Mistakes that will bankrupt your online store: top bad advice

Do you want to know how to destroy your online store yourself? Then fasten your seat belts as we take you on an exciting journey through the most devastating mistakes online business owners make! Study them carefully and try to never allow them in your practice!

Glossary

• 📉 Bankruptcy is a financial condition in which a company is unable to fulfill its financial obligations to creditors.
• 📊 Business plan is a document that includes the company's strategic and financial forecasts and serves as a guide for achieving its goals.
• 🛑 Financial cushion - a cash reserve intended to cover unexpected expenses and maintain the financial stability of the business.
• 📈 Sales planning is the process of forecasting future sales volumes in order to optimize the company's activities and determine the necessary resources.
• 💳 Loans - borrowed funds that the company is obliged to return to the lender with interest within a specified period.
• ⚙️ Cost optimization is the process of minimizing a company's costs while maintaining or improving the quality of products and services.
• 📜 Legislation - a set of legal norms and rules that a company must comply with in its activities.
• 📅 Trends - current trends and trends in an industry or economy, knowledge of which helps a company remain competitive.
• 🧑🤝🧑 Team is a group of employees working together to achieve common company goals and objectives. Team performance plays a key role in business success.

Tip #1: How to fail to write a business plan and end up going broke

I can write an epic comedy about how entrepreneurs decide to open an online store without any business plan. Yes, yes, you heard right, without a business plan. Doing this is like jumping with a parachute and forgetting to put it on. If you want to go under quickly, then don't write a business plan, and I'll show you how to do it.

❌ Do not write down the estimate

So, friends, the first bad advice is to forget about the estimate . Who composes it anyway, right? Let's decide that we have money and enough for everything. But now - the online store has already been launched, the goods have been ordered, and there is nothing to pay the rent. Remember this point before you ignore the estimate. And yes, using the word “estimate” should simply be a matter of honor (let's be honest).

🧾 Here's what happened in my case:

• 🥴 I ordered the first batch of goods - 35 euros.
• 🎉 Launched advertising - another 20 euros.
• 🏠 Rented an office - 79 euros.

And then I realized that I had not taken into account employee salaries, electricity bills and other little things. As a result, all the money melted away like ice cream on a hot day. Ignoring estimates is a sure path to bankruptcy. By the way, you could have drawn up a business plan yourself or turned to professionals, but I never did.

❌ Equipment? For what?

If you want to fail, don't overthink your equipment list. Let's live for today. Why do I need water coolers when I can buy more product?

❗️ Ignoring the need for coolers or other important office things will naturally lead to employees going on strike due to the lack of basic conditions. I remember a time when I simply didn’t have coolers, and how I was convinced that first I needed to think about the comfort of my employees.

❌ Do not choose a legal form

Known harm: do not choose a legal form a form for your online store, it’s just paperwork. There is no need to choose between LLC and sole proprietorship - live freely, without restrictions of laws and taxes.

⚖️ You will immediately feel more fun when the tax office comes to demand an explanation. “Not processed” - that’s your motto. But most importantly, I would advise you to pay attention to this at the beginning of your journey.

❌ Don't turn to professionals for help

Do you consider yourself a business genius? Great, then don't ask for help, figure it out yourself. But does it make sense to pay trusted suppliers? It's better to drink coffee and play solitaire than to make a work plan.

So, friends, don't miss out on the important things. I hope that you will not fall victim to the mistakes that I have humorously outlined to you here. Good luck to you and your future online store!

Tip No. 2: Take care of your financial cushion - guaranteed success!

Strong winds of change? Just think! Surely you have an excellent business strategy and nerves of steel. But let's face it. When I first launched my online store, I had no idea what was in store for me.

📉 Facing the unexpected

Here's a simple example from my practice. We once received a large order: holiday supplies for a corporate party. Well, the joy is full of pants, but the next morning we realized that half of the goods arrived defective. We had to urgently look for a replacement and deliver it in record time. Fortunately, I had reserves, otherwise this order could have cost the entire business.

Approximate statistics: about 60% of small entrepreneurs face unexpected expenses in the first year of operation.

💡 Unforeseen expenses are normal

👉 I can confidently to say that unexpected expenses are not something special. This is common.
👉 I believe the best solution is to have a financial cushion in case of unexpected situations.
👉 I would advise you to keep a financial reserve for 3-6 months of expenses.

🤪 Financial balance

One day I decided that I shouldn’t worry about low-marginal problems. I started spending everything I earned on new technical developments and marketing. And guess what? At some point I realized that there was nothing to pay the employees with. Standing up in front of a group empty-handed is one of the worst situations I've ever found myself in.

To prevent this from happening, I recommend that you consider the following steps:

💡 Always review profitable and losing months
💡 Keep reserve funds in a separate bank account
💡 Review financial statements regularly.

Financial Cushion - Your Wings

I am convinced that for this case it is best to keep a cushion equal to the cost of the project. If you spent half a million on your startup, keep about the same amount of money in reserve. This will give a sense of maneuver, security and stability in difficult times.

This is important: Keep emergency funds of at least 20-30% of the annual business income.

Comparison table

I encourage you to pay attention to the importance of a financial cushion. A financial cushion will help you not only get through difficult times, but also avoid many troubles, including fines and legal costs. Remember that this is an investment in your business and its stability.

Also do not forget about the importance of the right approach to organizing your business.

Tip #3: Don't plan to sell

Oh, how familiar this situation is: you open an online store and you have no idea how sales will go. Unfortunately, I have already fallen into such traps and now I am ready to share my experience.

When I started my business, I thought that forecasting sales before opening a store was a completely pointless exercise. Who even knows how many products will be sold in the first month? But, as practice has shown, this approach quickly leads to dire consequences.

Let's figure out why sales planning is so important. First, you have monthly expenses. This includes renting premises, purchasing goods, wages to employees, taxes and loans. For example, my expenses were about 1300 euros per month. Therefore, I decided: in order to work at least to break even, I need to sell goods worth 44 euros every day (1300 divided by 30 days).

In reality, my sales at the initial stage went something like this: some day 20 euros, another - 33, and sometimes all 67. But if I sold less than 44 euros per day, then a month closed with losses. And this forced me to take emergency measures, such as:

🔧 Press on advertising. Yes, advertising is the engine of trade. Without it, few people will know about your store.

💰 Adjust prices. Sometimes it is enough to lower prices a little to increase sales.

✂️ Cut expenses. Revisiting where you can save money is a great practice. For example, temporarily abandon overly expensive packaging.

📦 Verified suppliers. Make sure they are not providing you with Chinese knockoffs.

I assigned specific goals to each sales manager and regularly checked their progress.

Here's what I can advise:

• 🛠️ Hire an employee who would be responsible for advertising and set the task of recruiting at least 10 new clients per month.
• 💡 Invite the employee responsible for marketing and oblige her to optimize advertising costs so as not to go into the red.

I am sure that without a clear sales plan, your business is doomed to fail. Sales must be forecast and measured. When I implemented these practices, things started to improve.

Overview table

I sincerely hope that my advice will help you avoid bankruptcy. I advise you to consider the following: plan your sales, assign goals to each employee and adjust expenses on time.

Get into the numbers. Not only is this important, it's vital to your business.

🚀 Tip #4: Gain credits: how to definitely ruin your online store

Mistakes to avoid

When I first started my online store, I made one of the most common mistakes - I accumulated a ton of credits. Sounds familiar? Let me tell you what this looked like in practice and what it led to.

✨ It's easy to get carried away: how to start a business from a debt hole

Having received your first large amount of money from the bank, I was full of enthusiasm. I always wanted not only equipment for work, but also to look cool: 👔

• 🎮 Leather chair for the boss - because, after all, you You see, a solid appearance is the key to success.
• 💻 Advanced computers for managers - what if the old ones can’t handle the entire volume of tasks?
• 🎉 Advertising campaigns, although over budget - well, how could we live without them!

At the start it is always difficult to resist the temptation to buy all the best. But after a couple of months, I realized that the debt load was growing faster than profits.

💸 Surprise! Loans need to be repaid

Every month, towards the end, the realization came: there were a lot of loans. After all, banks don’t care at all how successful your business is. For them, the main thing is getting your money back. So I started a chain of missed payments and constant calls from the bank. The result was tangible pressure on business, both moral and financial.

📉 Results: constant debt is the path to bankruptcy

📈 As a result, the debt load led to the fact that profits could not cover all obligations. First lesson: loans led to unexpected expenses and debt.

Therefore, if I were starting my business again, then I can confidently say that we take loans only as a last resort. And this is clearly not when your hands are itching for cool “toys” for the office.

How to avoid mistakes with loans

Now that I have such experience behind me, I would recommend following a few rules so as not to step on the same rake:

1. 🧠 Plan your finances carefully.
2. 💸 Expenses must be justified.
3. 📊 Include all loans in your business plan.
4. 🚀 Try to avoid loans in the beginning and only take them when absolutely necessary.

I encourage you to pay attention to your long-term strategies. It’s easy to get carried away by loans, but not letting them drag your business down is a completely different story.

Summary table: Helpful tips

Tolerance of credit obligations is a sensitive matter. Pay attention to my advice and try to minimize the risks. Your online store will thank you for this.

Tip #5: How to go bankrupt quickly: don't optimize expenses

Ah, I remember how I wanted to shell out for an online store. At first I thought that I would save money, but suddenly I realized - why is this necessary? This list contains my personal bad advice for those who dream of the collapse of their own business.

🌟 Order products from the first link

When I started, I always ordered products from the first link on Google. What's the point of analyzing offers and comparing prices? This is a waste of time. I remember ordering a batch of T-shirts from the supplier who appeared first on the list - the result? The T-shirts looked like they were made in the 90s, and no one wanted to buy them.

👜 Connect to the most expensive Internet tariff

Why understand tariffs and overpay for the Internet? Certainly! Submit a request for the most expensive tariff from your provider. Personally, I once burned through my budget so much that I had to give up some marketing tools, without which my promotion suffered more than I could afford.

💳 Open an account in a bank with expensive services

When I decided to open an account, I trusted the recommendations of the manager, who recommended a bank with a bunch of paid options. Why waste time studying favorable conditions and saving? This path leads straight to bankruptcy!

✉️ Don’t skimp on auxiliary products

Stationery and office equipment are another great way to spend money. I personally bought the most expensive equipment on the market, despite the fact that I could have gotten by with reliable and more budget-friendly analogues. The result: a waste of money with no real benefit to the business.

📦 Avoid choosing suppliers based on the “price-quality” criterion

🛒 I once made a mistake and did not optimize my purchases. I chose a supplier with disgusting product quality and high prices. The goods had to be discounted and sold for next to nothing.

📡 Overpay for Internet services

💻 Why look for alternative ways to connect to the Internet? I chose the most expensive wired tariff, although it would have been possible to install a cheaper and no less reliable 3G modem. Don't repeat my mistakes!

📊 Table: useful tips versus bad ones

If you want to make your task easier and avoid these mistakes, I advise you to carefully study the terms of your business. Remember that cost reduction is one of the key points for sustainable development. I hope my personal “bad advice” will prevent you from making such mistakes. Good luck in running your business properly!

Tip #6: How to break the law to go bankrupt faster?

When I started my online store, it seemed to me that laws could, in principle, be ignored. Spoiler: this is the perfect way to quickly bring a business to bankruptcy. I share my experience and tell you how I managed to collect the whole range of possible fines and troubles.

❌ Neglect taxes and online cash registers

So, first of all, forget about online cash register. That's exactly what I did. The result is that the regulatory authorities imposed a fine on me and suspended the store’s activities. You shouldn't miss this great opportunity!

Here are a few facts for you:

• 🎯 If you didn’t purchase an online cash register, you were subject to sanctions.
• 🎯 If you didn’t file your tax return on time, your bank account was blocked.
• 🎯 If you didn’t pay taxes, your current account was blocked, and goodbye to employee salaries and agreements with contractors.

One way or another, if you do not comply with the law, expect trouble!

🧼 Work without registering a sole proprietorship or LLC

I decided to work without registering a sole proprietorship or LLC. Well, it was a great lesson: I was accused of illegal business activities. This is not only a fine, but also the prospect of more serious consequences.

💰 Ignore trade rules and sanitary standards

What's next? I decided to forget about trade rules and sanitary standards. This added a significant portion of penalties to me. After all, rules are meant to be broken, right?

Examples of violations:

• 🔥 Neglect of fire safety – additional fine.
• ❌ Failure to notify regulatory authorities is another fine.
• 🚫 Violation of sanitary standards - a warning and, of course, a fine.

In general, if you want to lose business quickly, ignore laws and regulations.

📊 Table: What to do and what to avoid

And finally, if you want to avoid my mistakes and not ruin your business.

I hope my experience will help you avoid serious problems and keep your online store afloat. Good luck!

Tip #7: Ignore new market trends

How to quickly and guaranteed fail your online store? Easily! Just ignore all the new products and trends in e-commerce. Let's do it like this: competitors are implementing CRM systems with all their might, automating business processes and training staff, and you are working the old fashioned way. I once did the same thing, wrote down orders in a notebook and thought that Instagram was about cats and food photos. Believe me, this is a sure way to failure.

So, what do the basic “successful” steps to ignoring trends look like?

🌟 1. No automation

So, I used to personally avoid all automation. Studying CRM systems and implementing them into business? For what? You can write everything down in a notebook. Yes, I spent hours managing orders and inventory manually, while competitors did it all in a couple of minutes. It's so much fun to experience constant stress and chaos!

🌟 2. Forget about social networks

Instagram for selling clothes or products? No, I haven't. Maintaining pages on social networks takes time and effort, and I was sure that it was not worth it. While my competitors were gaining audiences, I was missing out on opportunities. Only later, having realized the importance of using social networks correctly, did I start setting up advertising and engagement.

🌟 3. Ugh, new items!

Keep up with new tools and trends in marketing? No, this is not about me! I preferred old and proven methods, even if they did not work. Sales funnel? Why complicate life? This approach slowly but surely dragged the business to the bottom, while competitors flourished.

🌟 4. Employee training is a waste of time

A fairy tale about the fact that training staff can improve efficiency, in my case it was a great way to waste resources. I thought my employees already knew enough until problems began: errors in orders, poor customer service and, as a result, negative reviews.

I remember at one conference I heard about the importance of introducing advanced techniques and approaches. It was like a cold shower. I started studying new trends, putting them into practice... and you know what? My business has finally come to life. And today I can say with confidence that it is worth the effort and investment.

If you still have doubts, here is a visual table:

Remember, monitoring the market and adapting to changes in a timely manner is not just good, it is vital. I am confident that if you take these aspects into account, your online store will thrive. Don't repeat my mistakes, learn from others.

Tip #8: Forget about professionals: hire everyone!

Do you want your online store to go bankrupt faster than the bun flies across the buffet? Okay, I'll tell you how to do it based on my personal experience! First of all, never hire professionals. Instead, assemble a mediocre team of friends, family, and anyone else who just happens to be free at the time. Example? Please!

When I opened my online store, I decided to hire my cousin Pasha as a warehouse manager. He had never worked before, but his mother said he was "a very smart young man." Forget about resumes and recommendations, only personal connections!

Problems with team selection

🧐 Communication: It was simply impossible to deal with Pasha and the other “stars” of my team . Every day I had to chew over basic things, and the time to meet and sort out the problem was running out.

💼 Efficiency: You may think this is funny, but I forgot that an SMM student for 3 kopecks still can’t do miracles . Not a single post on social networks really brought in either clients or likes.

🧠 Motivation: I didn’t give any advice on motivation, I thought that proof of motherly love for my cousin Pasha would be enough. It turned out that “playing with toys” was a higher priority for him.

Solution and personal advice

When I realized what I had gotten myself into, I started act differently:

1. 🌟 Professionalism: I started looking for employees with real work experience. Resumes, interviews, recommendations from former employers (and yes, it works!). These measures helped me assemble a great team.

2. 📚 Training and development: Since then, I regularly organize trainings and courses for my team so that they could grow professionally. Investing in their knowledge has proven to be more rewarding than I could have imagined.

3. 🤝 Effective delegation: I learned to delegate. This gave me time to focus on strategic business issues and entrust routine tasks to reliable employees.

4. 💬 Feedback and motivation: I started giving each employee regular feedback. Nothing motivates better than a fair assessment of their work and recognition of their success.

5. 🕵️ SMM manager with experience: I hired a professional in this field, and it was the best decision for light. We started using social media to attract customers and increase awareness of our brand.
   
   

Table "What to do and what to avoid"

I can confidently say that following these recommendations helped me avoid bankruptcy and save my business. Your team is your strength. My experience tells me that choosing the right team is the basis for success. I hope my tips will help you avoid mistakes and develop!

Conclusion: How not to run a business - my lessons on bankruptcy

Do you need to ruin your dreams and plans? Then follow these tips!

📉 Don’t sign contracts with suppliers

Why waste time on bureaucracy when you can just trust a good word? So I did and, of course, I ran into serious problems. Low inventory, late deliveries - this is what awaits you.

🦥 Ignore Customer Needs

Ignore your customers' complaints and suggestions. Somehow I decided that complaints are always and everywhere, and it’s not worth responding to them. I can say with confidence that this approach quickly reduced the number of my clients.

🪑 Don’t train your staff

Why spend money on trainings and courses if your staff already Looks like they know their stuff? It was this attitude that led to the fact that my team did not have basic customer service skills. If I had known earlier that staff training leads a business to the top, I would certainly have done things differently. You can read more about how I trained employees here.

💡 Don’t invest in marketing

The “it will work itself” principle for an online store is a guarantee of failure. Using this approach, I hoped for a miracle and gradually began to notice that the traffic on the site was falling. The results were disastrous.

🛒 Use legacy platforms

Why switch to modern technologies if the good old website still works? Of course, my online store has been stable since 1999, but the lack of responsive design and mobile version killed any attempts at growth.

🤹 Try to do everything yourself

It seems like saving on specialists is a good idea . I could delegate SEO, design and logistics tasks to professionals. But I decided to save money and do everything myself. The result is fatigue, high costs and no progress.

🏢 Ignore analytics and data

Why waste time analyzing the market and assessing performance? I decided it was a waste of time and relied on my intuition. The result was a lot of bad decisions that cost me time and money.

Table: What to do and what not to do

Following any of this bad advice is bad for business. I hope my experience will help you avoid the same mistakes. Good luck with your promotion!

Roca Experience

Company Roca has been a leader in the sanitaryware market for over 100 years, providing its customers with superior bathroom solutions. With an international customer base, Roca is active in more than 170 countries and offers a wide range of products including washbasins, bathtubs, showers and mixers. The main goals of the company are customer satisfaction and creation of innovative products that meet the highest quality standards.

Main goals and objectives of the project

🎯 Main goals of the project:

• Ensuring financial stability.
• Optimization of expenses and investments.
• Monitoring market and trends.

🎯 Project objectives:

• Drawing up a detailed business plan.
• Creating a financial cushion in case of unexpected expenses.
• Develop sales forecasts and update them regularly.

The main problem

The main problem was that Roca faced risks associated with insufficient preparation for market changes. Their strategies were not always successful and this could potentially result in significant losses. It was important to find ways to optimize business processes and reduce operating costs.

Characteristics and interests of the target audience

🛀 Roca's main audience:

• Owners of private houses and apartments.
• Interior designers and architects.
• Construction companies and contractors.
  
  

🛀 Audience interests:

• High-quality and durable products.
• Simplified installation and use process.
• Modern and stylish design.

Key points of interest to potential clients

📈 Key points:

• High reliability and durability of products.
• Wide range for different style solutions.
• Positive reviews and ratings from users.

Facts, figures and concrete results of the project

Specific achievements of Roca:

Roca initially pursued a number of strategies that did not contribute to its sustainable growth. Without a detailed business plan and cost optimization, they risked facing serious financial difficulties. Thanks to a thorough analysis of vulnerabilities and the implementation of effective management methods, Roca was able to significantly improve its business processes and maintain its leading position in the sanitary ware market.

Frequently asked questions on the topic: Mistakes that will bankrupt you your online store: top bad advice

Thanks for reading and for your smart head! 🌟

Well, now you know how to ruin your online store in one or two ways! Sit back, relax and watch your sales drop. Your orders are a story about how NOT to do business. Jokes aside, by applying my anti-tips in reverse, you have already become a professional 💼. My texts are guides in the labyrinth of online trading automation. Here, every phrase is the key to the exciting world of effective online business. Vladislav Tsymbal, an independent expert from Elbuz, was with you. Leave a comment and share your opinion!