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Stage 6 E-Commerce Business Fundamentals

Stage 6- Business Fundamentals

You have been building the foundation for your business for quite a while. You are using people, processes, and technology to hone in on your business’s problems you have been scaling by tackling one issue at a time each week. At this stage, you are beginning to search for ways to grow your business more significant than yourself and gain the ability to make wide-sweeping growth changes.

It can be challenging to decipher how to approach your business so you can have the desired transformation without the chaos of change and manage the time constraints. Foundational business knowledge doesn’t seem to guide you towards the real practices you should be implementing in your company at this stage, yet you aren’t a full enterprise yet. So how do we continue to scale at stage 6?

We look at some foundational concepts for stage 6 businesses through the lens of people, process, and technology. We will analyze each dimension again, providing real practices to explore. Our goal is by the end of this stage; you are running a holistic company that is well on its way to scaling to enterprise level.


We have examined processes in earlier stages as not only a way to create structure and sustainability but as a means to focus your people and technology better. At this stage, we begin to explore each process with knowledge of root concepts to introduce ways to analyze your business’s health on a deeper level.


Your legal standing should be in good favor, and at this stage, it is not likely you will have to engage in many legal practices regularly. However, it is essential to pay attention to taxes and keep on top of renewing your company LLC or restructuring your business as an  S-Corp or C-Corp. It is important to know the difference between an s-corp and a c-corp and know when it is best to select one or the other.

Both an s-corp  and a c-corp have the benefits of:

  • Limited Liability Protection

  • Separate Legal Entities

  • Structures

  • Corporate Formalities

  • Filing

So what makes one more appealing than the other? It all depends on your business needs and the way the business owner would like to handle taxation.

An s-corp provides no tax on income. Instead, the business’s profits and losses are passed through the company and taxed on a personal basis. Essentially, any tax that is due from the business remains the owner’s responsibility.

A c-corp, on the other hand, is taxed at a corporate level, and if the owners receive dividends from the corporate income, those will be taxed as well. This poses the possibility of being taxed twice on the corporation’s income. So what are the benefits of a c-corp? Do they outweigh the benefits of an s-corp?

The benefits of a c-corp are:

  • Unlimited shareholders

  • No restrictions on ownership

  • The lower maximum tax rate

  • More options for raising capital

The benefits of an s-corp are:

  • Pass through of losses

  • A single layer of taxation

  • 20% of the qualified business income deduction

The way you classify your business entity will have a lasting effect on many aspects of your business. These selections not only affect your taxation but your financing and growth. It is essential to look at the advantages and disadvantages of either an s-corp or a c-corp and how they will directly affect your company.


How is your product doing in its market? Let’s talk about product/market fit and how to measure it, so you know when to increase your product range or pivot into a new market. Product/market fit is a relatively new term. Marc Andressen coined it as finding a good market with a product that has strong demand in that market. Ultimately you may be thinking I am far past knowing if my product is doing well on the shelves – but it is vital to analyze this concept through your business’s lifespan. As you begin to reach enterprise levels of business, you will need to engage new customers and satisfy your loyal customers. Knowing how to measure your product/market fit is a great way to avoid stagnation and make informed business decisions on the products you are offering.

To measure the product/market fit look at these questions:

  1. Would your customers recommend you to their friends and family?

  2. Do customers care if your company closed its door tomorrow?

  3. How many customers leave, and how soon?

These should be your jumping-off point to evaluate your product/market fit. It is important to remember that your fit may not always be self-evident, that once you have data, using it to change your future is a task not solely left to the marketing department. It now is on everyone’s shoulders as it is the health of the business on the line.


Customer acquisition channels are just a fancy way of how are you acquiring your customers? There are several different customer acquisition channels that you may already be using or familiar with, such as :

  • Search Engine Marketing

  • Viral Marketing ( aka word of mouth )

  • Email Marketing

  • Blogs

  • Content Marketing

These are only a few of the many channels from where you may or may not be gathering your customers. It is important to evaluate these channels and make another decision to pursue or pivot. In stage 6, it should be clearer where your ideal customers are coming from and where you should invest your marketing and sales efforts. Now is the time to choose which areas to reduce spending while increasing how you are successfully gathering your customers.


At this stage, you may have increased your products, you have new partnerships, and thus you have a whole range of new challenges. How do you integrate all of these factors into your warehouse management? You may consider at this stage to reanalyze if your 3PL is the best option or investing capital into your warehouse is more beneficial for your growth. There are a few cons and pros to both.

Owning your warehouse reduces cost, increases business controls and tax benefits. But it also means a large amount of capital upfront and a disruption in your current workflows. However, a third-party logistics company will provide you with expertise and a reduced learning curve. You may be using one already and potentially have better transportation costs as shipping volumes allow for discounts on your end.

Suppose you decide to pivot and optimize your warehouse operations. In that case, you may want to consider what industry you are in and if this restructuring will provide long term benefits for your company.


In stage 5, the core concepts of tracking have been established. You probably have even tried to find a cloud-based inventory management system that matches your business needs. In this stage, you are either failing at implementing these systems because of weak data or failing to use the system correctly because it doesn’t meet all your business needs. Let’s talk about the former first.

Clean data is a must when transferring over your inventory and your stock take. Often, stage 6 clients have struggled to stick with an inventory management system because they haven’t implemented robust processes around their SKUs yet or don’t have the time to look for the correct data models to import. The latter reason is that the system was built around assumptions that do not match your company’s core needs. Often, this creates workarounds, lack of training, and ultimately even more confusion around tracking your inventory.

Trusting professionals who can help guide you through these intensive processes will only help you know the system better and know your company better. Looking for cloud-based systems is appropriate at this stage with the correct support.


This stage is all about engaging your staff and growing forecasting beyond your 6-12 month gap you were working on in earlier stages. Now is the time to look 2-5 years ahead with your staff and plan your next steps strategically. By this stage, you have hired a full team and have delegated departments. You are now operating as not only the leader and owner but the CEO or Chief Executive Officer. The CEO will take more responsibility for the vision that was more present in the earlier stages and begin to strategize with other core leaders in the company to communicate to the staff and build connections amongst the team. The later of these can be challenging in this stage as commonly this stage experiences :

  • Lack of quality staff

  • Lack of understanding between employee satisfaction and profit margins

  • Lack of New staff orientation processes

  • Weak business models

Taking these four factors into account, you, the CEO and leader, should be establishing new hiring practices, conducting company health surveys to increase engagement, and identify critical components regarding staff satisfaction, or the lack thereof. Developing core values and company culture will boost your workforce morale, which will help facilitate the change without much chaos.

Additionally, now is the time to be optimizing your departments so they can be more efficient and less overhead cost. By having your operations look at lowering their costs through implementing technology.


You may have tried an IMS or Inventory Management System in earlier years with no success. As you begin to scale larger and reduce costs by improving processes and business models, it is time to reconsider the investment of a cloud-based inventory management system. This time we explore reasons IMS software implementation often fails.

You have spent thousands of dollars on technology that failed to solve the problems occurring in your eCommerce business. Inventory Management systems are built on different assumptions and needs. It is crucial to find methods that align with your business. This is one of the biggest reasons we see failure.

Inventory management systems take a tremendous amount of time and effort to implement correctly in your business. Knowing this and planning for the timeline and installation of the product will help your expectations and pacing of your routine business tasks that still need to occur. An excellent implementation support team can help with this. Lastly, we often see the lack of training amongst the staff that needs to interact with it. This training is critical, so it does not become one person’s job to maintain the new software. Having cross-training and a support team that can help you get your employees on the same page will create cohesive actions and not confusion later on.