Why You Need To Know Amazon Indexing
Why Are PPC Costs So High Right Now and What Measures Can You Take To Prevent Amazon Advertising Expenses?
Off-Amazon Marketing Strategies for Amazon Sellers in 2021
How to Reset Your Amazon PPC After Q4
How to Make a Conversion-Ready Amazon Product Listing
How Much Capital Does Your Business Need in 2022?
2022 will be a year of opportunity for many types of businesses, but especially for eCommerce. Small businesses in the eCommerce sector have seen unprecedented levels of growth for two years thanks to the pandemic, and research suggests that 2022 could be the first trillion-dollar year for eCommerce revenues.
Consumers made changes to shopping habits out of necessity at the start of lockdowns, and many of those changes remain permanent. That means that digital storefronts, AI-augmented shopping experiences, and marketplace algorithms aren’t going anywhere.
All of that is great news for eCommerce businesses preparing to grow in 2022. However, a strong sales forecast alone won’t cause growth –– proper business planning is critical for long-term small business growth. One of the most vital components of a successful business model is growth capital.
Read on for a few tips on how to determine how much capital your business needs for 2022.
What are your revenue goals?
One of the first steps in planning your capital needs for 2022 is determining your revenue goals. What are your sales targets, and what is your plan for getting there? Consider your costs, prices, shrink, and desired profits.
What are your costs?
When setting revenue goals, it’s a good idea to start with costs. If you’re planning to launch a new business in 2022, you’ll need to factor in your startup costs, including equipment, licensing, real estate, inventory, marketing, storage, utilities, payroll, insurance, taxes, shipping, and more.
For existing businesses, a cost analysis will be similar. You’ll need to renew several leases and licenses, buy inventory and packaging materials, ship your goods, and pay your employees (and taxes). However, as an existing small business, you’ll have months or years of data to review about where your money is going.
Set time aside to review your costs. What was your cost of acquisition (CAC) for your most recent clients, customers, and equipment? Can you reduce your labor costs and shrink due to damaged inventory by changing your inventory management procedures or opting into a fulfillment program? Can you modify your shipping practices to save money, or refine your PPC campaigns to get better ROAS?
What is your profit target?
After you’ve calculated costs, you can set your profit target. Depending on your growth plans for 2022, you may set your profit target higher or lower than last year.
When seeking to drive more profits, you have several options.
If you have a strong sales history and excellent customer service, you can raise your prices –– just be careful not to raise your prices too much at once without communicating with your customers.
Another option is to explore other sales channels. Online marketplaces can be highly lucrative sales channels if you optimize your pricing and copywriting. If you currently sell on Shopify, consider launching storefronts on Facebook, Amazon, Etsy, etc. Before getting started, spend a little time researching which eCommerce marketplace is right for you.
Another way to earn more profits is by expanding and refining your marketing efforts. 2022 will be a great year to tweak your social media strategy, launch your loyalty program, optimize conversion rates, and level up your email marketing.
What new products are you launching?
Whether you’ve been selling online for a while or are just getting started, you may be planning to launch some new ideas in 2022. You might be productizing services to bundle into a new offering for high-price clients, or maybe you plan to diversify into a whole new line of products. Whatever your new product plans are, it’s important to hone your launch strategy with competitive intelligence.
Expect costs of raw materials to increase
While eCommerce revenues are projected to increase in 2022 due to high demand, so are costs. Many marketplaces have increased their fees to reflect pandemic growth –– for example, Amazon has invested heavily in infrastructure, supply chain, and labor throughout 2020 and 2021. As a result, many raw materials and packaging vendors are increasing their prices.
Additionally, climate events, supply chain challenges, and global spikes in taxes and inflation are driving up the prices of international goods –– especially on items from China. Food, fuel, wood, paper, metal, and more are all more expensive than ever, so business owners need to prepare for a year of rising prices.
Be prepared for shipping delays to continue and shipping costs to rise
The supply chain crisis is far from over. This year, retailers encouraged consumers to start their holiday shopping as early as September to guarantee the product availability, and that trend will likely continue into 2022.
Customers are facing higher shipping costs along with longer shipping times, so strategic customer service is necessary to ensure customer loyalty in the coming months. A supply chain strategy will help to mitigate some of the adverse effects of supply chain delays in 2022
What are your growth plans?
2022 will be a year of growth for eCommerce businesses, and you should be ready to take advantage of it.
You might plan to launch new products or invest in new software. Maybe you’re moving your facility or hiring more labor. Or perhaps you’re planning to expand to other marketplaces, purchase new equipment, or purchase the office building you currently rent.
No matter your company’s plans for 2022 and beyond, you’ll need to raise business capital.
How to raise capital for small businesses
When it comes to accumulating raised capital, you have several options. Depending on your business model, growth plans, and history, you can choose one of the following routes.
Apply for a small business loan
The traditional way to raise funding is to apply for a business loan. Established businesses with robust financial health won’t have many problems when qualifying for loans, but newer business owners may struggle to find a lender –– or favorable terms.
The downsides of business loans include tight restrictions, slow credit checks, expensive security deposits, and complex qualifications.
A slower funding option for small business owners is to win over investors. Wooing investors requires meticulous business planning, significant growth goals, strong negotiation skills, tons of charisma, and often, a lot of time.
Launch a crowdfunding campaign
Crowdfunding for small businesses has gained popularity in the last few years. Crowdfunding has low barriers to entry and bears quick results, but it comes with platform fees and requires a lot of upfront work to win over strangers and compete with other projects.
Get instant funding from Payability
One of the safest, easiest ways to secure growth funding is with efficient cash flow solutions from Payability.
Slow money is the Achilles’ heel of eCommerce growth. Chasing investors, qualifying for loans, and running crowdfunding campaigns require tons of time and effort without guaranteed returns.
Payability offers efficient funding for your growth plans on your schedule. Instant Access provides accelerated daily payouts for eCommerce sellers, and Instant Advance offers rapid access to up to $250k in growth funding in as little as one business day.
Payability is fast and easy, with no credit checks required! Plus, you can access your funds when you need them with Instant Transfer. Lastly, Payability helps you earn more money with cashback rewards of up to 2% on every purchase you make with the Payability Seller Card.