Back several weeks ago, before every email we received was related to the CARES ACT or COVID-19, I asked followers of my blog what their biggest challenges were in ecommerce bookkeeping. Here is what I learned–36% were concerned with cash flow, before all the recession worries; 21% had to do with marketing and advertising; 15% involved sales; and the other responses expressed concerns about scaling, product development, inventory management, taxes and accounting.
Ecommerce Sellers and the Business Crisis Trend
I suspect that these are still challenges today because a crisis doesn’t change our priorities, it just makes the business fundamentals even more important. The Business Crisis Trend below shows us that after we get past the Shock and Desperation stages, the best thing we can do is focus on what our data tells us in the Evaluation stage.
The First Critical Step in Overcoming a Crisis
During the Evaluation stage, monitoring our data and making adjustments is tremendously important as things are changing rapidly in the ecommerce world. Some of you may be experiencing a boom. Others may have had to shift platforms or switch to Merchant fulfillment as FBA was no longer a reasonable option. Yet others may have seen sales decline significantly and are unsure if you’ll survive this challenge. These changes will have an impact on your business both short-term and long-term, so you need to analyze them from both perspectives.
Fix This Next!
In Mike Michalowicz’ latest book, to be released on April 28, Mike provides a framework for what to work on next in your business. In fact, the book is entitled Fix This Next.
I have just received my certification as a Fix This Next Advisor and I’ve been performing Fix This Next evaluations for a few of our clients. The evaluation provides a framework to ensure you are working on the most important challenge for your business, not just fighting fires and surviving.
Moving in the Right Direction
Mike describes the survival trap as “The result of responding to an apparent and urgent issue while unintentionally neglecting the considerations that will permanently move a business toward vision. The survival trap is typified by the sensation of taking two steps forward and three steps back.” As he explains, when you are facing a challenge, any movement from where you are feels like relief. However, unless you’re moving in the direction of your vision, addressing the most vital need of your business, you may in fact, be moving backwards.
To ensure that you are moving your business in the direction of your vision, use the methodical approach outlined in the book. Evaluate the business using the Business Hierarchy of Needs (BHN). Next week, we’ll discuss the BHN and share a link to a site to do an online assessment, using this framework.
Avoid that survival trap! Learn more about Fix This Next by downloading this excerpt, and mark your calendar for April 28th to get the rest of the story!
Interested in Profit First?
If your ecommerce business isn’t where you’d like it to be in terms of profitability, check out my book, Profit First for Ecommerce Sellers. It answers important questions about how to implement Profit First in an ecommerce business. Take control of your money and your business, and put Profit First to work for you! Contact bookskeep today to learn more about ecommerce accounting.