Launching your new online business is a time of trepidation and excitement and it’s vital you focus on what will be important long after the initial hoopla has died down.
I am analysing a beautifully designed site developed for a line of children’s clothing and bedroom accessories. When writing my marketing report for the owners I wanted to headline some key things to help them prioritise from the many different goals that they have for their business.
This made me realise that - being conservative by nature - I think the number one priority for New Zealand business starting selling products online is the goal captured by the wonderful term “Ramen Profitability”. Ramen are (of course) a kind of noodles – so what do noodles have to do with the performance of your online business?
Ramen profitability is generating just enough profit from your website to survive on a diet of noodles! This means you are covering your costs and making a (very) small surplus. This might not sound ambitious to you but I think that proving your business idea is sustainable even if you are not making very much profit is actually a tremendous achievement (especially if your target market is a small one like New Zealand). Sustainability is the best base for future growth because you now know that there are customers out there for you – all you have to figure out is how to grow this base with a marginal cost less than the marginal profit on the extra products sold. If a campaign doesn’t work you can retreat back to your sustainable noodle level of profitability and try something else.
My firm belief is that the key to Ramen profitability is to really keep an eye on your costs, no matter how small. How much are you being charged by your web host, your developer or payment gateway? I had a client who was being charged by their Christchurch web developer $10 a month for “submission to search engines” – which as Google, Bing etc do this for free borders on the criminal. Because I deal with lots of different clients I have a good idea of what level of fixed overhead you should be paying and if I can help you save money you are on your path to Ramen profitability even after paying me for my advice!