There was a statistic I heard a little while ago about Mums in business which saddened me.
No one likes to talk about it much, but I will tell you what it was.
That 95% of new businesses will fail.
The thing I find sad, is…
I have to agree with it.
But, there is one key element that can put you in the 5% of successful businesses.
Want to know what it is?
It all comes down to how you setup your business from the get-go.
Six years ago, I was a new Mum dreaming of starting my online business. Like most Mums, I thought selling a physical product would afford me a life of being a badass screwing the 9-5. I couldn’t find what I wanted to buy for my daughter and felt for sure that was reason enough to take the jump and sell organic cotton baby clothes.
I stuck with this business for 4 years, thinking at the end of the rainbow there would be a pot of gold. All the time using my freelance website and graphic design biz to help pay the bills.
The first two years I lost money because, as you know, you need to buy products up front in order to be able to sell them.
That wasn’t fun but I knew it was pretty typical in retail business so I pushed on.
It wasn’t until the end of my third year, I stopped and deeply evaluated where I was and where I wanted to go.
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I broke it down like this:
The conversion rate for online retail websites is on average 2.5%
That means for every 100 people that visit your website 2-3 will buy from you.
Shall we round that up to 3 people for this exercise? Ok.
3 people buy 3 products for $20 each.
Awesome. You’ve made $20 per sale right?
Out of the $20 per sale, you need to spend the following to stay in business: $10 needs to go straight into replenishing your product (assuming you are working on a 100% markup)
To get 100 visitors to your website in the first place you need to allocate funds for advertising and marketing campaigns. Truth: customers do not magically just find your website.
To run your business you need miscellaneous items like bubble wrap for packaging, envelopes/packaging, stickers, business cards, stock photos, graphic designers etc
Plus you have service fees like hosting and domain, Paypal fees, accounting software fees, social media scheduling software fees.
Sometimes there will be a difference between what you charge for postage and what the customer pays or you’ll need to replace and resend lost items
Don’t forget, you’ll need to pay your tax to the ATO
If you are buying products from overseas, the exchange rate is crap right now, that will eat into your profit too.
So, from all that, let’s say your outgoing costs to stay in business are $15 out of every $20 product sold.
That means, there is $5 left for you to pocket.
Out of those 3 sales, you have profited $15 as your take home income.
But wait, what if your product doesn’t sell and you need to have a sale? When you discount your $20 product down to $15, you will only be breaking even. No profit for you.
It gets down to the wire pretty quickly, doesn’t it?
We haven’t even considered the time factor yet. Or the amount of cash you’ll need in the first place to bankroll your business and purchase products to sell.
But in a nutshell we need to source a manufacturer/supplier, pay money upfront to get products, (usually there is a MOQ) check stock when it arrives, sort out inventory, house products, start the selling/advertising/promoting process, pick and pack, book courier, re-order stock, attend to customer service enquiries/issues. etc. etc. etc. Well, that was tiring just writing that!
I estimate that it probably works out to be 30 minutes per product.
So, in essence, we are working for one and a half hours and making $15.
Now, at this point most people will knee cap this business module and move on.
But don’t give up on your dream of being your own boss or believing you can have an online business which affords you to work around the children, have a life with freedom unshackled from the 9-5 grind, with an uncapped salary, whilst running a business that is aligned with your heart and soul.
I am living proof it is achievable, albeit after much test and measure.
Us Mums who dream of running our own online business are determined ninjas, we are motivated mofos, we know damn sure there is a way to run a successful and profitable business to achieve our jam, we just need to find the right key to unlock the door.
Listen in. I am going to tell you the secret sauce to buck the trend on that dire statistic I mentioned at the start of this post.
It is all in the type of business model you choose, let’s go through my fav’s:
Affiliate marketing has gotten a bit of a bad wrap in the past but it is actually a highly lucrative income stream if done properly. Affiliate marketing is essentially promoting a third party product on your website / blog / mailing list /social media channels and when someone whom you have directed to the product purchases, you’ll receive a commission. Now, there is a secret formula to getting this income stream right to ensure you don’t come across spammy.
Affiliate Marketing Suggestion:
Family Travel Blog – A travel based business could be a great way to build a community and share experiences and advice on travelling around the world. An active Facebook group where members share their stories as well as ask for advice could be a good way to build a potential customer base. Once you have an active group of members with a common interest, you can then start to offer curated promotions via your affiliates. For example, create blogs and how-to guides on everything travel related and embed your affiliate links within them. You could start with a blog called ‘7 Pieces of The Best Luggage To Use When Travelling With Little Ones’
Affiliates can literally make a few dollars to over $50,000 per month. Yes, per month.
With a travel blog, I would look to being an affiliate for holiday packages that pay around $500 per sale, encourage 20 people to buy and that’s an income of $10,000.
Think Esty, eBay and the like. Don’t freak out about how big these websites are and get put off though! Remember, they also started with just an idea and I believe that anyone can be just as successful as them.
Marketplaces traditionally house lots of other smaller stores (vendors) on the one website and offer your audience an all-in-one place to shop. It is your job to provide an audience (eg potential customers) to these vendors to make it worth while to list on your website. The best part is, there is no inventory, picking and packing or dispatching products with this model. It saves you SO much time which can be invested into growing your business.
Usually, you will be paid via a commission for every sale, in between 15 – 25%. Payment transactions will take place on your website, but once the payment has been made, the website will split that payment, send you your commission and send the remaining amount and the order direct to the vendor to dispatch.
If your average commission payment is $20, you’ll need to make 500 sales per week to bring in an income of $10,000 per month.
Tweens – This has to be one of the biggest gaps in the market for kids clothing. Babies are covered and some and the toddlers and preschoolers are pretty well catered for as well. But what about the tweens. A marketplace dedicated to tween fashion would help so many time poor Mums to the fussy 7 – 13 age bracket shop a little easier.
We love online directory’s because they offer the game-changing combination of being able to apply any concept your heart is in love with to a highly automated and recurring income stream. However, there are secret ingredients to getting it right. We don’t want the old style 1990’s directory that looks dab as that will get you nowhere fast. The concept, branding, messaging and growth strategy has to be on point to make it work. An online directory works similar to a marketplace, but no transactions take place on your website, instead when the customer clicks ‘buy’ they get taken to the vendors website.
So, you may be wondering how you create an income with this model? Well, here is the best part. Vendors pay you a monthly flat rate. That means you have recurring income every month. Start with something super low, like $19.99 and once you have 500 vendors signed up you’ll be making a highly passive $10,000 per month.
Online Directory Suggestion:
Online Mums Facebook Group – If you live in an area that needs an overhaul of the local business arena and activities, then a community page dedicated to your local area and surrounds could be a great idea. A site like North Shore Mums started as just a community Facebook page and now they are one of the go to websites for all things Sydney North Shore, from searching their local business directory to finding the best kindergarten or Mums group. They have opened up income streams from their business directory as well as advertising and affiliate marketing / promotions.
A membership platform is ideal for those who have a skill or expertise in a certain area and they want to use their knowledge to help others. With a membership, people will generally be paying a monthly flat payment, and in order to retain people, you must be continually providing updated content and value.
Let’s say you are a lawyer with loads of experience in small business practices, you love what you do but you hate the work hours and having to put your little ones into long day care.
Use your knowledge and convert it into an online format, then sell it to Mums who are starting out in business and need to learn the legal side of business. You can create videos, training, provide legal docs – whatever you like!
Depending on the concept, you can charge anywhere from $9.99 per month to $100s per month.
Let’s say, for example, you charge $149 per month, you need just 70 people to be making over $10,000 per month.