A penny spent is a lot of time saved

Kickstart – Penny Flanders spends a great deal of time doing manual work administering her website. Is this what’s holding her back from growing the business? Our expert panel finds out.

Penny Flanders launched a second-hand clothing emporium, Miss Money Penny, in February 2009. The idea behind it occurred to her about six months earlier. 

“Within the space of four weeks, about five girlfriends said to me, ‘I’ve got all these clothes in my wardrobe and they’ve got tags on them and I don’t want to take them to markets, and I don’t like eBay, and I don’t want to go down to consignment stores because they look you up and down’,” she says. Spotting an opportunity, Flanders entered a national competition for women trying to start an online business and won. She received a free website design as part of the prize and got things going.

More than six months down the track and Penny has over 200 sellers but is finding the administrative side of the website is slowing her down because she has to approve and reformat each item for sale. She is worried that the site isn’t earning as much income as she would have liked. And she would like to know the best way to promote the site to get more sellers listing their products, and more buyers looking to buy them.

Challenges:

1. Reduce the amount of time spent manually updating the website 
2. Grow the site to the point where it’s earning a decent income
3. Promote the site to get more people buying and selling

The panel

• Jonathan Crossfield, Netregistry.  Expertise: online content
• Laurence Harrould, Aviel. Expertise: business and personal coaching
• Terri Winter, top3 by design. Expertise: online retail
• Josh Mehlman. Moderator

Challenge 1: How can you grow a business if you’re drowning in admin work?

Josh: Penny, you mentioned that a lot of people don’t like eBay. What’s wrong with it?

Penny: There is a lot of clutter to get through. My buyers don’t want to fossick around for things, they want to have all of the hard work taken out of it for them. They don’t want to search through 1500 dresses on eBay, they just want the cream of the crop already selected for them by our professional stylists.

Josh: That’s very similar to the model Terri’s design store is based on.

Terri: Our business is very much based on curating and editing a selection. Fashion adds that other dimension of difficulty because there is the aspect that people have to feel comfortable it’s going to fit.

With my shop, you don’t have to check if a candelabra fits you or not. Do you reject some of the products people put up for sale?

Penny: I do, that’s my key point of difference. But this is a big issue for my business because it makes admin very extensive. I actually don’t get a lot of submissions that aren’t right, but the system I’m using slows me down.

“Any business that’s actually profitable in the first year is pretty unusual, given that that’s when you’ve got all the expenses and no income”

I get the selling forms that sellers have submitted with images attached. I have to resize the images in Photoshop, re-upload them onto the system, and fill out all the product description details.

For each item, it takes me about 15 minutes. So, if I’m listing 100 items a week, it’s a whole lot of administrative work that is taking me away from marketing the business.

Jonathan: Is there a reason you don’t have the system set up for people to create their own listings in the correct format and have them in a holding pattern for you to hit ‘approve’?

Penny: I didn’t have a lot of money to spend on developing a website and I believe it is quite expensive to get one built from scratch with that functionality.

Terri: I think that your workload is going to be too high, too manual, especially as your business grows. That’s kind of what’s happened to us because a lot of our systems were very manual. It’s better to start the right way, even if you’re not as busy now because you get the right systems in place.

What if products automatically went up, but then you had some sort of system where the community could vote on things and send you notices if they thought something wasn’t appropriate?

Jonathan: You’ve got to weigh that additional cost against the extra time that you’re putting into it at the moment because that is also a valuable resource. If it’s taking you all these extra hours to do that work manually, you need to work out what is the dollar value of that and decide if it’s worth putting that money into the website instead.

Terri: In another couple of years when you’re even busier, you won’t have the time to do the upgrade properly. It just gets harder and harder.

Challenge 2: How long will it take until the business is profitable?

Josh: Laurence, you’ve worked with quite a few start-up businesses. How long generally does it take before things really kick-off?

Laurence: Well, the general figure is that you’ve got to give it three years. Any business that’s actually profitable in the first year is pretty unusual, especially given that that’s when you’ve got all the expenses, the set-up costs, and no income. So you can pretty much write off the first year.

Penny: Good, I feel better about that.

Laurence: The fact that you are about six months in and you’re starting to think about how your processes are going to work, I think that’s pretty standard.

Penny: I guess I was nervous about whether the concept was going to work. If I grow, I get nervous because I’ve just got all this admin to do. I’m even thinking of putting on a junior for $15 an hour to help me, as an interim thing. But it sounds like I would be better off investing the money in a system that is more automated.

Jonathan: If you know it’s not working perfectly now, you’re not in the best position to make a judgment call. I think you really need to look at fixing these issues and then give it some time when the website is working at its optimum. Then see if your sales are increasing each month. Even if it’s not going as quickly as you’d like, you can see if the trend is going in the right direction and work out how long it’s going to be before you hit that sweet spot.

Penny: The thing that’s worrying me at the moment is, some things are selling really quickly but there are others that have been on there for a while and people are getting disappointed that it’s taking so long.

Josh: I don’t usually give advice, but one of the things about selling online is there may be items that sit there for ages until someone comes along and says, “Oh, my goodness, I’ve been looking for this for five years and you finally have one.”