Creating a Budget
A well-thought-out and accurate budget is the foundation of a successful eCommerce business.
Last updated
A well-thought-out and accurate budget is the foundation of a successful eCommerce business.
Last updated
When creating a budget for your eCommerce business, you’ll need to consider different aspects depending on the exact stage of your venture. However, a solid picture of your cash flow is imperative to long term success.
The most important aspects of building a budget for an eCommerce startup are:
Having a reasonable idea of how much you will need for marketing, the website, the platform, and the product.
Knowing your industry and accounting for future costs and sales.
Using an eCommerce bookkeeping tool like CommerceNavigator to keep track of day-to-day income and expenses.
Realistic projections will make or break your budget. When planning a budget for an eCommerce business, it is often easy to underestimate the cost of successfully launching your venture.
You could spend anything from just a few dollars to thousands starting up an eCommerce business. Whatever amount you start with, consider that you will likely get out of the startup what you put into it. This is true in terms of time, effort and money.
The highest costs you will have to plan for when launching your eCommerce startup are marketing, the website, the platform, and the product. The most important thing you can do is track each of these costs diligently. simple, yet powerful reports and insights make your budgeting and planning faster, easier, and more accurate.
Marketing budgets vary dramatically from one business to the next.
If you’re planning to sell on a marketplace, like Amazon, eBay, Etsy, Poshmark, or the like, you won’t have to invest as much in marketing upfront. This is why these platforms charge higher fees on each sale — their name and marketing efforts help your store to flourish.
When launching your own website or store, however, marketing efforts can be more intensive. Whether your store is built on Shopify, Woocommerce, Squarespace, or another platform, you’ll have to drive traffic to your store and build a unique brand to keep your customer base coming back. Especially in the beginning stages of your business, this means investing in things like search engine or social media ads, a network of influencers, or in-house content creation.
For businesses starting as a side hustle or with minimal capital, consider building your brand on a marketplace platform, then directing customers to your own store. Or, create content yourself and post to platforms where your market is most likely to be, such as TikTok, Instagram, Twitter, or Facebook.
Whatever your marketing budget, CommerceNavigator automatically tracks what you spend on marketing efforts, so you can spend more time building your business and manage your marketing dollars more effectively.
You can opt for a marketplace, like Amazon, eBay, Etsy, or Postmark, or create your own website. Each marketplace has plans that don’t require any initial monthly commitment — simply pay when you sell! The marketplace route typically requires a lower upfront cost, but can be more costly over time, as percentage-based per sale fees are often higher.
Sellers with a higher budget may choose to create their own eCommerce site and build their brand there. This leaves the option of using a template or creating an eCommerce website from scratch — consider the licensing and development costs of these two options. Creating an eCommerce website from scratch will help you stand out more, while a template will likely save time and money.
If you’ve decided against selling on a marketplace, you’re still left with many choices on where to launch your eCommerce business.
The two most common platforms, Shopify and WooCommerce, allow you to choose between more options, customization, and ease of use for the user. Choosing the platform that will work best for your eCommerce startup is important. Shopify is more straightforward and can be customized without code using built-in features as well as free and paid plugins, however customization options are not as plentiful as with WooCommerce. It’s important to consider, however, that WooCommerce requires starting and maintaining a WordPress site — an additional cost.
There’s also an abundance of other website builders with reasonable monthly fees and sufficient customization for stores just getting started. Think Squarespace, Weebly, and Wix.
What are you planning to sell? The golden question of eCommerce also brings an important budget consideration. Are you planning to sell items from around the house as you get started? Will you purchase inventory from thrift stores and garage sales or are you planning to launch your own custom line of soaps? Your choice of product to sell will have a huge impact on your budget, so consider how much you have to invest. For many sellers just starting out, simply gaining experience with low cost, low profit items can be a smart route.
No matter the product, it’s important to keep accurate records. With CommerceNavigator’s Premium Plan, you’ll have access to reports that point out sales and inventory trends. This is a huge asset while planning to launch your eCommerce startup, as well as for long-term planning.
Creating a long-term budget for your eCommerce startup will require solid insight and some guesswork.
No one wants to think about the boring burdens of taxes and bookkeeping during the starting stages of their business, but it’s a necessary evil. By budgeting for your startup expenses and tracking them as they arise, you can see how profitable your business is, estimate your tax liability, and perhaps most importantly, track expenses that can power essential tax deductions.
At CommerceNavigator, we grow as you do.
