Stage 5 Ecommerce Business Fundamentals
The Sears Tower took three years to build. When you think about it, it didn’t take that long to build one of the tallest buildings in the world. Completing the project in this time frame was grueling, gritty, and sacrifices were made to complete the project in that timeframe. Similarly, building a continuously growing business in a short timeline is grueling, gritty, and sacrifices are made. The building still stands today because of the innovative architecture and strong foundation.
We don’t believe that e-Commerce is a get rich scheme. We also know that managing inventory isn’t glamorous or all that easy. Its grueling, gritty, and some sacrifices are made. We that it’s possible to build a long-lasting, successful business by creating innovative architecture and a strong foundation.
As a stage 5 eCommerce business, you start to feel the small wins and the delicate balance of time and money. You want to optimize your sales channels and operations so that you can keep scaling upwards without compromising too much money or time.
We build our Clearinity model off of the foundation of people, processes, and technology. We have seen firsthand when in balance with each other, these three cornerstones of business can help you scale effortlessly and efficiently. Each of these dimensions has key foundations that build upon stages 0-4.
We find it is so important to first begin with examining your processes. If you are looking to grow further, these processes will indicate critical areas that need improvement through people management or technology implementation.
In this stage, you are hiring a team in previously established departments. As these departments get more substantial or more complex, it is important to create a human relations contact for your staff. An HR or Human Resources personal will be the buffer between you and your employees. What does a human resources manager do? A few tasks that a human resource person would perform would be:
Advocate for the employees
Formal performance evaluations
It is essential to acknowledge that as a team leader, you will not always be the first person someone will want to come to when they are overwhelmed, stressed, or feeling unsafe. Human resource management allows a neutral bridge between you and your employees. In stage 4, your team is expanding and will need a point of contact for their anticipated needs, both personally and professionally.
If you have secured an investor, your capital seems plentiful. It may be enticing to invest in systems that offer one-click buying. Unfortunately, these automated buying programs present various problems later down the road because they do not have business controls.
It may be enticing to invest in systems that offer to forecast buying products and provide automated services such as order placements. It is a poor investment to invest in these products with your inventory capital. It is essential to use that capital in a sustainable way, and often these products are unsustainable. It sounds easy to have automated buying programs, but unfortunately, they present various problems later. That’s because not all of these programs can forecast your budget or know your other bills that need to be taken into account when purchasing the product. They also do not take into account the demand market or specific reorder points. Ultimately this is a business control and one YOU want to control.
Customer relationship management systems or CRMs are catalogs of your customers. They are not only valuable for customer service but your bottom line as well. CRMs provide four benefits:
Documentation of Leads and Contacts
Tracking Customer Interaction
Identifies Prospects and Potential Leads
Allows you to focus on the customer
Adding CRMs for your sales team will provide an immediate benefit for you, but later down the road, if you decide to sell your business, your important contacts and high paying customers are not lost.
You may have heard about workflow-based work. At this stage, creating workflow-based work in your warehouse should be a top priority as this affects your customers, your employees, and, most of all, your bottom line. Successful workflow only works if there is a workflow for every process required to move or store the products arriving and leaving the warehouse. Standardize your workflows to ensure that all employees operate under the same guidelines and in the most efficient way. Doing this also allows you to gather metrics to measure individual performance.
To create an efficient workflow, you must look at :
What you want your end goal to be
The steps to reach the end goal
Providing the resources and tasks to complete those steps
Identifying the order to proceed with in the steps
Assigning the tasks to each department
Creating an estimated timeline for your workflow
There are many software options out there that can help you create these workflows. Some are free, such as draw.io or google draw. Below we show an example of a workflow diagram.
Bridging the gap between your accounting and operations is critical at this stage. You are prone to more human errors, more lost time, and higher overhead costs when you do not have a cloud-based inventory management system. We have spoken about the various benefits of investing in an IMS or Inventory management system. Still, we haven’t covered what it looks like for all your departments to be connected.
Your sourcing and marketing process are well on their way to getting completely optimized. You are beginning to evaluate the operations process and your accountant. You notice you may be outgrowing your one-person accounting department and may need a full team to support you in your later years of growth. This is normal and happens for various reasons; if you aren’t there yet these are some telltale signs you are ready for an accounting firm:
You are growing into a new niche that your accountant does not have experience with
You have expanded to new territories and countries online, and your accountant can not handle the amount of work
You have had no cash flow education from your accountant
You don’t feel cared for or comfortable asking questions
So what do you do if you outgrow your accountant? Well, you have a few options. If you have a good relationship with your accountant, it’s time to have a conversation with them and evaluate how they will continue to support you through growth, whether that’s their team or others they may know. If it’s not a viable relationship, it is time to seek an accounting firm. A firm will be able to provide you with:
A team of accounting professionals
More efficient time management with accounting documents
E-Commerce accounting firms will be able to educate you on e-commerce accounting needs
Have valuable resources when they can not solve your accounting problems
It is vital to start evaluating this side of the business as it will continue to support your business decisions and operational processes.
Don’t worry. You’re not the only one confused by WMS and IMS. Despite their similarities, there are many notable differences between warehouse and inventory management systems.
Inventory management systems provide you with a total count of inventory in specific locations. In contrast, warehouse management systems tend to be more complex and divide warehouses into multiple compartments and bins. This allows you to manage the entire storage system within the warehouse rather than a location. When we encourage our stage 4 businesses to start investing in inventory management systems, we are aware they may not be able to see the macro and micro of these two technologies. That’s why services like Clearinity offer valuable knowledge and expertise to guide you to what is appropriate for your business. If you are running your fulfillment through a 3PL, it’s crucial to ask them what their WMS system is as it often will integrate with your company’s IMS systems. The answer will help guide your decision-making, and also allow you to evaluate how your warehouse is managing inventory already and how an IMS could benefit them. So what are the benefits of IMS? There are so many we have written another article separately on this, so check it out here.