It’s every business owner’s dream, a milestone, an indicator of success, to achieve 6 figure sales – to be in the comma club
It’s validation and proof that a business model works, successful execution of well thought strategies, proof of a good product, and a sustainable business
It’s easy to say but not easy to do
However, 6 figures is not something that can be achieved alone. It requires buy in from all stsakeholders, proper planning, and most importantly – careful management of cost
I know this because we’ve been in 6 figure territory before, just not on a consistent basis – a fortunate glimpse of that gave me the realization of some of the things that we need to do to be at that sales level consistently
After a couple of days of intense planning – here’s how I think we can get there
1. Breaking down what 6 figures looks like
How does 6 figure sales looks like for us?
On a daily and weekly basis:
- How much total sales do we need to generate?
- How many orders needs to go out?
- How many individual items needs to be sold?
If you’re in a service business, consider:
- How much total sales do you need to generate?
- How many customers do you need to close?
- How many leads do you need to generate to close the required amount of customers
2. Understand how this goal will affect everyone
We need to know how 6 figure sales looks like to get an understanding of how it will affect all stakeholders
To put it in another way – the process of producing and selling RM300 vs RM3000 worth of products or services daily is extremely different
In our case, I anticipate that we will be affected as such:
Daily operations:
- Additional staff required for packing
- Operation SOP & procedures need to change
- Customer service issues will increase
- More delivery challenges
- Overall increase in operational costs
Marketing
- A 3 fold increase in marketing budget
- More competitive marketing campaigns and tactics
- A change in all marketing KPIs (ROAS / CPM / CTR etc)
- Development of more marketing channels
Major and minor suppliers of goods and services
- Sourcing of raw materials
- Supply and production management
- Delivery of foods
- Other issues of stock management and stock levels
- Allocation and management of drivers
- Stocking up of packaging items
After getting a good picture of what looks like on a daily and weekly basis for our 6 figure goal – all stakeholders will then have to rethink how operating on a higher level will affect them and be prepared for it
3. Analyze what worked for us and others
To consistently be in the 6 figure territory, we’ll have to do more of what worked, so it’s important for us to analyze what worked for us previously and also to look and learn from what worked for other more successful businesses. I chose to look at things from these 2 aspects – marketing and consumer journey
These are what worked well for us:
Marketing Activities
- Brand collaborations
- New product launches
- Mega sales and events
- High value bundles
- Extremely targeted exclusive sales
Consumer journey
- Overall website purchase experience and convenience
- Customer service level
- Following up with subscribers
Conclusion
After analyzing these points, these are the conclusions we drew:
- Price is not the deciding factor of a person’s purchase (although it is still a big affecting factor)
- People buy excitement
- People buy exclusivity
- People buy freshness
- People buy value
- People buy a good experience
These points will then form the basis of how we will get to 6 figure territory consistently
In essence, we’ll give customers what they want, and exceed their expectations!
4. How we will get to 6 figures
Our plan has only 2 main points
- High impact marketing campaigns (seasonal product launches, exclusive product bundles, high value bundles, a combination of these)
- Strengthening each consumer journey touchpoint to elevate the overall brand experience
Sounds simple, right?
But trust me, executing and planning for this is a completely different thing
And that’s why I don’t mind sharing, because precise execution trumps any great strategy that is poorly executed
5. Define challenges and how to manage them
Now we’ve got the plan, and know what needs to be done. We then need to think of what are the challenges that we will face executing this plan and how to manage them
At a 6 figure level, we won’t be able to afford to only start thinking of how to solve an issue when it arises – chances are issues will quickly snowball if not anticipated and managed earlier
The 3 main challenges that I anticipate we will face is
- Coming out with exclusive products on a monthly basis
- Consistently offering more value to our customers without eating too much into our cost
- Cost control
How will we overcome these challenges?
Coming out with exclusive products on a monthly basis
- Reducing our current SKU line up to ease production issues
- Planning of a list of repeated seasonal products (Think McDonald’s Samurai burger)
- Getting more input from our partners which are production experts
Consistently offering more value to our customers without eating too much into our cost
- Bring values in a creative way and stretching our marketing dollars as far as possible
- FOC products instead of % discounts
- Absolute value discounts instead of % discounts
- FOC deliveries
- Giveaways
- Lucky draws
- Exclusive new product samplings
Cost control
Cost, to me, is the deciding factor on whether we will be able to reach consistent 6 figure sales. This is also the hardest challenge to manage
A business can be at a 6 figure sales level and be losing money
A business can also spend their marketing dollars unprofitably to reach 6 figure sales and run out of cash there
There’s only 4 ways to increase sales and profitability
- Get more customers
- Get customers to spend more
- Get customers to spend more frequently
- Reduce costs
#2 isn’t so practical for us as our average basket size is already very healthy. So the idea is to work on #1, #3, and #4
To get more customers and get them to spend more frequently, we have to work on the secret of all online marketing, and also the only number I give a shit about in online marketing – ROAS (Return On Ad Spend)
Essentially, ROAS tells you how much you get back in return for every dollar you put into advertising. The higher the ROAS you can generate, the easier it is for you to be profitable
Different businesses require different ROAS numbers to be profitable, and ours is … P&C (sorry, haha)
To get to where we need to be in terms of ROAS, we’ll need to depend on
- Good online marketing practices
- High impact marketing campaign
- Expanding customer touch points of existing customers and customers that are very interested in us but have not tried our products yet
To reduce costs, we’ll have to relook at our variable and also fixed costs
As a primarily online business, our fixed costs are actually at a very ideal level
Plus, with the anticipation to reach 6 figures, we definitely foresee some increments in our manpower costs so it’s not ideal for us to make any reduction here
So we’ll be looking at two of the main components of our variable cost – marketing costs and also cost of goods sold (COGS)
Marketing costs is linked back to getting a higher ROAS – Higher ROAS means getting more sales at a lower cost, lower marketing costs as a percentage of overall sales also equals lower variable costs
COGS – Negotiations with raw ingredients supplier for more volume commitment, and also structured discounts for specific products that we are going to focus on a month on month basis
6. Relook at the practicality of our strategy
Is this doable or are we kidding ourselves?
After laying down the foundation of our strategy, I looked back at our performance history as a business, mainly at our sales, cost structure, types of promotions, and also ROAS
I created a detailed excel sheet indicating:
- Our cost structures and breakeven points at various sales levels
- Our margin details on a product level based on different basket sizes
- Our ROAS for the past few months
Fortunately, based on our past performance, this looks like an achievable goal – albeit its not going to be easy
This goal also seems scary and exciting at the same time – so that’s a good indicator we’re aiming for something achievable too
7. Evaluate the risks and get stakeholders’ buy in
I’d like to think that I am not a pessimist, but I have always had the habit of preparing and anticipating for the worst case scenario in a plan
This way, I find that I’ve always been able to decide better on whether to move forward with a decision or not
In this case, what is the worst that can happen if we do not hit our goals?
After some thought – at the required level of marketing spend, if we do not hit our goals for 1 or 2 months, the company will be in a bad financial position
We might also need to close shop if this business model proves to be unsustainable (I didn’t get into this just to run a business that performs moderately)
Plus, it’s not like I have not experienced handling a company going to shits before (my previous travel agency was brought down by Covid)
This plan won’t work if not everyone is 100% committed. Hence, we had a meeting between all the directors and looked at the strategy and risks involved
Fortunately, all of us agreed that this is a move we needed to make
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So now that we’ve got a proper strategy laid out, and have everyone’s full commitment, it’s time for us to go out and kick some ass, and be a member of the comma club for good
