Looking back on my time running a drop-shipping company from 2018 to 2020, I can now see it was a wild ride. It was the best business experience I could have asked for. Even though I'm no longer in the drop-shipping business and have since moved on to the data field, where I'm absolutely loving my new job, that doesn't mean I don't miss the lessons I've learned from running my own company.
From scaling effectively to managing logistics, customer service, and producing my own content, I've gained a lot of knowledge. My business lasted for two years and brought in over $2 million in revenue. It was an incredible experience, and one I'd like to share the lessons I've learned with those who are interested in the online marketing field.
Whether you're currently doing drop-shipping, planning to start your own business, or just curious about the field, here are the seven most important lessons I've learned from my time as a business owner.
1 - Cashflow is king
Cashflow is essential for any business. Just as breathing is necessary for a human to survive, cashflow is necessary for a business to take action. You may be eager to launch a new campaign, test a new product, source materials, or take any other action that could double your business's revenues. However, without the adequate cashflow, none of that is possible. Therefore, it is important to prioritize cashflow before considering any other action. This means putting cashflow monitoring at the top of your priority list, taking care of all the accounting tasks, and keeping track of all bills due before the due date. Only by managing this aspect correctly can you grow a serious, long-term business.
2 - Understand the risks
Once your business becomes your full-time job, it's time to assess the potential risks. I was unaware of the risks I was taking, which resulted in PayPal withholding around $100,000 from my balance and Shopify payments doing the same for tens of thousands of mine. Regularly check your transaction disputes, avoid gaining too many of them, and make sure you don't miss any emails from your suppliers or customers. Ensure you comply with your suppliers' guidelines; after all, they set the rules and you must follow them.
3 - Scale gradually and mitigate the risks
Scaling your business can bring about potential risks. To reduce these risks in the long run, it is best to divide activities into smaller parts. For instance, rather than managing one store for all transactions, you can manage multiple stores, each responsible for a part of the activity. Similarly, instead of having one ad account on a platform like Meta, you can create multiple accounts and pages. Although it may be more difficult to maintain, this is a great way to protect your business.
4 - Have one source of truth
Reliable business intelligence is essential for any business, regardless of its stage. To track Google Ads ad spend, the best place to do so is Google Ads. Payment gateways platforms can be used to monitor revenues. To view shoppers' activity, consult the eCommerce platform used. With a bit of effort, all these platforms can be connected. Automation of tasks and exporting of reports from any source can be done, and these can be compiled into a spreadsheet or database to create reports and dashboards for full control of the business. If you're serious about your business, this should be a top priority. For my business, I used the Make Automation Tool to gather all data in Google Sheets and then visualize it with Looker studio (formerly Data Studio). Even with a minimal budget, you can achieve great things.
5 - Choose volume over quality
Considering that you have yet to achieve your dream business with tens of thousands of loyal customers, when it comes to marketing, your job is to find good products and create effective creatives. Focus on quantity rather than quality; while the quality of your output should be acceptable, it does not have to be perfect. It's better to create and test 100 different visuals than to try and create the perfect one. Put it into a system, such as testing a new visual every X days, no matter what. This applies to products, ad copy, new features in the funnel, and anything else that can be tested. The more you test, the better you become. Thanks to new AI tools like Chat GPT and Dall-E, testing is easier than ever.
6 - Collaborate and outsource
It's unlikely that you can be the best at every skill needed to run a successful dropshipping business. You may be able to create great campaigns, have complex and effective funnels, and write compelling ads, but you still need to be proficient in accounting, customer support, and inventory and shipping management. Doing all of this on your own is difficult, if not impossible, unless your business only sells 5-10 products daily. Don't hesitate to use freelance websites like Fiverr or Upwork to find assistants or permanent workers. Delegating some of your tasks can free up your time and mental energy, allowing you to focus on growing your business and increasing your revenues. When your cash flow allows, consider hiring an assistant.
7 - Know what’s happening around you
Staying up-to-date with the latest news, features, and limitations related to suppliers is essential to staying competitive. To gain an edge, it's also important to keep an eye on competitors. With Meta's ad library, you can view what your competitors are promoting. Other spy tools, such as Similar Web, SEM Rush, and Adplexity, can provide further insights. Additionally, it's recommended to try out your competitors' full funnel. Analyze their conversion strategies, customer support, shipping times, etc. to gain a better understanding of who you're competing with. By staying informed and monitoring competitors, you can remain competitive in an ever-changing landscape. Just a couple of years ago, tracking web activities wasn't a priority; now, cookie-less browsers are a reality. To stay ahead of the game, you must stay up-to-date and understand who you're competing with.