TSH 13: 100k a month with your side hustle, with no employees? Here's how.Oct 09, 2023
Reading time: 2 mins
What if I told you it's possible to scale your ecommerce side hustle to 100k a month, with one full time team member - yourself?
Well, it's possible.
Over the past year, I've watched a client execute on this, she's just hit her first 25k week. Here's how she does it in 10 steps:
1) Reboot and take stock
She took 3 months off to reboot her struggling business, find new suppliers, clear out old slow moving stock. Her old business was in a hyper competitive space, and she had no clear differentiator with respect to her product. We found a new product idea, new suppliers, and zeroed in on a niche we thought would work.
2) Starting with good unit economics
She focused on high margin products, over 70%. Previously, her margins were sub 60%, and she was discounting, which was making it worse. There was never any profit, because the pricing was wrong from the get-go.
3) Reducing MOQs
She ordered the lowest MOQ's she could, and built it steadily up to 8 weeks cover. Previously, she had fallen into the trap of failing to negotiate firmly with suppliers, and not hunting around for appropriate MOQs, as a result, her opening purchase orders were way too high, draining the majority of her working capital, meaning she didn't have enough to keep her range fresh, and her replenishment up to date.
4) Don't quit your day job too soon
She didn't quit her day job in a hurry - She still hasn't. Why would she? It's paying her bills while she expands her product range. Too many people love the idea of identifying as an entrepreneur in the short term, rather than grinding in an unglamorous fashion, and succeeding in the long term.
5) Make sales, inject 25% into new stock - repeat
She injected 25% of her planned monthly sales into new stock every month without fail. Put simply, with a 75% margin, this basic formula will keep your product at a level that will facilitate your growth, without depleting your cash.
6) Keep it lean and mean.
She ran her business as lean as she could, using her community and small influencers for photo shoots. Getting used to running a tight ship early, keeps you in a good position to handle your finances when you grow. Remember, it's easier to control costs than it is to control sales.
7) No agency, no worries
She ran her paid media herself - everyone should at this size (and I'm speaking as someone who co-owns an agency). Not only is it possible, it's actually necessary to run your own ads at some point as an online business owner, to further your own upskilling and education.
8) Organic is the key
She focused heavily on organic socials, UGC, and used UGC video on product page. Previously about 80% of her sales were coming from Facebook ads, and for every dollar she spent, she was losing 10 cents when you factor in the cost of goods. She was in a trap - she needed the sales to pay her liabilities, but her sales were unprofitable, due to the over spend and dependency on Facebook - she was in a paid media vortex that needed to be disconnected. Her new business focused primarily on an organic strategy, with Facebook ads as a supporting act.
9) Build a business, not just a brand
We spent time every month on the financials, especially using Xero. She runs a Xero file that would put a $50m business to shame. Getting control of the numbers brings an incredibly satisfying feeling of control. When you're in control of your numbers, it's amazing where you can take your business, and how you can steer it.
10) No more discounts
She stopped discounting and protected her brand. She didn't need to discount. Her MOQs were low so over stocking was never an issue. Enough said. If you need to discount to make sales, your product probably isn't good enough, or you've increased your operating expenses so quickly, that your sales can't keep up - so you discount. That is never the answer, and that problem only gets worse.
We've now modelled out a salary for her, which is going to be more than her full time job paid - and after her salary, she's still going to hit a 25% net profit.
So remember, when you're starting up your new side hustle, it's important to keep things simple. Ecommerce doesn't need to be complex, but just as importantly, your business should have a diversified strategy that doesn't rely on just one or two things - let's not be a one-trick pony, you need to tackle growth through being tactical, and focused.
Following these 10 steps was the right thing for the business, find your own 10 steps to profitability, but above all, operate within a framework to success. If you're winging it, and riding your luck, there's one thing I can guarantee - luck eventually runs out and is replaced by skill. The goods news, anyone can upskill in ecommerce, all it takes is a desire to learn.
Until next week,
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