How to build an ecommerce business that scales

All small businesses hope to grow into large, robust and stable companies. Metamorphosing from a scrappy startup to a stable pillar of business is a process that takes years of dedication and effort, and an ecommerce platform that can support startup growth. When it is time to expand, the transition from small to large is easier if scalable practices are in place from the earliest draft of your business and marketing plans.

A solid foundation of marketing strategy, product focus, financing and networking will naturally evolve and expand to accommodate and drive growth.

Big data

The single most important fundamental for building a scalable business is the regular collection and analysis of data about your business' health. This is something you can, and should, do from the moment your business goes live in front of the public. With comprehensive metrics, you can:

• Evaluate the effectiveness of marketing efforts

• Analyze the return on investment (ROI) of marketing expenditures

• Discover how many of your site visitors are buying (conversion rate) or abandoning their carts

• Analyze how much customers are buying and how many return

Without this information, your business will not know where to concentrate expansion plans in the future. For instance, your company undertakes a big marketing initiative concentrating on two distinct tracks: pay-per-click ads and content marketing. The business sees a spike in both click-thru rates and conversions. However, lacking data on the click-thru rate from each distinct source, you have no idea where most of your conversions are coming from. It's possible that all the conversions are coming from the content marketing.

When scaling up, it's essential to have hard data about what has worked in the past, so resources are spent as efficiently as possible.

Know when and how to scale

According to a study by Startup Genome, 74 percent of startups fail because of pre-mature scaling. There are several stages that a business must pass through before it's ready to grow.

The first few years of a business' life is all about proving that your product or service is salable, that your business model is sound and your business culture promotes good decision-making.

A business must first validate their products by demonstrating success, then prove their long-term viability by demonstrating that the market for their product has legs (you'll know you've reached this stable point because of your data analysis). Therefore, making a business scalable in the future means having a strong core product line in the present.

With a strong product as the base, expansion can happen in easy stages, beginning with improvements and iterations on the original offerings, then branching out into products or services that are closely related to the initial product line. For instance, a shoe retailer may begin to offer more color or pattern choices. If that works out, they may choose to sell socks or laces. As each expansion succeeds, they may offer more clothing until the shoe retailer has become a clothing retailer, as was the case with Nordstrom department stores.

Put in place all of the mechanisms for managing a larger company as early as possible. This means streamlining and finding efficiencies even before you feel you need them, including:

• Training processes and new hire procedures

• Automated payroll

• Automated bill pay

• Large and expandable server spaces

• Automated marketing services

Many of these efficiencies are best accomplished through outsourcing. Payroll, email marketing, accounting and law services might be thought of as "non-essential" roles, better performed by a third-party rather than hiring someone to do the work in-house. Be sure that third-party services are already set up to scale and that they have extensive experience with all sizes of business so they can handle your volume as you grow.

Content marketing and networking

Content marketing - creating informational and entertainment content related to your business - is the most scalable form of marketing in the internet age. Content marketing helps you products find their audience and creates a strong brand identity. It is also easy to collect data about their effectiveness by monitoring click-thru rates. It is both the best way to introduce a startup to the world and solidify a reputation as a product and thought leader in the industry.

A modest content marketing strategy is capable of evolving into something much grander as your business scales. Blog articles become convention appearances and social media posts become professionally produced videos. Scaling up content marketing leads to increased traffic and conversions, which leads to scaling of the rest of your business.

As you and your business become more visible, cultivate relationships and networks with other business leaders. Relationships can become partnerships or you may find investors who can help finance expansion plans. Often, growing a business hinges on knowing the right people who can support your efforts.

It's never too early to start making important contacts.

"Growing a business hinges on knowing the right people who can support your efforts."

Human resources

Small businesses start out with small teams, and when planning for scalability, efficiency is key to hiring. As stated above, don't hire anyone to do work that can either be done by a third-party service or a computer. Automate as much as possible to maximize human potential.

Yet, the lean and mean team that shepherds the business through the startup phase may not have all the skills needed to enter into the more staid expansion phase. As your business scales, hire people based on a proven track record of promoting growth and stability.

It may also be time to consider whether the company founder should stay at the reins or hire a CEO. While it's tempting to want to hold control of every aspect of the company, a scalable business is one where no single individual is required for the business to operate - not even the owner.

Financing

Finally, very few businesses are capable of growing without some outside investment. A capital infusion increases marketing budgets, hires new personnel or makes new product development possible. As stated above, networking is important for finding potential investors, both at the startup and at the scaling phase.

It's important to have a high-level financial expert on hand to break down expansion plans and determine exactly what growth will cost before you ask anyone for money. They may also see opportunities for expansion that you may have missed. Smart financial advice should be part of your business plan from the very beginning.

The same pillars that make for a successful startup - comprehensive analytics, targeted content marketing, streamlined operations, a good product and a solid financial plan - will become the basis for future scaling. Knowing when to expand requires careful consideration or your business' health and the patience to wait until the time is right.