At early stages of building, long-term planning feels like a luxury. And even when you make time for it, the ecommerce environment changes so quickly that detailed plans become irrelevant.
What you want is optionality.
Optionality means building a company that leaves as many paths as possible open to you in the future. Want to expand to other markets? Want to grow to >100m€ in revenue? Want to stay small and maximize dividends? Building a financially strong company from the beginning means keeping options open.
During hard times, it means survival or even taking market share.
And it’s not rocket science – just business fundamentals applied to the ecommerce business model: strong cash flow, strong unit economics, and building assets.
💵Cash flow
Bad cash flow dynamics mean you need banks/investors to grow. It means one bad purchase order could sink you. It means giving up points of margin to survive.
Good cash flow dynamics mean you can grow without raising money, and can be traded for a few points of margin if needed. It means confidently purchasing inventory because you know you can sell it.
What to do right now:
👉Take a long hard look at Q4. Having to make your largest purchase order in low season is incredibly stressful. You don’t have to participate.
👉Learn to forecast, predictable revenue makes cash flow easier. Quick tip: model new and returning customers separately, then combine them.
👉Supplier negotiations and financing. Evergreen advice, don’t underestimate what payment terms can do.
🔧Unit economics
Bad unit economics means it is expensive to grow, and sets a high bar for marketing effectiveness. You have to be exceptional at something else to get this to work.
Good unit economics means you grow profitably. Everything else is easy when the margins are good.
💰Assets
Many actions are just rented performance. Turn off the ad spend, and everything stops.
Others build assets: things that keep generating a return after you stop paying for it.
The most valuable asset? Your customer base. It’s difficult to convince someone to try your product, but once they do, they’ll likely return and buy again. Group these customers together, and you can reliably predict when and how much they’ll buy.
I strongly prefer building assets where I can predict future revenue. Then you can confidently invest knowing you won’t spend way too little or way too much.
What to do right now:
👉Look at the LTV of your customers, per product. Are you building a healthy company or spending money on customers who never return?
👉Be critical about long-term investments with ambiguous benefits. Concrete benefits to customers are great. “Brand campaigns” – not so much.
🕰️ Final point
Even seemingly small improvements in these can change your company, especially when they compound over time.
