Impassable jungle of business, part 2
This is the second part of a note about how we did the www.Smart-Masses.ru shop. If you have not read the first part, you are welcome to part 1 . Those who read - go further.
To make a store, you need money. What are they needed for?
The main items of expenditure we had were:
Since Habr is a resource saturated with material on website development, etc., I will not dwell on the creation of our website in detail. Let me just say that our engine is self-written, and the design and layout were made for us by our friend Lifelines . In this connection, we cannot precisely determine the budget for creation, since programming is “shareware” for us, and the design was based on offsetting.
At the office as a problem of a purely technical plan, I will not stop either, let me just say that we found it as usual through an agent and removed it.
But working capital deserves closer attention. Generally revolving is such a thing that does not happen much. The more money you have that you can spin freely, the better. In the end, part of it can always be spent on development and advertising. But there is a certain minimum of working capital that you need to have, so that your trading business does not go to ashes. Calculate it can be based on the break-even point. It is necessary to estimate your monthly costs, and from the mark-up on the goods sold, calculate the rate of the monthly sale to go to zero. It is still useful to add 10-20% to expenses without justification - experience shows that there is always something that was not taken into account in the calculations. From the resulting sales rate will be visible minimum monthly turnover, which you need to keep, so as not to fall apart. If your working capital is below this number, then you need to think about increasing it. We ran into this problem after the start of work, and the problem itself was the brainchild of initially illiterate planning — we simply did not know that it could exist. I had to urgently look for a loan.
')
Our last serious problem on our way to capturing the world was advertising. It's silly to talk about it, but we, uh ... forgot about it. In part, this was due to the fact that we were limited in money and wanted to save money, and therefore we relied on all sorts of free advertising, such as viral marketing and word of mouth. Looking ahead, I will say that we were wrong :)
But in order. Before you begin to advertise and give the owner of an advertising platform any money for advertising, you need, first and foremost, to evaluate the power of this advertising campaign. Since we live on the Internet, where everything is much simpler than in real life, the power of an advertising campaign can be assessed very easily in visual figures: this is the amount of traffic that came to you from the advertising platform. The person who places ads on a billboard on the side of the road does not know how much traffic has come to him from this billboard. This is a big plus online advertising. And it is cheaper. If you divide the amount of money you paid for advertising by the number of people that came to you from this advertising, you will get the effectiveness of advertising investments, measured in “money for a visitor”. Obviously, you need to choose those sites where such efficiency will be the highest. As new online salespeople, we overestimate the possibilities of word-of-mouth and viral advertising. Some number of people came to us, of course, from the information distributed according to the announcements, ICQ and VKontakte, but for the normal operation of such a number of visitors was not enough. Therefore, we, in a panic, decided to resort to paid advertising and SEO. Since banner advertising has long been stigmatized by everyone as dead and ineffective, we decided to make a bet on the Yandex context. But this option turned out to be very expensive. There is a concept of conversion in electronic commerce - this is the percentage of visitors who later turned into buyers. So we have this figure is approximately 0.5-2%, we can not determine more precisely, since it constantly floats depending on the phase of the moon and the position of the stars. And with such a conversion, taking into account our profitability, it is unprofitable to use direct for simple traffic surge - the traffic does not pay off. After all these experiences, I asked our SEO to evaluate the effectiveness of investing in a seo. We had a list of key requests, which he estimated at $ 1,300 per month. It turned out that the traffic from these 1300 we get almost less than with the same amount invested in direct. Therefore, we also refused SEO.
"How, then, to advertise?" - Gave us a difficult question. In general, we decided to start with not very popular thematic resources with attendance of up to 1000 people per day. On them we posted (and post) articles about our gadgets with links to our store. Some articles are paid, some are free. Paid go to where the resource has good attendance and an established channel for receiving content. Free - on developing resources where the resource itself is interested in receiving content. It turns out that paid articles are inexpensive, but they have several times higher efficiency than regular advertising. In this case, the user is not in the loser: the information is not stupid spam for him, because he comes to the resource to read about gadgets, and reads about them, and by the link can also buy. In addition, for the site and for the business as a whole, it is good to have some information noise around you: to write about you, talk, advise friends, etc. We cannot directly influence people so that they mention us in conversations, but it’s real to make some noise, besides articles about gadgets. We came up with a couple of geek contests that we want to spend on some very popular information platform *. We figured that such a scheme is good for everyone: the information resource where the competition is held gets interesting content, and we get an influx of visitors. We give the budget in the form of prizes for the first places in the competition. So far, we have not yet carried out our bold plan, keep it as if in reserve. The reason for this lies in our mistake, which we made, and about which I wrote above: lack of working capital. The fact is that we would like to catch up on as much traffic on our resource as possible, and sell as much as sold, but due to the lack of working capital, we cannot provide the necessary flow of goods. In this connection, there are very frequent cases when customers ask for a product that we do not have at the moment. Over this and now have to work the most.
* - outdated information. Now FPPP is going along with Habr, and next week we will launch a contest on the women's platform askwoman.ru
Capital / K. Marks /
To make a store, you need money. What are they needed for?
The main items of expenditure we had were:
- Store site
- Design, layout
- Engine
- Other programmer work
- Office
- Rent
- Equipment
- Procurement (start of working capital into turnover)
- Advertising
Since Habr is a resource saturated with material on website development, etc., I will not dwell on the creation of our website in detail. Let me just say that our engine is self-written, and the design and layout were made for us by our friend Lifelines . In this connection, we cannot precisely determine the budget for creation, since programming is “shareware” for us, and the design was based on offsetting.
At the office as a problem of a purely technical plan, I will not stop either, let me just say that we found it as usual through an agent and removed it.
But working capital deserves closer attention. Generally revolving is such a thing that does not happen much. The more money you have that you can spin freely, the better. In the end, part of it can always be spent on development and advertising. But there is a certain minimum of working capital that you need to have, so that your trading business does not go to ashes. Calculate it can be based on the break-even point. It is necessary to estimate your monthly costs, and from the mark-up on the goods sold, calculate the rate of the monthly sale to go to zero. It is still useful to add 10-20% to expenses without justification - experience shows that there is always something that was not taken into account in the calculations. From the resulting sales rate will be visible minimum monthly turnover, which you need to keep, so as not to fall apart. If your working capital is below this number, then you need to think about increasing it. We ran into this problem after the start of work, and the problem itself was the brainchild of initially illiterate planning — we simply did not know that it could exist. I had to urgently look for a loan.
')
Advertising
Our last serious problem on our way to capturing the world was advertising. It's silly to talk about it, but we, uh ... forgot about it. In part, this was due to the fact that we were limited in money and wanted to save money, and therefore we relied on all sorts of free advertising, such as viral marketing and word of mouth. Looking ahead, I will say that we were wrong :)
But in order. Before you begin to advertise and give the owner of an advertising platform any money for advertising, you need, first and foremost, to evaluate the power of this advertising campaign. Since we live on the Internet, where everything is much simpler than in real life, the power of an advertising campaign can be assessed very easily in visual figures: this is the amount of traffic that came to you from the advertising platform. The person who places ads on a billboard on the side of the road does not know how much traffic has come to him from this billboard. This is a big plus online advertising. And it is cheaper. If you divide the amount of money you paid for advertising by the number of people that came to you from this advertising, you will get the effectiveness of advertising investments, measured in “money for a visitor”. Obviously, you need to choose those sites where such efficiency will be the highest. As new online salespeople, we overestimate the possibilities of word-of-mouth and viral advertising. Some number of people came to us, of course, from the information distributed according to the announcements, ICQ and VKontakte, but for the normal operation of such a number of visitors was not enough. Therefore, we, in a panic, decided to resort to paid advertising and SEO. Since banner advertising has long been stigmatized by everyone as dead and ineffective, we decided to make a bet on the Yandex context. But this option turned out to be very expensive. There is a concept of conversion in electronic commerce - this is the percentage of visitors who later turned into buyers. So we have this figure is approximately 0.5-2%, we can not determine more precisely, since it constantly floats depending on the phase of the moon and the position of the stars. And with such a conversion, taking into account our profitability, it is unprofitable to use direct for simple traffic surge - the traffic does not pay off. After all these experiences, I asked our SEO to evaluate the effectiveness of investing in a seo. We had a list of key requests, which he estimated at $ 1,300 per month. It turned out that the traffic from these 1300 we get almost less than with the same amount invested in direct. Therefore, we also refused SEO.
"How, then, to advertise?" - Gave us a difficult question. In general, we decided to start with not very popular thematic resources with attendance of up to 1000 people per day. On them we posted (and post) articles about our gadgets with links to our store. Some articles are paid, some are free. Paid go to where the resource has good attendance and an established channel for receiving content. Free - on developing resources where the resource itself is interested in receiving content. It turns out that paid articles are inexpensive, but they have several times higher efficiency than regular advertising. In this case, the user is not in the loser: the information is not stupid spam for him, because he comes to the resource to read about gadgets, and reads about them, and by the link can also buy. In addition, for the site and for the business as a whole, it is good to have some information noise around you: to write about you, talk, advise friends, etc. We cannot directly influence people so that they mention us in conversations, but it’s real to make some noise, besides articles about gadgets. We came up with a couple of geek contests that we want to spend on some very popular information platform *. We figured that such a scheme is good for everyone: the information resource where the competition is held gets interesting content, and we get an influx of visitors. We give the budget in the form of prizes for the first places in the competition. So far, we have not yet carried out our bold plan, keep it as if in reserve. The reason for this lies in our mistake, which we made, and about which I wrote above: lack of working capital. The fact is that we would like to catch up on as much traffic on our resource as possible, and sell as much as sold, but due to the lack of working capital, we cannot provide the necessary flow of goods. In this connection, there are very frequent cases when customers ask for a product that we do not have at the moment. Over this and now have to work the most.
* - outdated information. Now FPPP is going along with Habr, and next week we will launch a contest on the women's platform askwoman.ru
Source: https://habr.com/ru/post/40978/
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