20 December 2022
4 min read
5 Tips for Managing Your Finances as an Ecommerce Manager
There are a high variety of costs associated with the commercial development of a business, especially if it produces or sells products, or both. In order to run a risk-free business and drive growth over the long term, you must periodically analyze the company’s profit, which means, taking into account both the expenses and revenues.
A big amount of businesses fail because of poor management and a lack of understanding of their cash flow. Keep reading to not let this disturb you anymore.
Track your annual recurring costs
Tracking these costs can help you gain a better understanding of your fixed expenses, which are the costs that are consistent and do not fluctuate over time. This can help you identify areas where you may be overspending, and make decisions about how to reduce your expenses.
It also may help you develop more accurate budget projections and financial forecasts. By understanding your historical costs, you can develop more accurate projections of future expenses, and use these projections to plan your operations and allocate your resources more effectively.
Tracking annual recurring costs is useful to identify opportunities to save money and improve your profitability. By understanding your fixed expenses, you may be able to find ways to reduce or eliminate certain costs, or to negotiate better terms with suppliers or vendors.
Keep track of your logistics expenses
It is important to track logistics expenses for several reasons. First, tracking your logistics expenses can help you gain a better understanding of how much money your business is spending on logistics, and where that money is being spent. This can help you identify areas where you are overspending, and make decisions about how to reduce your expenses.
Second, tracking your logistics expenses can help you improve the efficiency of your operations. By understanding how your logistics expenses are being incurred, you can make informed decisions about how to optimize your supply chain, reduce waste, and streamline your processes. This can help you save money and improve your profitability.
Third, tracking your logistics expenses can help you make more accurate forecasts and projections. By understanding your historical logistics spending, you can develop more accurate projections of future expenses, and use these projections to plan your operations.
Overall, tracking your logistics expenses is essential for managing and growing your business successfully. It can help you gain insights into your spending, improve the efficiency of your operations, and make more accurate forecasts and projections.
Calculate your net margin
Knowing your net margin is important because it tells you how much profit your business is making after all expenses have been taken into account. It is a key indicator of the financial health and profitability of your business, and can be used to compare your performance to industry averages or to other businesses in your market. By understanding your net margin, you can make informed decisions about how to allocate your resources and improve your profitability. It can also help you identify areas where your expenses are too high and may need to be reduced. In short, knowing your net margin is essential for managing and growing your business successfully.
To calculate your net margin, you need to know your net income and your total revenue. Net income is calculated by subtracting your total expenses from your total revenue. Your net margin is then calculated by dividing your net income by your total revenue and multiplying by 100 to express it as a percentage.
Calculate and track your return on investment (ROI)
To calculate and track your return on investment (ROI), you need to know your total investment and your total return. ROI is calculated by dividing your total return by your total investment and multiplying by 100 to express it as a percentage.
Follow these steps:
- Determine your total investment: This is the amount of money you have invested in your business, or in a specific project or asset. This might include the cost of purchasing equipment, materials, or inventory, as well as the cost of marketing, advertising, or other expenses.
- Determine your total return: This is the total amount of money you have earned from your investment, or from a specific project or asset. This might include revenue from sales, profits from operations, or other sources of income.
- Calculate your ROI: Divide your total return by your total investment and multiply by 100 to express it as a percentage. For example, if your total investment is $10,000 and your total return is $15,000, your ROI would be (15,000 / 10,000) * 100 = 150%.
Once you have calculated your ROI, you should track it over time to see how your investment is performing. This can help you identify trends, make decisions about where to allocate your resources, and improve the profitability of your business.
Monitor and analyze your financial metrics regularly
Regularly monitoring and analyzing key financial metrics can help you make informed decisions about your business’s financial health and future growth. Use tools like Google Analytics to track your performance and make adjustments as needed.
You can use a variety of tools and methods. Here are a few suggestions:
- Use accounting software: Accounting software is designed specifically for tracking business finances. It allows you to manage your income and expenses, generate financial reports, and track your profits and losses. There are a good deal of different accounting software options available, ranging from free and basic to paid and feature-rich.
- Create a budget: A budget is a plan for how you will distribute your income and expenses. It will help you keep track of your finances and ensure that you are spending and earning money wisely. To create a budget, start by listing all of your expected income and expenses for a given period of time (e.g. a month or a year). Then, compare your actual income and expenses to your budget to see how well you are sticking to your plan.
- Use a spreadsheet: A spreadsheet is a simple and flexible tool that can be used to track your business finances. You can create a spreadsheet in a program like Microsoft Excel or Google Sheets, and use it to enter and manage your income and expenses. You can also use formulas and functions to automatically calculate totals, create charts and graphs, and generate financial reports.
- Keep receipts and records: It is important to keep track of all of your income and expenses by keeping receipts, invoices, and other records. This will provide a detailed record of your financial activity, which can be useful for tax purposes, and can also help you track your business finances more accurately.
Free delivery. Yes or no?
Definitely. 90% of consumers affirm they would buy online more often if free shipping was more common, while 73% of shoppers are more likely to decide to buy the item if the shipping doesn’t include any additional costs.
We are conscious that sometimes it seems a bit risky, so what about offering free shipping after a certain amount of items or money? 24% of customers buy more products in order to reach the free shipping amount, which would mean increasing your customers’ basket value.
By following these tips, you can effectively manage your finances as an e-commerce manager and drive long-term growth for your business.