We spent over $1 Million in January…here’s what we learned.
In January we spent over $1 Million on Facebook ads in one of our businesses…
But don’t worry… I don’t expect you to believe me without proof…
Here’s the Amex statement for January…
And if you still don’t believe me or think I made this image up, then feel free to close the page, never return, and forget we exist…no offense taken.
I mean seriously, if you had told me one year ago, I wouldn’t have believed I’d be doing $1 Million in advertising in one month!
But advertising, marketing and sales is really what makes a business grow. So if you aren’t willing to spend time and money on marketing, you aren’t really expecting to grow your business.
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Now, I’ve run multi-million dollar organizations before, but they were all someone else’s, so I wasn’t involved in every aspect of the business.
With this business I’ve been very involved in everything.
Now, in full disclosure, this is an eCommerce business selling products online all over the world…
Not a coaching business, info business, or service business, but real products to real people.
During that time we did over $2.4 Million in sales, so our marketing cost was about 42% of sales.
Again, I don’t expect you to believe me (and honestly don’t care if you do), but here’s the Shopify dashboard just in case:
Okay, so I’m assuming if you’re still reading then you are at least somewhat curious what we did, how we did it, and what we learned, right?
Well what we did was simple:
- Find great products people really want
- Create engaging advertising that will entice people to buy
- Follow up, follow up, follow up!
- Sell the product
- Deliver our product to the customer and keep them happy!
- We ran video ads on Facebook
- Retargeted customers who went to our site
- Created email follow up campaigns
- Optimized everything
- Rinsed and repeated…
Now, the important part you need to know are the lessons learned. If you are looking to scale a business, then these lessons will serve you very well.
I’ve run everything from a one-man shop, to a small healthcare practice, to a large division in a billion dollar company, and I can tell you these lessons serve well for all different size businesses.
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Major Lessons Learned
- Communicate with Your Customers!
I can’t stress this one enough. No matter how great your product is, how loveable you might be, or how incredibly popular your brand, poor communication can kill your chances of success at any stage!Have you ever placed an order at a restaurant and the food came out all wrong? How did you feel when you got your order? Like they didn’t care and didn’t listen, right?Well it doesn’t matter if you’re a solo-operator or a billion-dollar brand…If your customers don’t feel they are being heard, they will turn on you. This means checking in on Twitter, Facebook, YouTube, Instagram, LinkedIn, google reviews, Yelp, your website – anywhere and everywhere your customers are looking for answers! We even had someone report our business to the Better Business Bureau because they thought we were a fraud…turns out that our email was in their spam box, so even when you do try to communicate it can backfire. Luckily we did follow up and communicated even more after receiving the notice, so the dispute was dropped.
- Never Rely on One Avenue for Customers
This is not a new lesson, and one that you wouldn’t think needs to be stated, but it’s true:If you are relying on one media source for your customers to find you, you are dooming yourself from the start!We relied heavily on Facebook, and at one point we were doing over $50k per day in ad spend on that site. Well, one of our ads was deemed in violation of their guidelines, and as a result the entire business manager was shut down! ???Imagine having a blazing fire keeping you warm in the midst of a blizzard and all of a sudden your fuel supply is stolen! Not a good place to be.This brings me to number three…
- Always Have a Backup Plan
We knew that this was a possibility, so we had several business managers with several logins, and several credit cards just in case one of these was shut down. We ended up needing all of them, and we kept having to resolve disputes and errors to ensure that the business stayed open.We call these redundancies, and you need them for your advertising, your fulfillment, your databases, computer systems, suppliers…anything and everything that you rely on to run a business. If you have just one of anything that is critical to running your business, you are asking for problems.
- Build a Strong Foundation Before You Build the Walls!
Ever seen a house built? Did they start with the ceiling first, or the foundation?Stupid question, right? Well unfortunately most people build their businesses using the wrong sequence. There’s a fine line you have to walk when building a business, and there’s always a Catch-22 you need to be aware of:Your business can only scale as fast as you can deliver on your sales promises!When you sell something, you are under a legal, ethical, and moral obligation to provide that thing or service to your customer in the way they expect to receive it! This is critical…If you aren’t ready to fulfill on your promises (i.e. deliver the product, complete the service, etc.), then you should not be selling it! This is different than “sell it before it’s ready”, which is what we coach entrepreneurs to do…I mean that if you can’t feasibly fulfill your orders in a reasonable time, or have no way to catch up if you catch a massive wave, then you shouldn’t be selling it!The foundation of a business is the ability to deliver to the customer what you promised. This is the operations-end of the business. Not sexy or fun, but vital to lasting success and continued growth.
- Know Your Numbers!
It’s very easy to get caught up in the excitement of selling your products or services, but don’t ever take your eye off the bottom line!For example, we were selling thousands of products daily around the world (God bless the internet!), and we had to know which products we could buy, sell, and ship profitably…Not on a quarterly, monthly, or even weekly basis, but ON A DAILY BASIS!Imagine spending $50k per day on ads, another $50k per day on products and fulfillment, and then only making $75k per day in sales…How long would it take to go out of business? Maybe a day or two for some, a week or two for others, right?Don’t be fooled by big businesses with billion-dollar top line revenues, wishing you could be like them…Many of them are losing money by the fistful day in and day out because they aren’t accounting for their business properly.If you run a business, you need to know both the static fixed costs, as well as the variable costs that eat away at your profit. And anything is better than nothing…we had to estimate shipping, merchant fees, chargebacks, and refunds until we had a track record we could rely upon…And we simply used a Google Sheet to track it! You don’t need to be overly sophisticated to know your numbers, but you must know your numbers! We had to shut off ads and products within hours of turning them on, but wouldn’t have been able to without knowing our numbers.
Shoring Up Your Business
Running a business is hard enough, but scaling a business significantly is a real challenge. There are so many little things that can go wrong and eat your lunch.
We don’t want that to happen to you, and if you’d like to someday be doing over $1 Million per month in sales (let alone advertising), then you need to really focus on shoring up your business.
This is the SSOS of running and growing a business…
- Structure your business properly with the right tools, technology, and people.
- Systemize your business using automation where possible and standard operating procedures everywhere!
- Optimize everything from your sales and marketing, to your people and processes on a regular basis.
- Scale your business only after you know the wheels won’t fall off the bus as you speed up.
If you want to learn how you can build and scale your business the right way, then head over to www.AngelInvestorsNetwork.com/evaluation to receive a free business evaluation and determine the red flags in your business!