(There’s a sequel to this post. Read it here.)
You might not feel like this post applies to your business because these problems are not the same as yours. But the thing you’re trying to pick up is the eye for identifying the limiters in your business and deciding the way to solve them.
Apparently when people successfully lose weight, they mostly do it after a short illness or something that initially lose them a few pounds. That early win encourages them. That’s how the book business came to be. We got in at just the right time of year to
- secure inventory
- sell that inventory
- iterate fast enough to recover from any mistakes
We got lucky, is what I’m saying. But luck isn’t just about getting whacked upside the head by opportunity. It’s about seizing it, and leveraging it.
Let me walk you through the process.
Building the Simplest Business there is
We started 4 years ago in October, which is the start of the busiest season of the year. We sold books almost as fast as we could list them. Plus, we were getting the $3.99 shipping stipend with every $7 book, which made us feel rich. (It was easy to forget that $3.60 of that went into shipping and the rest into padded envelopes.)
The book business is very simple because there is no marketing involved. There’s no “finding an audience.” We buy the books one place, and we sell them at another. But even early on, we could see room for improvement.
Shipping and Fulfillment
The first issue came to the fore after only a few weeks. We would come home after a long day sourcing books and have over 25 books to package up and ship out. Of course, they had to go out in the next day’s mail because Amazon grades us on the speed of our fulfillment.
I knew that was unsustainable. We’d only been in the business two months. What would the volume be like when we were working at scale? So I immediately started looking into Fulfillment By Amazon, which is where you ship the books to an Amazon warehouse, and when the title sells, Amazon ships the book out for you.
Always run the numbers
Of course, it costs money. You pay Amazon to handle the fulfilment, and the storage. But when I ran the numbers, I realized that we actually made a little extra money on FBA– about $.50 per book, as a long as the book didn’t sit in storage for more than a year. Suddenly, the cost didn’t look so unreasonable. And it was sure a lot less work. A no-brainer, right? So we started shipping books immediately, starting with our best inventory.
Did I mention this was right after Thanksgiving?
That’s right. We pulled our product off the shelves during the HIGHEST GROSSING week of the year. >.< We didn’t realize that it took 4 days to ship, then another 2 days, minimum, for Amazon to get the product on the digital shelves. So that hurt. That REALLY hurt. We figured our sales in December were about half of what they could have been, and it was all on me, and my campaigning to switch to FBA.
But, it only hurt for a little bit. Because it became so apparent, as we grew, that FBA was utterly crucial to business growth. The lag that Christmas was a bone-headed, completely avoidable mistake, but it didn’t hurt us a bit in the long term. Remember that for the next time YOU screw up hard.
The other early issue we spotted was repricing the stock to ensure that it was competitive. Since sales are pretty damn important to a viable business, every morning after breakfast I manually repriced our meager 200 listings. It took hours. This was clearly not scalable, so I started looking for a repricer.
I know so many book sellers who don’t even use a repricer. “Repricers are untrustworthy,” they tell me. “I have my own system; a repricer can’t handle it.”
You wouldn’t think it, but book prices are very volatile. It’s basically a stock market in miniature. So if you price a book at 14.95 and don’t use a repricer, your price stays stable but the market moves around you. So you are missing potential opportunities to sell that book, and the fewer opportunities you have, the fewer sales you make.
But it’s very hard to program a repricer. You’re basically taking your mental calculations for how you would determine the selling price of your book and translating it into a set of instructions for the program. And even then there are limitations. For instance, I want my repricing program to be able to let me set my price at $X.99 above the lowest. But it won’t, and the developer has no plans to offer that feature — I asked. So instead I have to create slightly less-than-ideal ways to approximate my repricing technique, because if the program is even 80% as good as I am, it will make WAY MORE sales because it runs ten times a day.
I have spend hours programming and tweaking our repricer. I’ve spent even more time than that analyzing our sales to see what, if any effect, my tweaks have had. But in the last year alone, I increased our margins by almost 10%.
Think about the hours YOU have spent on your social media, your graphics, or your tagline, none of which directly affect your bottom line. Now consider what you could have applied those hours to that could have potentially made you money.
Administration and Analytics
This aspect of business isn’t actually one that I recommend outsourcing right away, because there is nothing like rolling up your sleeves and actually attempting to interpret your analytics to help you get an accurate sense of your business health and what you need to do to move the needle on one metric or another.
But after a couple years, you’ll know what you’re looking at when you see columns of numbers all prepped and ready to go, so there’s no longer any need for you to do the prepping.
When I finally hired a VA for this purpose last fall, it saved me 3-5 hours a week, just for the initial task I hired her for. Just updating spreadsheets so I could keep an eye on cashflow and ROI. Just like improving my margins with the repricer, freeing up 10% of my working hours in the busiest season of the year was worth some cash out of pocket.
The process of hiring was less hard, but more complicated than I anticipated. Since I already had a particular candidate in mind, I thought that I had cut out the most difficult aspect– weeding through candidates. But let me show you the process:
- I wrote a narrative description if the task I needed done on Upwork, outlining the tools required and the other necessary details.
- Then I waited almost a week for the person I wanted to log into Upwork and check her messages. (This is par for the course for people who have a reasonably full roster of clients.)
- Then SHE wanted an interview before she would accept the job. Incidentally, this made me think more highly of her– but it took another two days to set up an interview time.
- When I finally got to click the little “Hire” button on Upwork, we then spent several more days of back and forth emailing working the kinks out of the various shared passwords and such.
- After a couple of weeks of work, I had to go back to her and make some changes to the procedures. For instance, I had told her that I needed such-and-such a thing done by Monday, not realizing that I usually performed that task on Sundays.
So all in all, it was a month between the time that I posted the job description and the time where the VA started to be really useful to me.
That’s why they tell you to hire before you need to– but who can afford to do that? My advice is just to recognize when you’re approaching the point of needing to hire and start figuring out the highest-value activities to start handing off. You know the pain of having to pay wages is coming, but you can figure out how to shift gradually into it instead of having to do it all at once.
How To Apply These Lessons to Your Business
Now, I don’t know your business. But I’m sure there are various things you do on a regular basis that are a) relatively time-consuming and b) could probably be done by someone else.
I do know– I understand– that it takes a lot of upfront time and effort and usually money to solve these problems, or even to merely mitigate them. I realize that, at least initially, this process will create almost as many problems as it solves. But only initially.
The important thing I want you to see, from the examples I gave, is that these problems will never go away. They’re like pants around your ankles, making everything you need to do a little harder and WAY more time-consuming, and they prevent you from finding the time to do the things you need to do in other areas of your business.
So FIND these limiters. Be ruthless about rooting them out. Your business can’t grow until you do.