing financial discipline is beneficial to your eCommerce business. For example, by ensuring that your finances are always in a good, safe place (metaphorically speaking!) you gain the peace of mind that you need to focus on your business goals, such as expansion, hiring processes, and more.
Similarly, knowing that your finances are well-managed can give you that much-needed boost to stay motivated and continue implementing your tips and tricks to remain on track: it’s like a virtuous circle, basically.
Now, let’s delve into the 15 top tips to achieve and keep solid financial discipline for your eCommerce business.
1. Plan, Budget, Forecast
Just like any other business, your eCommerce store will hugely benefit from a well-thought-out financial plan.
So, set aside some time to go through your current financial situation and, based on that, try to come up with as detailed a future plan as you possibly can.
This should easily lead you to make some initial considerations about how you can budget your finances in the short, medium, and long term, as well as forecast your spending.
2. Always Be Ready to Pay Your Taxes
As an eCommerce business owner, you must pay your taxes every year. This is a fundamental aspect of practicing financial discipline: by delaying your payments or not paying enough, you will rapidly plummet into debt which, as we will see shortly, can seriously damage your finances.
Therefore, always keep an eye out for the next deadline, have your paperwork, records, and money ready, and make sure you complete all your payments accurately and on time.
3. Make Sure You Use the Right Tools
By “tools” we mean, of course, digital software and other similar programs. Managing your finances in a manual, paper-based way, in fact, is not only incredibly complex and time-consuming, but it can lead you to make easily avoidable mistakes that might end up costing you a bomb.
4. Set SMART Goals
The SMART goals technique is a wonderful, effective, and easy-to-implement way to gain clarity over your current situation, challenges, and ambitions. It’s so versatile that it lends itself really well to be applied to the context of financial discipline for eCommerce – let’s find out how, in practice.
Specific: Your financial goals should be as detailed as possible. Try to include practical examples of what you are planning to achieve.
Measurable: In order to ensure that you are actually getting where you want to with your financial management goals, you need a foolproof way to measure how they perform against your expectations.
Achievable: The financial goals that you set for your business should be realistic and fairly easy to attain.
Relevant: Regardless of what other businesses in your industry might be doing, the goals that you establish for your own business should be entirely relevant to your business, and your business alone.
Time-bound: Remember to include a rough deadline that reminds you by-when you are planning to reach your financial goals. It could be quarterly, yearly, or even longer-term, it all depends on what your goals are and how much effort you are willing to put in.
5. Pay Off Any Debt
Debt doesn’t just hinder your personal finances – it can destroy your business ones, too. Before you even think about investing and saving money, it’s imperative that you settle any existing debts that you may have.
6. Save Money Regularly
When running a business, saving money can sometimes feel like an impossible task. After you have paid your suppliers, your taxes, your website domain, and any other mandatory expenses, you are likely left with not a lot of money in your pocket.
Nonetheless, ensuring that you save some of that money on a monthly basis is paramount.
7. Look at Others for Inspiration, not Peer Pressure
Let’s say that you run an online store selling beautiful, hand-made jewelry. In all likelihood, you are more or less aware of who your direct competitors are.
They might be other local, small or medium businesses like yours, and some of them might be currently doing a lot better than you in terms of sales.
As tempting as it is to feel pressured into almost “copying” their selling behaviors, you need to remember one thing: you and your business are unique. Your challenges, goals, ambitions, and needs are not the same as anyone else’s.
So, why should your selling strategies imitate theirs? Do feel free to let yourself be inspired, challenged, and motivated by other people’s success, but try not to fall into the trap of emulation – your finances will be the first aspect to suffer from it.
8. Set Up an Emergency Fund
Unless you are OK with the prospect of potentially going bust soon after something unexpected happens with your finances, it’s a good idea to have some saved-up money ready to help you stay afloat.
What if, for example, another unprecedented situation like the Covid-19 pandemic was to suddenly happen in the future? What would that mean for your eCommerce business?
In order to prepare yourself – and your business – for whatever life can throw at you, setting up an emergency fund is the best way to enjoy that little bit more peace of mind that can allow you to stay in business while you are figuring out how to deal with the situation.
9. Keep Reviewing, Analysing, and Adjusting Your Financial Plans
Once you have created a financial plan, it would be tremendously short-sighted of you to think that it is set in stone and can’t ever be tweaked.
In fact, financial plans should act more like temporary guidance, and you should be fully expecting to have to review, analyze, and potentially adjust them depending on the current and future circumstances of your business and finances.
10. Don’t Play Catch Up!
If you are one of those eCommerce business owners who leave their financial management tasks to the very latest, then you are going to have really big troubles when it comes to achieving financial discipline.
Instead of scrambling to get all your records in order a day or so before a deadline, try to set aside some time, every week, to run a bit of financial admin. This will ensure that the whole process is not only more efficient and profitable, but much less stressful, too.
11. Consider Teaming Up with a Pro
Especially in the beginning, pursuing financial discipline can feel like an enormous mission to accomplish. This can be made even more challenging if you are flying solo, which is why we recommend teaming up with a professional.
By working with someone who knows the ins and outs of business finances, you are in a much better position to realize your financial dreams, achieve stability, and grow your eCommerce business gradually and safely.
12. Minimize Your Personal Spending
If you run your own small eCommerce business, the chances are that your business finances are tightly linked with your personal ones.
For this reason, it’s a good idea to try – at least temporarily – to live a bit more mindfully when it comes to your own personal spending.
There are lots of resources online that can help you implement a simpler, more frugal, and more minimalist lifestyle, and this can give your eCommerce finances a huge boost, especially if you are just starting out.
13. Look into Investing – and Diversifying
Once you have reached a certain degree of financial discipline, it can be worth looking into ways to make your money work even harder – and smarter – for you and your business.
One of the best ways to achieve this is through investments. Naturally, you will need to make sure that you invest in something that has good growth potential, and remember to start small in order to minimize any potential risk.
Similarly, when you have gotten to grips with investment strategies, you can choose to diversify where your money goes. For example, you can invest in two, three, or even more different areas and assets – think about bonds, stocks, and real estate.
If you diversify your investments, you are much less likely to be heavily affected by a loss of money if one of your investments doesn’t go to plan.
14. Praise Yourself and Reward Your Efforts (When You Can Afford to!)
Staying financially disciplined is hard enough when your personal finances are involved, but it can be an entirely different story if you include your business finances, too.
Therefore, to keep yourself motivated and on the right track to maintaining financial discipline in the long run, it’s important that you acknowledge when you’ve done well – and that you reward yourself for it.
We are not suggesting splurging on something totally unnecessary, or anything like that. On the contrary, what we mean is that you should treat yourself to something small but meaningful and realistic – something that has the power to keep your commitment and determination high.
Whether it be investing in a new and improved type of financial management software for your eCommerce business, or finally getting around to working with a professional graphic designer or copywriter to spruce up your online store, the choice is entirely yours.
15. Be Patient and Don’t Give Up
Financial discipline is almost like a muscle in your body: the more you train it, the better and more efficient it becomes. Therefore, it would be a bit silly to expect immediate results from your new financial management strategy.
Just as muscles don’t suddenly get better or more toned overnight, your finances will take a little while to show any tangible signs of improvement.
And while this might make it a bit more challenging to stick with it in the medium and long term, it’s vital that you don’t lose sight of the bigger picture or your end goals.
Keep following (and reviewing) your plans, keep working hard, and keep motivating yourself by praising your hard work whenever you can.
Similarly, you should also be prepared to accept that you almost certainly will make mistakes along the way – but this should never hinder your progress or put a hamper on your determination to pursue, achieve, and maintain solid financial discipline for your eCommerce business.
Practicing financial discipline to ensure that your eCommerce cash flow is always solid and reliable can sound like a daunting task, but our guide has hopefully shown you that there are lots of things you can do to achieve this – and keep it up in the long term.
Have even more questions, doubts, or curiosities about finances, business, and eCommerce? Be sure to check out our other blog posts!