As a 14-year-old I had my own beginner business. A greenhouse. I grew pine tree saplings and sold the trees to a forest product company. In addition to the pine trees I also grew poplar saplings that I sold to, for example, my mom’s friends.
A tiny business of a single greenhouse wasn’t exactly a goldmine, so in addition to it, I also had a day job delivering mail and planting trees.
After working hard for two summers I had managed to gather a decent pile of cash. So what did I do?
I bought a snowmobile…
I didn’t realize it then, but I had made the typical and the worst mistake that one can make in building a business: I didn’t invest the profit into growing the business.
Of course, you cannot expect a 14-year-old to have very good “business instincts”, especially with an image of a snow mobile burning a hole in your pocket daily already for a couple of years. What I did as a 14-year-old is, however, a good example of what I should NOT have done, and what I unfortunately have done in my life many times since.
I have made the same mistake regrettably often, but I have also learned a lesson. I have learned this “the hard way”, but maybe I could have been more sensible already a long time ago, if I had had a business mentor or coach from the get go.
I wrote this blog post, so that you can look back down your own path as an entrepreneur, and figure out where along the way you should have acted differently. You can learn from these situations, in order not to repeat the same mistakes.
“Invest the revenue of your business to increase your trade and your profit, and do it fast because time is money, and you will never get back the time wasted.“
The worst mistake you can do in business is not investing the revenue into building your business, but spending it on something that won’t turn into new gains.
You probably have heard this one before, haven’t you? This is hardly a new idea, but I’m sure that you haven’t thought about this from “the right perspective”.
I have approximately 10 years of experience in building a business online and growing it with the help of paid advertising. I claim that Facebook and Google advertising are the fastest ways to grow the sales revenue of online stores, digital merchandise, expert services, and other similar businesses.
What does a typical unexperienced online entrepreneur do when the business proves to be successful and makes a small profit?
- Withdraws wages
- Saves the earned profit for “a rainy day”
- Aims to minimize the expenses including advertising costs
- Broadens the range of products sowly “bit by bit”
- Does nearly everything him/herself because hiring people is expensive and risky
This approach will lead to very slow growth or even to a standstill of the business.
A better approach is to INVEST the business revenue back into growing the business. Instead of the above an entrepreneur should:
- Avoid withdrawing wages as long as possible
- Transfer the work to someone else as fast as possible either by hiring employees or by outsourcing the action to another company
- Broaden the range of products
- Expand the sales abroad
- Increase the daily budget for advertising
- Take a risk with loan funds
- Hurry up!
Most of us have a strong fear of risk and investment per se. The fact of the matter is, however, that a business will only grow by taking risks, and taking risks includes, among others, outsourcing the work, hiring people, broadening the range of products, opening new markets, growing the advertising budget etc.
In order to make the business grow and to produce a larger profit you must sell more. To achieve this, you must reach new customers faster.
There are two main ways to do this:
- broadening the range of products
- increasing the budget for advertising
John Doe likes mountain bikes but Jane Doe appreciates quality running gear. In order to sell more you need to reach new target audiences. This only happens by broadening the range of products.
If you invest 20 euros a day in advertising at the moment, and you reach 20 potential customers daily, how to reach 40 customers daily in the future? By doubling your budget for advertising, naturally.
Systematic and aggressive increasing of the advertising budget is the way to achieve increased sales revenue.
In order to sell to new target audiences in the first place, you should have a wider range of products and a mechanism (advertising) to reach these audiences. This is why the two points mentioned above are the clearest way to increasing the sales revenue.
It’s all about REINVESTING the money received from sales.
The widening of the range of products and the increasing of the advertising budget should be “rushed”, meaning that they both should be done at a pace, but by no means “blindly”.
The conversion pixel is used in digital marketing to measure the results of advertising. Using the conversion pixel, it is possible to know exactly which target audiences buy which product and to figure out which advertisements increase the sales the most. With this information it is possible to make educated decisions and changes.
The conversion pixel tells us which products sell and which don’t. The pixel also tells us the invested capital, to which target audience and to which advertisement, returns the most profit, i.e. revenue for the invested capital. The growth of the online business is based on this information. With this information we make the right decisions in widening the range of products and in increasing the advertising budget.
Whatever it is that you sell online, your first step should be to install the conversion pixel, test that it functions properly, and after that start creating an advertising campaign using the conversion pixel.
After doing this you should be advertising every day to make sales every day.
”Money doesn’t sleep”, is the saying. This is why also I advertise 365 days a year to make sales 365 days a year. My online store is open now and always. Learn from the beginning an approach in which you aim to invest the revenue from sales, instantly, back to advertising, and to broadening the range of products to gain a bigger business.
Don’t take breaks, rush it.
Always aim to rise to the next level. When your business is booming and bringing in revenue, what is the next step?
Take a loan, make a huge investment, and pick up the pace.
Don’t do this blindly, but, for example, relying on the data offered by the conversion pixel. Invest loan funds wisely.
Remember to rush it. If you have the time to watch Netflix or TV, you’re not focusing on what is relevant. If you have the time to read a nice book in a café you’re not focusing on the essential. If you have the time to slack off for an entire weekend, you’re not focusing on what is relevant.
Aim higher. Commit youself to growing your business 110 % and work hard. Instead of aiming to double the profit, aim to tenfold it.
Time is running constantly and every minute lost is indeed gone forever. You cannot gain back the time lost, so aim to raise your turnover to a million euros in a year instead of five years.