Ecommerce Owner Sells the Company; Explains the Process

Editor’s Note: We welcome Dale Traxler as our newest contributing editor. He is a former owner of an ecommerce company — having bought, grown and subsequently sold Beaded Impressions, a household of jewelry-related websites. He is currently an advisor and consultant to small businesses.

Ten years back, it was easier to succeed in ecommerce than now. In case you had a product to sell, built a website, opened a merchant account, figured out how to get Google to see your site, and might ship the item, you could probably thrive. It was more of a”Ready, Fire, Aim” approach to a business plan. If what you’re doing worked, you kept doing this. Otherwise, you made an alteration or just failed.

But in 2012, you have to have a more logical approach to your business strategy. I call this “Think, Plan, Act.” There’s virtually no such thing as a special product in the industry. There’s a substitute product for consumers and everything can purchase it from many unique stores. There are probably many competitors in your market — such as Amazon.com — with sites just as great as yours. Even if you hire smart marketing gurus, it is hard to influence your search positions to get more visitors. Your shipping and inventory costs likely increase regularly, your workers want raises, you want to continuously reinvent your website etc. You need manage growth, profits, and maintain clients, investors, and workers happy. In short, running an ecommerce company in 2012 is a complicated endeavor.

Successful ecommerce business owners now understand their clients, the way to reach them, and why they buy. These business owners understand their value propositions, understand their financial and funding issues, grow and develop a strong infrastructure, and build an organization that’s sustainable. The owners of the very best companies are also likely strategically to maximize their existing operations and strategy for future change and growth.

The really important part of creating a strategy isn’t necessarily the output. It is the thinking that happens as part of the procedure. Fantastic thinking and planning will accelerate your development, decrease risk, and build a more sustainable organization.

Strategic Planning

Many small business owners associate company plans with larger corporations. Many don’t understand what a business model is or why they would want to build strategies around it. Other small business owners build business models before realizing it.

I see the strategic planning process as creating a blueprint for success. If you’re building a new home, as an instance, you have a vision, get a layout, build a model, create a blueprint with that model, and then hire a contractor to build it. If you’re constructing or expanding a business, you will need to have a vision of what you would like to do, build a model, develop the plans and strategies, and then implement the program. The company model and plans are the blueprint for success.

Business Models

A business model describes how a company makes money. The model shows, in detail, the core elements of the company, including its purpose, customers, channels, products and services, infrastructure, organization, and gain model. It allows for modeling by changing factors. It’s a highly effective business tool.

Generating a business model is usually a part of a strategic planning procedure. This process doesn’t need to take weeks and months. It can be performed on a napkin over lunch, even although there are lots of web tools and apps that help. The company model is a tool that you use to create decent business strategies and plans.

There are a number of ways to describe a business model and nearly as many books, but here’s a simple conceptual diagram to assist, courtesy of Vision into Action Management Consulting, a Colorado-based advisory company.

Enlarge This Picture A well-planned strategy should address all aspects of a business, as shown in this diagram. <em>Courtesy Vision into Action Management Consulting.  </em>A well-planned strategy should address all aspects of a company, as shown in this diagram. Courtesy Vision into Action Management Consulting.

Business Strategy

At the heart of the company model are the plans. They tie the components of the model together and identify key initiatives, resources, and activities necessary to support it.

Strategies may also have plans for expansion, product launches, financing, and depart — i.e., selling the company — plans. Plans are developed for the daily functions, like marketing to target clients, hiring workers, and outsourcing functions to other businesses.

More to Come

I will be exploring many facets of ecommerce business plans over the coming weeks. I will break down core regions of an ecommerce company and determine the questions that you should be asking and answering. Then, I will look carefully at how different approaches affect various circumstances. By way of instance, if you choose a”lowest price guarantee” plan for your goods, you better be sure that you are also the”low cost producer” in the market. Otherwise your profit model will be impacted. If you choose to offer the widest choice of widgets in the market, you’ll need money to get the inventory and employ staff to support that plan.

Meanwhile, check out Business Model Canvas, a tool from Business Model Foundry, in Switzerland. It is a handy template for making your own ecommerce version.

You might also need to read “What is a Startup? First Principals,” a blog post by Steve Blank, a serial entrepreneur and now a writer and consultant, about business models, value propositions and their significance for startups.