Bigger, faster and more seems to be the fuel behind online businesses. Chasing profits and fighting for customers drives prices to their proper point due to the “invisible hand” and productivity gets rewarded. That’s the theory at least, but theories often work better in classrooms than actually out in the field, when you’re getting down and dirty.
Time or money?
Time remains the greatest resource humans and businesses do not have enough of. Time limitations ensure that the best decisions are not merely based on how much a deal will earn a company. Rather than simply chase after dollars, online businesses need to ask the following questions when looking at clients:
- What else could be accomplished in the time spent on a client?
- What is the profit per unit in dealing with this client?
A huge revenue number for an overall project might not look as good when put into figures of the amount earned per hour- not to mention the endless amounts required in online business where working hours are all hours.
Say No to Time Wasters
Some clients are not worth the time and effort. This might be the most difficult and counter-intuitive lesson for some business owners. Some customers might make so many special requests or demands that severing the relationship might make more sense in the long term. All business decisions must be made while keeping in mind the economic concepts of opportunity cost and Pareto’s Law.
Opportunity cost means that every decision comes at the price of not doing something else. Pareto’s Law states that 80 percent of sales come from 20 percent of clients. Rather than focusing on expanding, concentrating on key customers might streamline the business and improve profitability in the future. Unfocused pursuits for profit might cause a business to neglect its most important customers.
Centralized Software
In the growing stages of a business even the smallest expenses might mean the difference between success and failure. Keeping some of the key functions in-house and centralized not only allows business owners to learn every aspect of their business but also keeps costs low. Aids like Netsuite software provide business management tools to centralize and strengthen business operations. They also promote transparency when you run an online business and are not neccesarily face to face with many of your employees.
When to Outsource?
There’s always the option of outsourcing for smaller or easier tasks that you don’t want to burden and employee to handle. Before considering outsourcing, ask yourself these questions:
- What is the business doing well?
- What areas need to improve?
- Can multiple people coordinate outsourcing if they aren’t in the same office?
- What do we hate doing?
The internet offers easy access to freelancers in virtually every field to offer professional help that will seem like in-house expertise to customers- noone will be able to tell the difference.
Empowering Employees
Empowering your employees could quite possibly be the most important decision you could ever make. In the online world, you’ll often have virtual employees, working in different time zones. You can’t necessarily be around all the time to help them make decisions. Empowering them will not only save you from sleepless nights, but you’ll also improve the morale of everyone working under you- even if they aren’t in the same office as you.
Employees will show their true worth without a manager breathing down their necks- given space and support, an employee can generally make good business decisions. Rather than worrying about micromanaging workers, trusting employees to make the right decisions will cut down on lag time for customer inquiries and give the business owner, or you, something better to do with your time.
Online business owners do not have to be the masters of everything- but thanks to the capabilities of the internet, there are many ways to streamline and work to your full capacity.