What are some barriers of entry to running a successful eCommerce business?

2018-06-13T21:17:08+00:00By |Categories: Finance|Tags: , , , |

This is a Quora question I was asked and my answer is as follows. My sense is that a minimum qualification for “successful” is profitable on an EBITDA basis (net profit or earnings before interest and taxes, depreciation and amortization) such that your profits will pay back your original investment in a defined time [...]

What is the cost to revenue ratio of an e-commerce infrastructure in the retail industry?

2018-06-06T11:55:08+00:00By |Categories: Finance|Tags: , , , |

This is a Quora question I was asked and my answer is as follows. For my P&L’s, I break cost up into 3-main buckets: COGS (cost of goods sold) Marketing Operations I compute COGS based on landed costs, which includes the complete costs to produce a product so that it is sitting in your warehouse [...]

Marketing campaign goal metrics model: a simplified version of the most important financial model for any consumer product company

2018-12-08T14:21:41+00:00By |Categories: Downloads, Finance|Tags: , , , , , , , , , , , |

The ultimate goal in any company... ...is to acquire AND retain customers where costs to acquire and retain are less than expenses, which leads to profits. Boiled down to this single statement, then the most important variable in the finances is the marketing spend. Even if your other expenses are high or way out of [...]

One method for determining channel margins when you are not able to talk with industry insiders

2018-12-08T14:18:43+00:00By |Categories: Downloads, Finance|Tags: , , , , , , , , , |

This post answers this question I received on Quora: Does the manufacturer of robotic kits for kids have a potential to enter markets overseas by offering a 50% discount on MSRP to importers? Will the importer have enough space to markup the price before CE retailers markups his own purchasing price? The answer is unknown [...]

The North Star Metric

2017-09-23T21:05:33+00:00By |Categories: Finance|Tags: , , |

There's something called the North Star Metric, which one can also refer to as a super metric or a super KPI (key performance indicator). I found it to be best described in this one sentence, pulled from this post: The North Star Metric is the single metric that best captures the core value that your product delivers to customers. I think the [...]

The Flow of Money in a Consumer Product Company (infographic)

2018-12-08T14:11:46+00:00By |Categories: Downloads, Finance, Visuals|Tags: , , , , , , , , , , , , , , , , , |

The best way to think about this is a profit and loss statement, starting with revenue at the top and net income at the bottom. A customer flows from the top, acquired through marketing spend, and everything in between to deliver that product to them, with profit left over, and all the key metrics [...]

What are Honest Co.’s gross margins (and some rules of thumb for figuring this out)

2017-06-11T19:44:42+00:00By |Categories: Finance|Tags: , , , , |

This is a Quora questions I was asked.  Here is my answer I did a quick search in my industry source and did not find anything that specific. Here are some quick metrics to make a guess: As of 2016, they are north of $300 mm in sales; Unprofitable; Raised $220 mm to date from [...]

Are you in alignment with your investors?

2017-10-10T20:35:35+00:00By |Categories: Finance|Tags: , , , , , , , , |

I want to cover fundraising and investors, and even if you do not plan to raise money, this discussion has important implications for giving equity to cofounders, employees, advisors, consultants or partners. Investors invest to get a return on their investment, and the predominant way in which they get a return is when their investment is [...]

Revenue strategies in the early days of your consumer product startup

2017-10-11T15:07:11+00:00By |Categories: Finance|Tags: , , , |

In the early days of your startup, there are three revenue generating strategies that you want to try and adopt into your business. First, try to maximize the price of your product to get as much revenue a possible from a single customer. As an example, if your goal is $1000 in gross sales a week, at [...]

Equity Capitalization Model

2018-12-08T14:10:10+00:00By |Categories: Downloads, Finance|

If you ever plan to take on investment or bring on co-founders, employees, advisors, consultants or partners and you want to share equity with any of these stakeholders, you need to have a capitalization schedule. The cap schedule helps you plan out how the equity in your company gets distributed, to whom, when and at [...]