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Having a product go viral presents an exciting opportunity, provided you can fulfill orders and maintain adequate inventory. As more and more orders pour in, you may find your cash flow isn’t sufficient to keep in-demand inventory stocked.

That’s where inventory financing steps in to save the day. With inventory financing, you can get the capital you need to stock up on products, which serves as collateral for the loan.

Read on to learn how inventory financing works and how to secure financing to keep your business bustling.

What is inventory financing?

Inventory financing is a loan or line of credit small business owners use specifically to buy inventory—either finished goods or raw materials to manufacture products. It’s useful for businesses selling or manufacturing physical goods, including retailers with physical stores, ecommerce retailers, manufacturers, distributors, and wholesalers.

Inventory financing is a secured loan, meaning the products or materials you purchase will serve as collateral. If you can’t make payments, the lender can seize your products for compensation. Most lenders limit how you can use the loan, and how much you can borrow, often a percentage of the total cost of the goods you want to purchase. You can’t, for example, take out an inventory financing loan and decide to use it for payroll.

In order for inventory to work as collateral, it has to be nonperishable and able to hold its value for the length of your loan terms. That means you can’t use inventory financing to purchase products like flour for your bakery, but you can use it to purchase spatulas you sell in your kitchen supply store.

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Common uses for inventory financing

Here are common reasons small businesses use this type of business financing:

• Cash gaps. Many businesses use inventory financing to cover short-term cash gaps. If your cash is tied up in other business expenses, inventory financing can help maintain stock without disrupting daily operations.

• Product launches. After putting resources into product development, you might need additional funds to get your product made. Financing can help you manufacture and stock your inventory line for launch.

• Seasonal demand. Businesses can also use inventory financing to prepare for spikes in seasonal customer demand.

• Bulk discounts. Both established and new businesses can use inventory financing to save money by buying products in bulk. Calculate whether a wholesaler’s bulk purchase discount outweighs the total cost to secure financing.

How does inventory financing work?

Inventory financing can be in the form of a business line of credit or loan. Both options require you to work with a lender, typically a bank, credit union, or online lender.

With a term loan, you apply for a loan in the amount you need to buy inventory. If the lender approves your loan, they’ll give you a lump sum with fixed repayment terms, including interest.

For a line of credit, the lender approves a loan up to a specific amount you can draw on as often as you need during the draw period. You pay interest only on the money you draw, not the amount you are approved for. Often, a line of credit is revolving, meaning once you repay the money you’ve borrowed, you get access to the full credit line again. This means you won’t have fixed payments—they can go up or down depending on how much you’ve spent.

How to secure inventory financing

1. Assess your financing needs
2. Compile documentation
3. Get preapproval from lenders
4. Compare your options
5. Apply

The application process for an inventory financing will be familiar if you’ve ever borrowed to buy a home or taken out an SBA loan. Lenders require you to provide a lot of information before they hand over cash, so get your paperwork in order before you apply.

1. Assess your financing needs

Before you take out a loan, you need to know how much money you need to buy inventory. To do that, compile a list of all the expenses associated with purchasing inventory, as well as your projected sales volume and forecasted demand.

For example, imagine you want to hold six months of stock. You estimate you’ll sell 1,000 t-shirts a month, so you need to order 6,000 t-shirts. If each shirt costs $3, you’d need $18,000 in inventory financing.

Get a few itemized estimates from your suppliers so you know what you’ll be spending. This estimate can also come in handy to prove the value of the inventory to the lender, so have the value of the collateral available if you default on your loan.

2. Compile documentation

The lender will want proof of your business income. Gather all the necessary documentation to give to the lender ahead of time, so you’re not scrambling at the last minute, including:

3. Get preapproval from lenders

Research at least three different lenders to compare their offerings and ensure you get the best terms. Then, fill out a preapproval form for each to see the exact loan terms they’ll offer.

Preapproval is less in-depth than a full application. The lender will likely check your personal credit report and may ask about your basic business finances. They won’t require all of your documentation until you actually apply.

4. Compare your options

If a lender pre-approves you, they’ll give you a document sharing the details of the proposed loan. As long as the information you provided in the preapproval step is accurate, terms shouldn’t change when you submit a final application.

Always read the fine print of all loan documentation. Here’s what to look for:

• Interest rate. Interest rates for inventory financing can be higher than SBA loans. Online lenders often have higher interest rates than banks or credit unions, but accept lower credit scores and short (or no) business history.

• Repayment terms. Make sure the loan terms are feasible for your business, and check for any prepayment penalties. Some inventory financing loans require daily, weekly, or monthly payments.

• Funding speed. Some lenders act fast, providing cash within one business day. Others may take a couple of weeks before releasing funds. If you need the funding quickly, make sure the higher interest rate that often comes with faster funding is worth the cost.

• Requirements for additional collateral. Sometimes, the potential resale value of the inventory you want to purchase won’t be enough to satisfy the lender. They may want to see what other collateral you can offer in the form of business assets.

• Loan minimums and maximums. Some lenders have maximum loan amounts, so make sure you’re not asking for too much. Additionally, some require you to take out a minimum amount, so make sure you’re comfortable with that as well.

5. Apply

Once you’ve determined the loan that’s the best fit for your business, it’s time to apply. Submit all required documentation. If you’re applying online, the lender likely has a portal where you can upload your application and documentation. If you’re applying in person, your loan officer will collect the paperwork.

Approval times vary depending on the lender. But you should expect to hear back within a few weeks at the latest.

*Shopify Capital loans must be paid in full within a maximum of 18 months, and two minimum payments apply within the first two six-month periods. The actual duration may be less than 18 months based on sales.

Many small business owners dread accounting. Organizing a pile of receipts, sending invoices, and finalizing financial statements are tedious tasks that mean less time spent growing their businesses.

Outsourcing your accounting needs to an expert—or team of experts—can help you avoid this problem. Read on to learn how engaging an accounting firm can streamline your business’s financial management and set you up for enduring success.

Why businesses outsource accounting

Businesses generally outsource accounting in one of these scenarios: 

1. The business owner doesn’t have financial expertise

Not all entrepreneurs have the skills to maintain detailed accounting records or file taxes—and that’s OK. Knowing how to do double-entry accounting isn’t a requirement to start a business. 

2. The business is too big or it’s too costly 

Every hour a business owner spends on accounting and bookkeeping is an hour they can’t spend on growing their company. The opportunity cost of managing every financial task can be immeasurable. Outsourcing accounting allows business owners to focus on critical business decision-making and growth.

3. It doesn’t make sense to hire an accountant in-house

For most small businesses, hiring a dedicated in-house accountant, let alone having an entire internal accounting department, may not be necessary. Hiring someone in house entails not only an hourly wage or salary, but also benefits, training, and management. With an outsourced model, you pay only for the time and services you need.

Additionally, an outsourced accounting team provides a deep bench of financial professionals with a variety of skills. These experts may include seasoned bookkeepers, certified public accountants (CPAs), tax specialists, and even virtual chief financial officers (CFOs). This team-based approach means you have access to specialized knowledge for every need, from tax compliance to detailed financial statement preparation.

It can also help ensure accuracy. If you outsource to a firm, you can have multiple sets of eyes on your financial reporting and financial statements, increasing the chances that your books are accurate. This is essential when trying to secure financing or navigate an audit.

Finally, an outsourced accounting model can entail incremental services like cash flow management, tax preparation, and financial analysis. These value-add services can help you spot trends, identify areas that could be more efficient, and create a proactive strategy to ensure a healthy cash flow. 

What kinds of accounting can be outsourced?

The scope of outsourced services is far-reaching, and can be customized to meet your company’s needs. From day-to-day bookkeeping services to high-level executive support, outsourced accounting professionals can handle it all.

Bookkeeping services

Professional bookkeeping services handle the recording of every financial transaction for your business. An outsourced team will take on categorizing your expenses, reconciling bank and credit card accounts, and reviewing your general ledger.

Accounts receivable (AR) and accounts payable (AP)

The management of accounts receivable and accounts payable is important for a healthy cash flow. With accounts receivable management, an outsourced accounting team can manage the entire process, from creating invoices to pursuing late payments. For accounts payable management, they can handle the receipt and payment of bills, ensuring vendors are paid on time and helping you avoid late fees.

Financial reporting and analysis

Outsourced accounting teams can prepare your financial statements on a monthly, quarterly, and annual basis. They can also create custom reports that monitor key performance indicators (KPIs), budget-to-actual analysis, and insights into your company’s performance.

Payroll processing

Outsourced accounting services can manage payroll on your behalf. This includes handling employee wage calculation, deducting taxes and benefits, initiating direct deposits, withholding and remitting taxes, and filing payroll reports with federal and state agencies. 

Tax preparation and planning

An outsourced accounting firm that employs CPAs can prepare and file your federal, state, and local tax returns. Many firms also offer year-round tax planning services, such as a tax specialist who can work with you to understand your long-term business goals.

Outsourced CFO services

For small businesses wanting executive-level financial guidance but that can’t afford a full-time CFO, outsourced CFO services may be the ideal solution. An outsourced CFO acts as a high-level financial adviser assisting with tasks like raising capital, long-term forecasting, budgeting, and business planning. They also provide insights for management and board meetings, helping you navigate major business decisions and come up with strategies for sustainable growth.

How to choose an outsourced accounting partner

The right outsourced accounting firm can impact your business for years to come. Consider these factors when evaluating potential accounting partners.

Industry expertise

Search for an accounting firm with a proven track record working with other businesses in your industry. Often, they will better understand the challenges and financial nuances of your market, which can render their advice more accurate. Be sure to request references from their current clients in your field.

Technology and data access

A modern outsourced team should be leveraging the latest cloud-based accounting software, providing you with secure, real-time access to your financial data. Ideally, they also use a secure portal to communicate and share documents.

They should be able to answer questions about their technology stack, explaining the tools they use and why. Ask about their knowledge of accounting software such as QuickBooks Online, Zoho Books, Xero, and other industry-standard tools.

Communication

The best partners act as an extension of your team, not just a vendor. Look for a firm that emphasizes communication with a point of contact for you and your team, and even regular check-ins. A firm that reaches out with insights before you even ask indicates a true partnership.

Reputation

Research the reputations of accounting firms you’re considering. Check out their online reviews and client testimonials, and ask for a list of references. A positive reputation is an indicator of their quality of service.

Data protection and security

You will be sharing sensitive information with your accounting partner, making data protection a priority. Inquire about their security protocols, encryption methods, and compliance with data privacy regulations such as the General Data Protection Regulation (GDPR). A reputable firm will be transparent and have demonstrable measures in place to protect your confidential information.

Scalability

Choose a partner that can grow with you. As your business expands, your accounting needs will become more complex. The best outsourced firms offer a tiered service model so you can easily scale from basic bookkeeping to advanced outsourced CFO services, without needing to switch firms.

Turning passion into profit is about understanding the mechanics of making money as an entrepreneur. While innovation and motivation drive entrepreneurs to create something new, sustainable success requires a clear strategy for generating income.

In fact, according to the US Bureau of Labor Statistics, about 20% of new businesses don’t survive their first year. This highlights a key reality: Although innovative ideas may be what inspires an entrepreneur to build a business, truly successful entrepreneurship means making money and setting your ventures up for long-term success. Here’s how to do it.

What exactly is an entrepreneur?

An entrepreneur is a person who creates and/or runs their own business, often taking on financial or personal risk in the process. But this definition only scratches the surface. True entrepreneurs embody passion, grit, drive, innovative thinking, risk tolerance, and the determination to succeed against the odds.

For many, entrepreneurship is as much a mindset as it is a business venture. The rise of the creator economy has helped broaden the scope of what it means to be an entrepreneur. Today’s entrepreneurs take many forms: a startup founder, a full-time ceramicist, and a TikTok influencer could all fall into this category.

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Entrepreneur vs. business owner

An entrepreneur differs from a business owner—someone who specifically owns and often operates their company. Business owners focus on the daily operations of their companies, managing resources and ensuring they continue to make products and provide services that meet customers’ needs. While they may innovate, they typically prioritize maintaining the continuity of successful operations.

There is plenty of overlap; many entrepreneurs also own and manage a business they created. However, some business owners buy and operate an existing company without making major changes, which is generally not considered entrepreneurship. Additionally, even after an entrepreneur sells their business, they often retain their entrepreneurial identity. In general, entrepreneurship involves more risk, innovation, and scalability.

How do entrepreneurs make money?

Entrepreneurs make money by building and expanding profitable businesses that offer valuable products or services. Their income varies depending on the specific area and industry, and many entrepreneurs earn money in multiple ways.

For example, an organic produce company may sell its products in stores while also offering a bi-weekly or monthly subscription box that generates recurring revenue. In the digital goods realm, a business coach may sell online courses directly to clients through their own website, while also licensing their teaching techniques to other coaches. An industrial designer could patent a game they created and license the patent to a toy company.

Successful entrepreneurs don’t just focus on a single revenue stream. They seek opportunities to innovate and diversify their income. By adding complementary products, entering new markets, or leveraging technology, entrepreneurs can hedge risks and maximize profitability over time.

In the Silicon Valley-style startup model, where many entrepreneurs seek an exit event like a buyout or an initial public offering, equity is the primary method entrepreneurs use to realize returns. When the business is sold or goes public, the founder’s ownership stake in the business can be quite valuable, even if the company hasn’t earned a profit. However, any business owner can potentially make money from selling their company if that’s their end goal.

How to pay yourself as an entrepreneur

Now that you understand how entrepreneurs make money, it’s essential you know how to compensate yourself for your work. In the early stages of a business, some entrepreneurs choose to reinvest in the business rather than pay themselves to create greater value—and a greater payout—in the future. That said, you can pay yourself as a business owner in a few ways:

Owner’s draw

This is common for sole proprietorships, partnerships, and limited liability companies (LLCs) taxed as disregarded entities or partnerships. You simply take money from your business bank account as cash flow permits. However, you remain responsible for paying estimated income and self-employment taxes and keeping accurate financial records.

Salary

This is required for S corporations or C corporations, where you pay yourself a regular salary, like an employee. You’ll need to establish a payroll process, and the salary is subject to payroll taxes (Social Security, Medicare, and unemployment).

Distributions and dividends

For S corps and LLCs taxed as S corps, you can take distributions, which reduce the owner’s equity in the business (since they effectively move capital out of the company to you as an individual). Dividends are after-tax profits from a C corporation that are distributed to owners or shareholders, rewarding them for investing in a profitable business.

How entrepreneurs build profitable businesses

1. Find a profitable idea
2. Develop and validate your product
3. Draft a business plan
4. Launch your new business
5. Manage the business

Success in entrepreneurship requires innovation, vision, and a unique skill set to develop offerings that create value for your target market. Here are the essential steps to become an entrepreneur and succeed:

1. Find a profitable idea

The product or service you choose for your business is your foundational decision—one of the most important ones you will make. While every business idea comes with trade-offs, you can minimize risk by finding the right niche with growth potential.

These questions will help you evaluate the merits and drawbacks of your business idea. To answer them, you’ll need to invest in market research to understand the wider landscape and define your target audience.

• Does this product or service serve a passion or solve a problem?

• Is this a growing category, a stable trend, or merely a fad?

• What is the competitive landscape in the industry?

2. Develop and validate your product

After deciding what you will sell, consider your options for product development. You might make physical products by hand, partner with a manufacturer who can build to your specifications, purchase wholesale products in bulk to resell, or leverage dropshipping if you don’t want to hold inventory.

Next, you’ll need to validate your product idea, confirming there’s interest in and demand for your product. Consider these validation strategies:

Finally, ask yourself how your product fits in the market: Does it expand an existing category, disrupt a legacy category, or create a new category?

3. Draft a business plan

Now it’s time to write a business plan—a document that outlines every aspect of your business. It covers core details and plans, including the cost to start the business and where you will obtain funds, who you can reach and market to, your business model, what you will charge for each product, the product lines you will offer, and your marketing strategy.

Your business plan will serve as your company’s roadmap, helping you stay on track and execute your carefully formed strategy. This free business plan template can help guide you through the process.

4. Launch your new business

Choose your business name and legal structure. Create a store launch checklist to plan your opening day. Schedule launch day marketing plans, like posting on various social media channels. If applicable, plan for customer support or at least an easy way for customers to contact you if they need help. Then, focus your time and energy on making your first sales.

5. Manage the business

You’ll learn more about business simply by doing the hard work; whether you ever take a business class, successful business owners continuously learn and adapt. Effectively managing a business includes honing your people-management skills, fostering company culture, assessing and planning for evolving business risks, measuring performance, and recovering from setbacks.

Imagine that you’ve just wrapped up a meeting with your marketing team about launching a new social media marketing campaign for your ecommerce business. You look down at your meeting agenda and the long to-do list from your meeting notes, only to discover you still don’t know exactly what items need attention and who is responsible for completing them. What you need now are action items.

Whether you’re a solopreneur trying to handle all of the tasks that go into running a business or a CEO needing to keep several team members on the same page, learn how you can craft effective action items to set expectations and get important tasks done on time.

What are action items?

An action item is a written statement that defines the details of a specific task, who’s responsible for it, and by when it needs to be completed. Project managers and business owners can use action items to detail the work that goes into a task and assign responsibility to a specific task owner.

By establishing a due date as well as an assignee, action items can keep team members accountable to turn around work in a timely manner. Going back to the social media marketing example above, you could write an action item to “set up a business account on Instagram” and assign it to your social media manager with a deadline for one week out.

Not all tasks can fit within a single action item; a complex task might include several action items. For example, one of your larger tasks could be to perform an audit of your existing social media accounts. You could then break it down into several action items, like analyzing engagement on TikTok or creating a survey for the followers of your Facebook business page.

Action item vs. action plan

An action item is different from an action plan—which details a step-by-step plan for achieving a goal, including information about process, workflow, budget, resources, and project timeline. Action items can fit within an action plan to detail specific activities related to the project, but they don’t cover larger considerations like project goals or timelines.

How to write effective action items

Here are some best practices to consider when writing action items for your business.

Identify the 3 Ws of each action item

You can write action items using the three Ws framework to break down the key attributes of a task with three questions:

• What? What specific task needs to be completed? 

• Who? Who is responsible for the task?

• When? When does the task need to be completed by?

What

When writing what will go into a specific task, use an active verb denoting a specific action. Avoid vague descriptions of tasks or incomplete notes: For example, “product photos” is a less useful action item than “Post product photos on Pinterest.” Here are a few examples of social media marketing action items using this framework:

Who

Choose a designated person for every action item. Although you can assign action items to departments, opt for specific team members to avoid confusion.

For example, you could assign the rewrite of your Instagram profile bio to a specific copywriter and the YouTube content calendar to a content specialist or project manager, rather than simply assigning tasks to your marketing department.

When

Set clear deadlines for your action items. If an action item relates to a larger project, evaluate your overall project timeline and identify how much time you can afford to take for each action item within that project.

For example, if you have an overall timeline of two weeks for a comprehensive social media audit, you can set specific due dates for smaller action items like compiling top-performing posts or creating brand guidelines for future reference. Make your action item due dates as specific as possible; you can opt for a set time frame like 24 hours, three days, a week, the following project meeting, or set an actual date.

For example:

• Rewrite profile bio on Instagram by next Monday.

• Create a three-month content calendar draft for the YouTube channel by September 3.

• Verify business profile on Pinterest by the end of this week.

• Register for TikTok Shop before next project meeting (August 28).

Use the SMART framework for action items

The SMART approach is a strategic framework used to set effective goals, but it can apply to action items as well. Here’s how you can use the SMART framework to evaluate the quality of your action items:

• Specific. Write specific action items with as much relevant detail as needed.

• Measurable. Can the results of your action items be measured by clear metrics or deliverables? For example, “Reach out to 10 potential influencer partners” is a more measurable goal than “Begin the influencer outreach process.”

• Attainable. Is the scope of your action item realistically attainable? If the work involved in a specific task feels overwhelming or overly time-consuming for one team member, you can likely break that item down into several smaller action items.

• Relevant. Is your action item relevant to a specific project and your business goals at large?

• Time-bound. Include specific deadlines in action items to keep assignees accountable for timely delivery. 

Implement project management tools to monitor action items

You can use project management tools like Asana and ProjectManager to create and organize action items, build out action items into a task list, and even use action items as the building blocks for other types of project management charts, maps, and grids.

For example, using Asana, you can automatically turn your list of action items into a Gantt chart format—a type of bar chart with each action item represented by a horizontal task bar along a timeline. Project management software can help you track progress more efficiently, but they aren’t strictly necessary—you can keep track of action items in a notebook, Google Doc, or whatever method works best for you.

Include additional details in your action items

Some action items can benefit from more specific details about the task. For example:

• Status. Consider including a status update for a specific action item to quickly identify tasks that need to be assigned as well as in-progress tasks, completed tasks, and overdue tasks.

• Priority level. You can also include the priority level of project tasks in your action items, noting them as low, medium, or high priority to help you and your team prioritize tasks.

• Creation date. Consider noting the creation date of a specific action item for future reference.

• Check-in date. If a particular action item will take an extended amount of time, consider including a check-in date (like your next meeting date) where you can meet with the assignee of that action item and make sure progress is on track.

• Attachments. If a specific action item requires any relevant documents or assets (like a brand logo for a social media post), you can attach those to your action items using a software tool.

It costs money to make money, especially when starting a small business. One thing small business owners have to account for in their budget is selling expenses. A crucial component of selling, general, and administrative (SG&A) expenses aren’t cheap. In 2023, median SG&A expenses totaled 13.7% of a company’s revenue, according to research from The Hackett Group.

Read on to learn how selling expenses affect your business and get some useful tips from experts on how to reduce your costs.

What are selling expenses?

Selling expenses are various costs a business incurs when promoting and selling products. They include everything from maintaining your ecommerce website to shipping products across the country. Selling costs can be either fixed or variable.

Selling costs are a part of SG&A expenses. Together, SG&A expenses are the costs associated with your business operations. Also known as overhead expenses, the general and administrative buckets include things like office rent, office supplies, office equipment, insurance, salaries for administrative staff or a finance team, and legal fees. While they affect profit margins, SG&A expenses are not directly connected to producing a product or service. 

In other words, SG&A expenses do not include the actual cost of a product; instead, they cover the direct cost of getting the product into a customer’s hands. Think of them as operating expenses.

Types of selling expenses

Typically, selling expenses are broken down into three categories: They include the distribution costs, marketing costs, and selling costs that a business incurs. 

1. Distribution

When a customer orders a product, you’ll need a distribution system to get it to them. This is often the biggest unavoidable selling expenses in ecommerce; even without marketing and advertising expenses you’ll need to pay distribution costs.

Examples of distribution costs include:

• Customs and duties (for international shipping)

• Fulfillment service fees (if using a third-party logistics provider)

• Inventory management software

• Packaging materials 

• Returns and restocking costs

• Shipping and delivery fees 

• Warehousing and storage costs

2. Marketing

Potential customers won’t know about your products unless you market them. That makes marketing one of the most important sales expenses, especially if your company is newer and hasn’t yet built up a customer base. These customer acquisition costs are part of operating expenses: They put your brand name into the world and showcase what makes your products different from the competition, giving you a competitive advantage.

Examples of marketing costs include:

3. Selling

The act of conducting a sale costs money, too. You’ll need an ecommerce platform that accepts and verifies payment; this technology costs money. If your business sells in-person, you’ll also need physical point-of-sale (POS) hardware to conduct the sale. Many sales costs, such as your website or POS system, are fixed costs because they’ll stay the same no matter how much you sell.

Examples of selling costs include:

• Customer service wages or tools 

• Ecommerce platform fees 

• Professional services, including point-of-sale system fees (if selling in person)

• Retail slotting fees (if placing product in physical stores)

• Sales commissions and salesperson salaries (if employees involved in selling directly)

• Sample or giveaway costs

• Trade show fees

• Transaction fees, such as credit card processing fees

• Transportation costs and other travel expenses for sales representatives

Tips for controlling selling expenses

The less you spend on acquiring customers and getting products out the door, the more can flow through to the bottom line. Here are a few tips on controlling expenses related to selling, with pointers from Nik Sharma, the founder of the agency Sharma Brands.

Consider analyzing selling expenses regularly

You won’t know how much you’re actually spending on selling expenses unless you track them. The first step for analyzing selling expenses is keeping good financial records, including an income statement, ideally in accounting software like QuickBooks or Xero. Review your financial performance at least once a month.

Effective financial management can help you cut out selling expenses that aren’t leading to wins. For example, if you see you’re spending $1,000 a month on Google Ads but not generating any revenue from it, you’ll be able to reassess your marketing efforts for better marketing ROI while fine-tuning your selling process.

You might also consider conducting customer feedback surveys to see what your audience has to say about your packaging and shipping. If you’re paying extra for customized boxes, but customers don’t notice them, then you can probably cut these selling expenses and use cheaper shipping materials instead.

Factor in your customer acquisition costs

Your product pricing should cover not only the cost of production but also all SG&A expenses, including the cost of acquiring customers. If your selling expenses fluctuate month to month, price your products and services with a built-in margin of safety so you don’t slip into the red.

A key metric here is your customer acquisition cost (CAC)—the average amount you spend on marketing and sales to gain one new customer. You can calculate this by dividing your total marketing spend by the number of new customers acquired in the same period. For example, if you spent $1,000 on marketing last month and brought in 25 new customers, your CAC would be $40.

“[Your marketing] budget really depends on what the projected acquisition cost is, and that correlates directly to how expensive the product is,” adds Nik. For instance, if you’re selling high-end bookshelves and estimate a CAC of $100, your pricing should reflect not just the cost of materials but also that acquisition spend.

That said, a high CAC doesn’t always correlate with higher prices. If your profit margins are healthy or your customers make repeat purchases—leading to a higher customer lifetime value (LTV)—you might be able to absorb the cost. Instead of raising prices, many businesses focus on lowering CAC by improving marketing efficiency, conversion rates, or customer retention.

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Save money by promoting affiliate sales

Four out of five marketers use affiliate marketing tactics, and for good reason—it’s more affordable than traditional marketing campaigns, especially if you’re only paying sales commissions on completed sales. Letting others promote your product on a commission basis is a major cost containment opportunity.

“Take Jolie, for example,” Nik says, referencing the filtered showerhead brand. “Jolie has created 10,000 pieces of content this year alone with a network of content creators. They reach out and say, ‘We’d love to send you a showerhead,’ and that’s pretty much it. They relied a lot on people who are open to taking the product and just creating content for them.”

Offer self customer service

When your customers have questions, it takes up valuable time to answer them. You’ll need to hire more customer service agents and bigger sales teams with properly trained sales representatives, all of which can drastically increase your selling expenses and sales performance.

Luckily, you can circumvent this by having answers to popular questions ready and accessible on your website and other marketing materials. This is known as self customer service.

“Really, it comes down to four or five main questions that you’re answering,” Nik says. “What is the product, why does it exist, who’s the product for, why is it better than the competitive set, when would I get it if I order it today? These are the questions you want to answer over and over and over again, whether it’s a landing page or a website that you’re driving people to.”

Answering these questions upfront with knowledge hub content, FAQs on your website, and blog posts should drive your selling costs down over time. You might even consider using marketing technology like a customer service AI chatbots to answer questions 24/7.

Profitability ratios help you assess your business’s health by quickly quantifying how well you use money to make money. It offers investors a quick way to gauge the potential value of their investment, and it helps lenders assess your company’s ability to repay loans. Here’s what you need to know about common profitability ratios and how it’s relevant for your business and its stakeholders.

What are profitability ratios?

Profitability ratios are measures of a business’s ability to generate profit or income relative to revenue, costs, assets, and equity. Lenders and investors use profitability ratios to evaluate the business’s efficiency in using their capital to generate that profit.

Profitability ratios come in two types: margin ratios and return ratios. Margin ratios compare profit to total sales or revenue, using figures from a business’s income statement. Return ratios compare profit to the money invested in the business in the form of debt and equity capital, which are found on the business’s balance sheet.

Higher profitability ratios generally indicate success in generating profit and deploying capital toward profitable uses. You can use profitability ratios to compare your business’s current and past performance, as well as against similar businesses. You may also compare your profitability ratios against a benchmark, such as an index for your industry or a broader stock market index.

Types of margin ratios

Margin ratios signify the margin, or degree, of a business’s profitability. Each subsequent profitability ratio shows a progressively lower level of profit as more categories of expenses are deducted from revenue.

Here are some key margin ratios:

Gross margin 

Gross margin, or gross profit margin, is the ratio of a business’s gross profit to its net sales or revenue. Gross profit is revenue minus the direct costs related to making products or services, known as cost of goods sold (COGS). The formula for gross profit margin, expressed as a percentage, is:

(Revenue – COGS) / Revenue x 100 = Gross Margin

Gross margin shows the basic profitability of a business’s production process before any other costs are taken into account.

For example, let’s say an online shoe company has $1 million in revenue in a quarter, and $400,000 in cost of goods sold, such as wholesale purchases of shoes for inventory. Its gross margin is:

(1,000,000 – $400,000)/$1,000,000 x 100 = 60%

Operating margin

Operating margin, or operating profit margin, is the percentage of revenue left after subtracting COGS as well as operating expenses, commonly referred to as selling, general, and administrative (SG&A) expenses or overhead. Since interest on debt and taxes aren’t yet counted, operating profit is sometimes called earnings before interest and taxes (EBIT). The operating profit margin formula is:

(Revenue – COGS – SG&A) / Revenue x 100

Using the hypothetical shoe retailer from above, let’s say it has $300,000 in operating costs (SG&A) in a quarter. Its operating profit margin then is:

($1,000,000 – $400,000 – $300,000) / $1,000,000 x 100 = 30% 

Pretax margin

The pretax margin measures profitability after all costs except taxes are deducted. It is determined by the following formula:

(Revenue – COGS – SG&A – Interest) / Revenue x 100

Pretax costs include interest payments, which (assuming IRS criteria are met) are tax-deductible for a business. Interest costs further reduce profit margin.

Say that the shoe retailer has $50,000 of interest payable on loans. Its pretax margin is

($1,000,000 – $400,000 – $300,000 – $50,000) / $1,000,000 x 100 = 25%

Net margin

Net margin, or net profit margin, most accurately reflects a company’s profitability—or its net income after deducting all costs. It’s calculated by dividing net income by total revenue:

(Revenue – COGS – SG&A – Interest – Taxes) / Revenue x 100

or

Net Income/Revenue

Sticking with the example of the shoe retailer, its taxable income for the quarter is $250,000. Assuming a tax rate of 20%, its taxes are $50,000. Calculating the net profit margin looks like this:

($1,000,000 – $400,000 – $300,000 – $50,000 – $50,000) / $1,000,000 x 100 = 20%

Net profit margin is the most commonly cited of the profitability ratios, representing a company’s financial health and ability to generate income. The net profit margin ratio can indicate how much profit a company’s management is producing from sales while keeping costs under control.

This metric does have drawbacks: It can include extraordinary accounting items such as one-time gains or losses, which can skew comparisons of a business’s current and historical profitability, as well as comparisons to competitors that may not have such extraordinary items distorting their profit.

Cash flow margin

The cash flow margin measures a business’s operating cash flow, which appears in its cash flow statements, against revenue:

Cash Flow From Operations / Revenue x 100

Calculate operating cash flow by starting with net income, then adding back any non-cash expenses from the income statement, such as depreciation and amortization:

(Net Income + Depreciation + Amortization) / Revenue x 100

Let’s say the shoe retailer recorded $80,000 of depreciation in the value of its assets in the quarter, so it adds that amount back to net income to arrive at cash flow from operations. The cash flow margin then is:

($200,000 + $80,000) / $1,000,000 x 100 = 28%

Cash flow margin indicates how well a business turns revenue into cash. This is typically important for businesses that sell on credit and need to collect payments from customers. A greater cash flow margin indicates more cash available for a business to pay its employees, vendors, and lenders, or to purchase more assets. Diminishing or negative cash flow may mean the business is generating profit but is losing money as customer payments lag.

Types of return ratios

Return ratios quantify how well a business uses capital, both debt and equity. They include:

Return on assets

The return on assets (ROA) ratio compares a company’s profit, or net income, found on the income statement, to total assets, which is found on the balance sheet:

Net Income / Total Assets x 100

Let’s say the shoe retailer has total assets of $1.5 million, financed with $1 million of loans and $500,000 of owners’ (shareholders’) equity. Its net income for the quarter is $200,000. So return on assets is:

$200,000 / $1,500,000 x 100 = 13.3%

Ideally, the more assets a company has, the greater its potential revenue and profit. Since economies of scale help lower costs and improve profit margins, returns may grow at a faster rate than assets, ultimately increasing ROA.

Return on equity

A business’s return on equity (ROE) ratio measures how efficiently it uses shareholders’ equity to generate profit. The calculation divides net income by equity:

Net Income / Shareholders Equity x 100

With a smaller denominator than return on assets, a business’s return on equity is often substantially higher. For example, if the shoe retailer’s equity is $500,000, its return on equity is:

$200,000 / $500,000 x 100 = 40%

The higher rate compared with return on assets illustrates the use of leverage, or debt financing, to enhance ROE. Since two-thirds of the shoe retailer’s assets ($1 million) are debt-financed, its net income increases by using debt. So the numerator in the ROE calculation is boosted by debt-financed profit, while the denominator is smaller because it excludes debt. 

Return on invested capital

The return on invested capital (ROIC) ratio reflects how well a business uses capital from both debt and equity to generate profit, rewarding equity investors and repaying lenders. It’s calculated by subtracting dividend payments from net income and then dividing that number by total capital:

(Net Income – Dividends) / (Debt + Equity) x 100

If the shoe retailer paid no dividends, then its return on invested capital would be the same as its return on assets:

$200,000 / $1,500,000 x 100 = 13.3%

Any dividend payments would lower the return on invested capital. For example, let’s say the shoe retailer paid a $50,000 dividend in the quarter. The ROIC then is:

($200,000 – $50,000) / $1,500,000 x 100 = 10%

How to analyze your profitability

1. Collect financial data
2. Calculate breakeven point
3. Examine historical profitability ratios
4. Know your competitors

To get a reading of your business’s profitability and analyze various profitability ratios, you will need to do several things:

1. Collect financial data

The data you need for profitability ratios is mainly drawn from the three key financial statements—the income statement, balance sheet, and cash flow statement. These statements provide the relevant entries for calculating ratios, such as revenue, profit, assets, equity, and cash flow from operations.

2. Calculate breakeven point

You’re at the threshold of profitability when you reach your breakeven point. Determine your breakeven point with the following formula:

Breakeven Point = Total Fixed Costs / (Contribution Margin Per Unit / Sale Price Per Unit)

In this formula, fixed costs are those that stay the same even when your output increases, and contribution margin is product price minus variable costs per unit.

At this stage, you might perform some what-if analysis to test breakeven assumptions about product prices, overhead and operating costs, and financing.

3. Examine historical profitability ratios

Compare your profitability ratios against previous periods to identify patterns. If your business tends to have seasonal fluctuations throughout the year, compare like periods, such as this year’s second-quarter net margin to last year’s second-quarter net margin. Also, compare profitability ratios internally, such as gross margin versus operating margin, to analyze opportunities for reducing operating expenses and increasing profit.

4. Know your competitors

Compare your profitability ratios against competitors to gain a sense of your place within the market. This is known as peer group analysis. You may also gauge your performance against benchmarks, such as an average or index for your industry. If your growing small business has a net profit margin of 10%, for example, how does it compare with the average net margin of companies in a small-cap index?

*Shopify Capital loans must be paid in full within a maximum of 18 months, and two minimum payments apply within the first two six-month periods. The actual duration may be less than 18 months based on sales.

In the days leading up to Mother’s Day, customers are often searching for the perfect gift, such as a beautiful bottle of perfume. When faced with two similar options—similar in size, scent, and price—what might sway their decision?

A simple line in one product description stating “Free gift wrapping and shipping included” can make all the difference, clinching the sale.

That’s the power of augmented products—valuable add-ons enhancing the products a business sells. These augmented products can help attract more customers, inspire long-term loyalty, and make your company more money.

Here’s a look at various types of augmented products and how they add value for both businesses and customers.

What is an augmented product?

An augmented product is an additional service or feature, physical or non-physical, helping differentiate a core product from its competitors. These augmentations go beyond the physical product itself, providing additional value to the customer without changing the core product or its functionality.

Common forms of product augmentation that add to a positive buying experience include: 

You don’t need to offer an augmented product to win business, but free perks certainly help. For instance, eight out of 10 consumers consider free shipping to be a top priority in their online purchasing. Some industries, like electronics and automobiles, come with built-in expectations of product warranties.

When an augmented product adds features exceeding customer expectations, you enhance your brand’s reputation and gain a competitive advantage in a crowded marketplace.

How an augmented product works

The augmented product concept is part of a multilayered product model, bundling a physical item with additional features to provide intangible benefits to consumers. For a true augmented product definition, we’ll break this product bundle into three components.

Core product

The core product is the fundamental benefit or value the customer is buying. For example, when someone buys a new laptop, the core product includes word processing, multimedia editing, and internet connectivity. When someone buys a car, the core product is transportation. When someone reserves a night in a hotel room, the core product is a place to sleep and rest. This product level focuses on a customer’s fundamental need, which the product directly addresses.

Actual product

The actual product is the tangible, physical item or service behind the core benefit. The actual product features the attributes that inspire a purchase: design, brand name, functionality, packaging, and overall quality.

In the laptop example, this would be the device itself—its processor, hard drive, screen, battery life, operating system, and brand, as well as its packaging. In the car example, this would be the literal vehicle, including various levels of trim (e.g., leather seats, all-wheel drive, etc.). In the hotel example, this would be the room itself, including the bed, desk, shower, and other physical attributes.

Augmented product

The augmented product includes added services or benefits that go beyond the basic function and physical form of the product. Augmented products work by building on the core product and actual product to create a more complete, compelling offering. They help differentiate a business in competitive markets by increasing perceived value, a factor that often retains customers.

In our laptop example, augmented products could include free trials for services (e.g., three free months of Apple TV+ when you buy a MacBook, or even a free carrying case). In the car example, augmented product examples include free roadside assistance and an extended warranty at no extra cost. In the hotel example, a room could come bundled with free Wi-Fi, complimentary breakfast, and free parking. All of these provide added value and may attract customers who were considering other lodging options.

Examples of augmented products

A product augmentation strategy can help your business meet customer needs and add extra value to each purchase. The best add-on goods and services are ones that naturally align with the core product you’re promoting.

For example, it makes sense for appliance retailers to offer interest-free financing in their marketing campaigns, but it would be odd for a cosmetics retailer to offer it due to the product price point. That’s why any thought of product augmentation should start by weighing your core product and the needs of your customer. Here are some augmented products to consider offering.

Free delivery

Offering free shipping enhances the customer experience by reducing the total purchase cost and improving convenience. Shopify users often offer free shipping as a sales incentive, especially during peak shopping seasons. On a large scale, Amazon Prime is known for bundling fast, free delivery with membership, which has won the ecommerce behemoth millions of loyal customers.

For example, home composting retailer Lomi offers free shipping on orders of more than $50. Since Lomi’s signature product is over $400, this effectively amounts to free shipping for most people. The actual product is the physical food disposal appliance. The product’s augmentation is the free, convenient shipping, bringing it directly to the customer’s home.

Product warranties

A product warranty is a promise from the manufacturer or seller to stand behind the product’s quality, offering repair, replacement, or a refund for a specific period. Warranties are common in industries known for relatively high prices, including the furniture industry, the electronics industry, and the automobile industry.

Sometimes companies extend these warranties during special sales, such as with a holiday offer for a 10-year warranty on a range of household appliances. Businesses of all sizes offer warranties. Samsung does on its appliances, but so does Nama—whose juicers and milk makers include a 15-year warranty on all parts.

Free trials

Think of free trials as free samples of a service. Offering free product trials is a marketing technique companies use to introduce their customers to subscription services. However, they also represent valuable add-ons that can help you stand out from other sellers.

For example, many Shopify Apps offer seven- to 30-day trials so users can evaluate the functionality and fit. The core product is the app’s functionality, but the ability to use it risk-free is an augmentation demonstrating its value to customers.

Additional services

Added services support the use or maintenance of the core product. Examples include installation, setup assistance, training, or customer support. For example, a furniture store might offer in-home assembly, while many technology companies provide online services to help customers navigate their software.

Some jewelers, such as Virabyani Fine Jewelry, offer complimentary resizing with the purchase of certain engagement rings, wedding bands, bracelets, or other types of jewelry.

Technology upgrades

In some cases, the ability to upgrade a product or get access to new technology is a key augmentation. For example, many customers purchase smartphones expecting operating system updates for several years.

Shopify Apps often come with regular updates to improve usability. Businesses can beam software updates to users’ devices for very little money. Meanwhile, the added functionality can inspire brand loyalty among customers, making it a win-win for both sides.

Accessories

You can also offer a physical augmented product: an accessory to enhance your customer’s core product experience. Examples include a free charging brick with a mobile phone or a free vase with a bouquet of flowers.

Novo Guitars includes a premium guitar case free of charge with every purchase of a new guitar. The case helps Novo ensure its instruments arrive intact, and the customer benefits from the case’s practical functionality.

If there’s one thing in life that remains constant, it’s that there’s always laundry to be done. Laundromats provide an essential service to those who don’t have washers and dryers in their homes. If you’re looking to start a company of your own, a laundromat business can be a stable and lucrative choice.

In the United States, about 95% of new laundromats survive for at least five years from their opening date, which is a much higher success rate than for other types of small businesses. Additionally, experts valued the US laundromat industry at $6.8 billion in 2025, with the average laundromat owner generating about $150,000 in revenue per year.

Read on to learn more about the laundromat industry and how to create a business plan to get started.

What is a laundromat business? 

A laundromat business provides laundry services to customers in a community or commercial enterprise who may not have access to a washer or dryer on-site in their homes, buildings, or offices. Laundry businesses often cater to college students or urban dwellers living in apartments. They typically include machines that are coin, credit, or mobile app-operated. Laundromat services may also include add-on services like dry cleaning to meet customer needs. 

What types of services do laundromats provide? 

A laundromat may offer a variety of services, such as:

• Self-service laundry. The most traditional offering, a self-service laundromat allows patrons to come and go independently and use washers and dryers on their own time.

• Wash-and-fold service. With a wash-and-fold service, an on-site staff member does laundry for a customer, who picks it up later.

• Pickup and delivery. To execute pickup and delivery services, you or your staff go directly to a client’s home or business to collect their dirty garments, clean and dry them at the laundromat, and then return them to the customer. 

• Dry cleaning. Some laundromats offer dry cleaning services on-site or as part of a partnership with a local dry cleaning business to attract additional customers. 

• On-site products. For convenience, some laundromats sell laundering products on-site, like detergent, stain remover, or dryer sheets. Some modern locations also feature items like vending machines for customers to patronize while waiting. 

How to write a laundromat business plan 

1. Start with an executive summary
2. Move on to a company overview
3. List products or services offered
4. Conduct a market analysis
5. Plan out logistics and operations
6. Put together a financial plan
7. Create a marketing plan

Whether you’re looking to start a new business, expand, seek funding, or simply share your vision with other stakeholders, a business plan can be a valuable tool. It can help crystallize your mission, your services, and your path to profitability. It’s also a necessary document if you’re looking to get a loan or secure outside investment.

While there may not be a one-size-fits-all laundromat business plan template, there are several key elements you’ll want to include in your own. Follow these steps to ensure yours is thorough and leaves no stone unturned:

1. Start with an executive summary

The executive summary is a one-page description of your laundromat business that includes a high-level overview of your product offerings, laundry services, target market, competitive advantage, leadership structure, mission statement, and financial plan. Since it should sum up all your sections in a concise and easily digestible format, write this summary at the very end of drafting your laundry business plan.

2. Move on to a company overview

Your company overview explains how you’ll execute your concept in detail. For a business venture like a laundry facility, there are many different business models to choose from, such as a self-service wash-and-dry center for residential community members; a private laundromat that services an office or residential building; or a large-scale industrial or commercial laundry that supports bulk cleaning of restaurant or hospital linens.

The company overview explains which laundromat format you plan to operate and how it will work. It should include your company name, location, legal structure (limited liability company, partnership, or corporation), mission and values, business objectives, and leadership and management team. 

3. List products or services offered 

Let’s say you plan to launch a self-service wash-and-dry laundromat that also serves as an arcade in an effort to target young patrons in a major city. You intend to include arcade games like pinball, as well as a Ping-Pong table designed to foster community and fun while people wait for their laundry.

In this case, your products and services section will include a detailed list of the laundry services you offer, a list of games, any additional services like pickup and delivery, and products you sell like snacks and detergent. Include a price list showing how you intend to charge for services (per load) and entertainment (per 30 minutes, per game, etc.), and how you’ll accept payment (whether you run a coin-operated laundry business or accept card or app payments).

4. Conduct a market analysis

The market analysis will spotlight your market research about the laundry industry and highlight industry trends and forecasts. For your laundry-arcade concept, this could include a competitive analysis (of other local laundromats, as well as any similar joint-venture wash centers that include a special attraction) plus a SWOT analysis that shows strengths, weaknesses, opportunities, and threats.

This section should also include information about the population density of the area you’re catering to and demand for laundry services like self-service laundry, which may impact the number of laundry machines and the type of laundry equipment you acquire. Provide an overview of your target market and potential customers as well. In the example of the laundromat-arcade, your target market might be urban dwellers between 22 and 40 years old.

5. Plan out logistics and operations 

The logistics and operations component will encompass the raw materials and supplies you need to operate your laundry business. Here, you’ll list the specific models, types, and number of washers and dryers, as well as the types of arcade games you plan to include. List suppliers and manufacturers, as well as information like inventory management and maintenance costs.

Alternatively, you may opt to buy an existing laundromat that already has this infrastructure in place but requires renovations. In that case, you would include an overview of the changes you plan to make, such as any updates to existing machinery or foundational elements. 

6. Put together a financial plan

The financial plan will delineate the money you need to get your laundry business up and running and provide an overview of your sales strategy. If you’re just getting started, include financial projections based on your pricing and industry trends to explain how money will flow in and out of your business. Also include any business capital you have on hand, and whether you’re seeking additional funding and how. Use these metrics to explain your path to profitability and how you plan to have a sustainable business.

If you’ve been in business for a while, your financial plan should include your cash flow statement, balance sheet, and income statement instead of projections.

7. Create a marketing plan

A laundry business plan will also include a marketing strategy that explains how you plan to promote your laundromat and attract new local customers.

Since laundry businesses are location-specific, start with efforts that help you get local traffic. Set up your Google Business Profile and Bing Business Profile so customers can find you online. Leverage local SEO strategies so you appear in local search results for location-specific or “near me” queries in your neighborhood, city, or town. Create a website so customers can find a detailed list of services, products, and prices before they make the trip. You can also include photos, customer testimonials, booking options, and an FAQ page on your site. Shopify can help you create a secure and seamless website in minutes. Additionally, you may want to target social media channels that your target audience frequents, using photos and videos to showcase the details of your business.

It’s also important to detail what your broad messaging will be—whether you plan to market yourself as an eco-friendly laundromat or an affordable option for price-conscious customers, explain those branding guidelines here.

If you’re running a small, growing business, handling customer queries can become a time-consuming task, pulling your team’s attention away from strategic projects. Customer service outsourcing can save you time and money, helping to improve service quality and meet customer expectations. Learn about the different types of customer service outsourcing available, as well as the customer service outsourcing companies to consider.

What is customer service outsourcing?

Customer service outsourcing involves hiring a third-party service provider to handle customer requests, questions, and concerns. A form of business processing outsourcing (BPO), customer service outsourcing can be a valuable resource for companies without an in-house team to handle day-to-day customer relations.

Different types of third-party providers can offer a range of specialized skills and services to help you provide excellent customer service. Customer service outsourcing can be classified by physical proximity: onshore (in the same location or country), nearshore (in a nearby country—say, in Mexico for a US company), or offshore (say, in India or the Philippines for a Canadian business). It can also be categorized based on tools used, such as phone support and online chat support handled by call center employees, versus fully automated support using chatbots. Often, businesses employ a hybrid combination of AI chatbots and human agents to help with customer service queries.

Finally, you can classify customer support outsourcing based on the activities being outsourced. For example, technical support outsourcing involves help-desk support for IT-related customer queries, often employed by software companies. Another specialized outsourcing field is customer support training outsourcing, where third-party experts develop training programs for your internal customer service team.

Advantages of customer service outsourcing

Companies outsource customer service for a wide range of reasons, from saving time to expanding into new markets. Some of the advantages of outsourcing customer service operations include:

• Cost savings. Outsourcing your customer service may lead to cost savings in the long run; a company that’s streamlined customer service operations may be able to do it more efficiently and for less than your in-house team.

• 24/7 support. By outsourcing tasks to a company with dedicated agents or software tools that work around the clock, you can offer multichannel support at any time—even when you and your team are out of office or otherwise unavailable. 

• Specialized expertise. Partnering with an experienced third-party provider can give your company access to professionals who have experience handling a range of customer service tasks, like establishing a ticketing system or communicating with customers in multiple languages or in countries where you don’t have an in-house team.

Disadvantages of customer service outsourcing 

Before you hand over the reins of your customer service operations to an external team, it’s important to be cognizant of its drawbacks:

• You surrender some control. Hiring others to do some of your work can mean losing your ability to safeguard quality control in the customer service process. This can potentially hurt customer satisfaction if you choose the wrong partner.

• There may be additional security concerns. Outsourcing customer interactions means sharing sensitive data like account numbers and credit card details with a third-party provider. If your provider’s track record and security measures aren’t up to the mark, you could compromise financial and personally identifiable information (PII).

• Your company may not be the only priority. Outsourced customer service providers often have multiple clients, meaning you might not have the same priorities as an in-house customer service team with only their own company’s process to manage. This may mean agents take more time to answer tickets or use your brand voice less accurately when communicating with customers.

6 customer service outsourcing companies

1. SupportYourApp
2. Influx
3. AnswerFirst
4. Aucera
5. HelpSquad BPO
6. Simply Contact

If you run an ecommerce business without an in-house customer service team, here are some of the most popular third-party companies to consider:

1. SupportYourApp

Originally founded in Ukraine in 2010, SupportYourApp has grown into a global customer service outsourcing company that operates in more than 30 countries. The core services that SupportYourApp offers include outsourcing for call centers, live chats, help desks, and technical support.

Pricing: SupportYourApp creates a quote for potential merchants based on their requests, meaning prices vary depending on a company’s support needs and the volume of customer interactions in a given month.

2. Influx

Established in 2013, Influx is an on-demand customer experience (CX) partner that handles customer service outsourcing tasks like customer support and technical support, running call centers that operate around the clock. Influx offers operations teams that integrate AI with human intelligence, as well as part-time support agents that cost less than dedicated agents. Influx offers customer support outsourcing for clients in a range of fields, from gaming and fintech to startups and ecommerce.

Pricing: Influx uses a pay-as-you-go pricing model and includes training and management costs without setup fees. 

3. AnswerFirst

AnswerFirst has decades of experience in the customer service outsourcing business, handling incoming customer inquiries through US-based call centers. AnswerFirst offers 24/7 answering services, dispatching services to relay important information quickly, and scheduling services to handle appointment booking for service-based businesses.

Pricing: AnswerFirst uses an adjustable pricing model employing a per-minute rate.

4. Aucera

US-based phone outsourcing company Aucera offers around-the-clock support to manage inbound customer interactions like customer support tickets across multiple communications, as well as outbound customer support like lead generation. Aucera works with companies in several fields, including ecommerce, insurance, health care, publishing, and education.

Pricing: Aucera uses an adjustable pricing model with fees based on usage. 

5. HelpSquad BPO

HelpSquad BPO is a US-based customer support outsourcing company that offers call center outsourcing, live chat outsourcing, virtual receptionist solutions, and knowledge base management of essential information about your business, including website copy, articles, manuals, and frequently asked questions.

Pricing: HelpSquad BPO pricing varies depending on the specific service. For example, virtual receptionist services start at $8 per hour, with live chat services ranging from $185 to $600 per month, depending on the number of chats needed.

6. Simply Contact

Simply Contact is a European-based customer support outsourcing company offering omnichannel and multilingual support across social networks, messenger, call, chat, and email. Simply Contact serves organizations in fintech, travel, logistics, government, and ecommerce across the UK, Poland, Ukraine, Romania, Moldova, and Bulgaria.

Pricing: Price on request.

There are 1.8 billion millennials—or members of Generation Y—in the world. Needless to say, this age group makes for a huge target audience. Born between 1981 and 1996, this socially conscious generation constitutes 23% of the global population. In the United States, there are 74.19 million millennials, and they recently surpassed the baby boomers (born 1946–1964) as the biggest generational cohort.

Their demographic size and subsequent purchasing power make nailing millennial marketing critical, but winning them over is not always straightforward. Keep reading to learn how you can tap into the millennial mindset by creating content that resonates and building meaningful relationships with this expansive target market.

Who are millennials?

Forget the jokes about how millennials spend all their money on fancy coffee and avocado toast. In the past five years, they’ve been accumulating wealth. Millennials’ total net worth has nearly quadrupled since 2019: It grew from $3.94 trillion in Q3 2019 to $15.95 trillion in Q3 2024, according to Federal Reserve data.

Given the generation’s size and combined spending power, millennials are a crucial segment to win for the sake of ecommerce success. More than half of US millennials shop online at least once a week, so reaching them via social media platforms—especially on mobile devices—can go a long way.

Overall, the millennial audience values authenticity: 90% of them agree that brand authenticity is key when making purchasing decisions, so phony or cheesy marketing campaigns are a no-go for this age group. Other key values include social responsibility and sustainability.

Millennials vs. Gen Z

Both millennials and Gen Z (those born between 1997 and 2012) are tech savvy and at home with mobile-first technologies. But there are key differences between millennials’ interests and Gen Z’s preferences. Millennials grew up alongside the internet, witnessing its evolution, while Gen Z grew up with the internet, becoming the first digital-native generation. Here are two key differences to keep in mind when it comes to these two groups of potential customers.

Relatability 

While both generations gravitate toward relatable and authentic content, successful millennial campaigns lean more heavily into emotional storytelling, aesthetics, and personalized engagement.

“Compared to Gen Z, who thrive on disruption and originality, maybe even quirk, millennials tend to prefer consistency, intentionality, and a sense of elevated style,” says Cristina Suarez Krumsick, founder and CEO of creative agency Isetta.

Social media consumption

Gen Z favors video-first platforms such as TikTok, YouTube, and Snapchat. Eighty-two percent of Gen Z are likely to have a TikTok account, which supports a generational shift in app preference. While not immune to the allure of video-based apps, millennials still engage with text and photo-based apps, such as LinkedIn and Meta’s suite of Facebook, Instagram, and Threads.

Gen Z is also more inclined than millennials to use social shopping, with 42% likely to buy holiday gifts through social media, while this behavior concerns only 26% of millennials, per EMarketer.

Millennials vs. Gen X

Compared to millennials, Gen Xers (1965–1980) have been neglected by marketers. Gen X accounts for only 5% of brand spending on influencer campaigns; that goes alongside a considerable lack of research involving this generation, with only 4% of generation research conducted by the advertising industry on this cohort.

Yet capturing Gen Xers pays off: Since 2021, it has been the highest-spending generation. Their buying power is around $15.2 trillion in 2025, projected to reach $23 trillion by 2035. Here’s more on how Gen Y and Gen X compare:

Meaning of authenticity

Millennials and Gen Xers differ in their preferred marketing approach. “Gen X gravitates toward authenticity grounded in practicality, with more straightforward messaging, whereas millennials are looking for deeper resonance that sends some kind of signal about who they are,” Cristina says. 

Social media consumption

When it comes to social media, Gen Xers are faithful to legacy platforms. In particular, Facebook remains Gen X’s favored platform, with 92% of them having an account and 40% of them using it to find and buy products. In terms of marketing, 32% of Gen X consumers were very likely to make a purchase influenced by a brand’s newsletter.

Financial responsibilities

Millennials and Gen X share substantial financial preoccupations. Both are now sandwich generations, supporting both their children and their aging parents. “[Most] Americans in their 30s and 40s have an aging parent and at least one child younger than 18,” reports the Pew Research Center. “This is the case for nearly all sandwiched adults in their 30s (95%) and 65% of those in their 40s.” 

4 tips for marketing to millennials

1. Invest in user-generated content
2. Cultivate genuine influencer marketing
3. Curate your content and products
4. Offer rewards and discounts

When it comes to developing your own marketing strategy, there are a few key approaches that can help you reach the millennial audience:

1. Invest in user-generated content

Most ecommerce shoppers have sifted through online reviews before making a purchase—but sometimes it’s hard to tell if reviews are legit. User-generated content (UGC) comes off as more thorough and genuine, and its value is projected to reach $32.6 billion by 2030. More importantly, more than 78% of millennials feel UGC is more trustworthy and valuable than brand, retailer, or influencer content, with a preference for video as a medium.

“UGC and reviews are key tools for eliciting participation and building trust, especially if it comes from someone within their network or a couple steps removed from their network,” Cristina says. “This means that building trust requires both macro- and micro-seeding within intentional subcultures that will really speak to the consumer.” Seeding involves sending free products to influencers (both macro influencers and micro influencers) with the hope that they’ll create content featuring the product.

Mayo brand Ayoh, for example, leverages seeding to sandwich aficionados of all types, including sandwich shop owners and family-oriented picnic packers in tertiary markets. “This creates social proof and a sense of inclusion for consumers, two key drivers of loyalty,” Cristina explains. 

2. Cultivate genuine influencer marketing

As a professional category, influencers reached critical mass in the early 2010s, right with the rise of Instagram and when the oldest millennials were in their early 30s. Many of the early influencers started out as YouTubers or bloggers, building authority—and an audience—within a specific niche.

“Millennials can detect inauthenticity quickly, so influencer marketing must prioritize genuine enthusiasm,” Cristina says. “The most effective campaigns involve creators who are real fans of the brand, who use their own voice and storytelling, and who aren’t overly scripted.”

The OB/Gyn-founded vitamin brand Perelel Health, for example, often partners with lifestyle influencers like Pia Baroncini, who has PCOS and has seamlessly integrated Perelel’s different products into her daily routine.

3. Curate your content and products

Curation is essential for millennials’ self-expression, and this extends to marketing. “Millennials came of age with Instagram and Pinterest—platforms where curated lifestyles are the norm—for them, status is more visual and emotional,” reports Vogue Business. 

“Millennial consumers love lo-fi authenticity over polish, but still with clean aesthetics—different from Gen Z’s proclivity for a more unfiltered, chaotic authenticity,” says Cristina.

Take brands that are now targeting new millennial parents. Clothing brand Dôen sells Family Sets that offer coordinated clothing for parents and children. It aims to create a unified aesthetic that appeals to the overall consumer palette for millennials.

Non-alcoholic apéritif brand Ghia combines high-design packaging with the story of founder Mélanie Masarin’s French upbringing and ties to Mediterranean culture and a robust line-up of products. All of those products come through in the brand’s Instagram, the founder’s Substack, and in the brand’s own Spotify page, which comes with curated playlists that match the mood of the drinks across seasons.

4. Offer rewards and discounts

Despite commanding a sizable amount of wealth, millennials came of age during the 2008 recession and are now caring for children and elderly parents. They may be more frugal as a result. Referral programs, discount codes offered during podcasts, and subscribe-and-save options are a good way to win them over.

Flamingo Estate, for example, offers site-wide discounts for its members and also uses its seasonal subscription boxes for limited-edition products.

Customer experience (CX) trends are reshaping how businesses connect with their audiences. According to an Intercom Customer Service Trends Report, 87% of support teams reported that customer expectations increased in 2024—a significant 12-point jump from 2022. 

Today’s customers demand more than quality products. They expect brands to deliver hyper-personalized experiences, provide seamless support across multiple channels, and actually know who they are. 

Whether you’re a senior product marketing manager, CX leader, or executive-level stakeholder, staying on top of customer experience trends helps you scale with purpose, attract and retain more customers, and build experiences that deepen customer loyalty.

Top customer experience trends

In its State of the Connected Customer report, Salesforce found that 80% of customers consider their overall experience with a business to be as important as the business’s products or services. To stay competitive, it’s essential to align your CX strategy with the trends shaping customer expectations today. Here’s an overview of emerging trends:

Finding a balance between AI and human agents

AI is transforming the way customers interact with brands. With AI-powered tools now embedded in everything from live chat to back-end automation, businesses are streamlining customer interactions and boosting contact center performance. According to the research firm Gartner, “85% of customer service leaders plan to explore or pilot a customer-facing conversational GenAI solution in 2025.”

Yet human connection remains irreplaceable. According to a survey from the data company Five9, “75% of consumers still prefer speaking to a real human for customer support.” The best support models blend AI-powered customer engagement tools with thoughtful human interaction, offering speed and empathy in the same experience.

Solving problems before customers ask

According to HubSpot, 90% of customers say getting an answer to their problem immediately is important, and 60% consider “immediate” to be 10 minutes or less. With today’s data analytics tools, you can drastically reduce wait times by anticipating customer needs before they reach out. 

Instead of reacting to support tickets, forward-thinking brands use predictive analytics to identify potential issues, remove friction points, and deliver proactive solutions throughout the customer journey.

Connecting channels for a cohesive experience

Modern customers engage with brands across multiple digital channels like email, SMS, live chat, mobile apps, and social media, in addition to in-store interactions. They expect every touchpoint to feel consistent and connected. Omnichannel integration ensures that customer data flows seamlessly between these channels, giving support teams the context they need to deliver fast, relevant service. The revenue impact is significant too. According to Firework, “Omnichannel strategies can boost average order values by 13%.”

Beauty retailer Sephora’s omnichannel strategy connects app, web, and in-store experiences to make shopping seamless for customers. The company transformed its checkout experience by introducing Tap to Pay in its stores, allowing customers to pay anywhere without waiting in line. This resulted in checkout times that were twice as fast as before and reinforced the attention to detail customers can expect across all Sephora touchpoints.

Acting on customer data in real time

Improving customer experience is not just about gathering information—it’s about leveraging data instantly. Real-time data integration allows brands to respond to trends quickly, test changes, and track customer interactions with clarity.

Consider DECKED, a company that makes organizational tools for trucks. By leveraging Shopify’s real-time insights, the company gains instant visibility into customer engagement patterns. This agility enables them to create targeted marketing materials that directly address customer needs and preferences.

Real-time data is especially valuable for customer support teams. When you spot a surge in delivery questions, you can immediately update chatbot scripts, refresh FAQ pages, and send targeted email updates—all before the issue escalates.

But speed without strategy creates chaos. The strongest support teams find the right cadence, making quick, informed decisions, then analyzing performance before iterating further. Real-time data gives you the agility to respond and the insight to improve continuously.

Dialing in personalization

In 2025, personalization goes much deeper than inserting a customer’s name in an email. Shoppers expect brands to remember their preferences, anticipate their needs, and deliver relevant experiences. A McKinsey study revealed what customers truly want from personalized brand interactions: 

1. Relevant recommendations. They don’t want generic recommendations; they want to know about products and packages they wouldn’t have thought of themselves.

2. Well-timed messages. Ideally, messages are timed while they are actively shopping, but messages that come in the same day they’ve visited a store or exactly a week later work too. 

3. Relevant reminders. Customers are looking for helpful reminders about products they love but aren’t actively tracking. If something is back in stock or available in a new color, customers want to know about it. 

4. Seamless experiences. Customers are looking for businesses to connect the dots between online and offline shopping. So, if a customer inquires about a product in-store, they likely want to get updates about it via text or email. 

Today’s brands are meeting these expectations by applying hyperpersonalization across the entire customer journey. AI-driven product recommendations, individualized discount codes, personalized homepage layouts, and dynamic email content based on browsing behavior are just some of the ways brands meet customers where they are.

Understanding customer sentiment

Customer sentiment—the emotions and feelings customers express about your brand—reveals more than traditional metrics. Instead of just tracking what customers say (like a star rating or survey score), sentiment analysis examines how they say it. Using methods like post-purchase surveys or social listening tools such as Sprinklr, brands can pick up on the tone of customer feedback by analyzing chat transcripts, product reviews, and social media comments. 

According to Hootsuite’s 2025 Social Media Trends survey, 62% of social marketers use social listening tools—and for good reason. Customer sentiment gives you a window into customer satisfaction that can impact other metrics. Qualtrics found that only 16% of customers actually leave public feedback and only 22% leave reviews, meaning most of the emotional truth lives in less obvious places. By tracking sentiment across customer touchpoints, you can catch problems earlier, prioritize support responses more effectively, and understand which parts of your experience need refinement. 

Prioritizing data quality and consent

Collecting data is easier than ever, but how you use that data is what really matters. People want to feel confident that their information is safe and that it’s being used in a way that actually benefits them. Cisco’s 2024 Data Privacy Benchmark Study found that 94% of organizations believe customers wouldn’t buy from them if they didn’t protect data properly. In a world where pop-ups ask for emails and personalized ads follow you around online, customers are paying attention to how brands handle their data. The best companies lead with transparency, collect data properly to ensure its quality, and clearly ask for consent.

Data quality means making sure the information you have is accurate, up to date, and actually useful. It’s the difference between sending a helpful reminder to reorder and recommending something a customer already bought last week. If your data is off, it can make your messages feel impersonal or disconnected. Over time, those small mistakes can add up and weaken customer trust.

Consent is just as important. Customers want to know what you’re collecting, why you’re collecting it, and what they’ll get in return. According to a Pew Research Center survey, 37% of respondents “feel overwhelmed by figuring out what they need to do” about data privacy. The most trusted brands make it easy to manage preferences, clearly explain opt-ins, and show the value of providing information right away. For example, you could offer 10% off in exchange for signing up for text messages. When you treat customer data with care and clarity, you build trust.

Best practices for the new age of customer service

Customer-obsessed companies are always looking ahead at CX trends. Here’s how to adapt your approach to meet evolving customer expectations:

• Test new strategies. Stay curious and experiment regularly. Whether it’s implementing an AI chatbot, providing real-time tracking updates, or asking for post-purchase feedback, testing helps you discover what resonates with your specific customers. 

• Invest in CX tools. Look for customer experience platforms that offer real-time data, analytics dashboards, automated workflows, and integrations across multiple channels to boost both speed and efficiency.

• Involve the whole team. Customer insights benefit every department—not just marketing or customer service teams. When everyone understands what customers are saying, all team members can contribute innovative solutions and achieve better outcomes.

• Think like your customer. The best way to improve customer service is to experience it yourself. Go through your checkout flow. Submit a support ticket. Open your own marketing emails. When you regularly step into your customer’s shoes, gaps in the experience become much easier to spot and solve.

The life of a small business owner is often filled with passion, innovation, and a commitment to a vision. But what lies beneath effective business operations is the critical, sometimes tough task of managing your business finances.

From sales and expense tracking to navigating taxes and understanding cash flow, the volume of financial data is impressive. In cases like these, accounting software like QuickBooks can be indispensable.

What is QuickBooks?

QuickBooks is an accounting software designed to help small business owners manage their finances. It automates bookkeeping tasks, allowing small business owners to reclaim their time to focus on growth rather than administrative tasks.

Key features of QuickBooks include:

• Invoicing. Create professional invoices, track whether invoices have been opened or paid, and schedule automated payment reminders to ensure your invoices are paid more quickly. You can customize invoice templates to include your logo and brand colors.

• Expense tracking. Categorize business expenses by connecting directly to your bank accounts and credit card statements. You can also upload receipts with the QuickBooks mobile app by snapping a photo of each receipt.

• Inventory management. This includes the ability to track products, manage stock levels, receive alerts when stock is running low, and monitor the cost of goods sold (COGS). This feature is important for ecommerce businesses to keep popular items in stock and optimize purchase orders.

• Reporting. Generate financial reports such as profit and loss (P&L) statements and balance sheets.

• Banking integration. You can connect your business bank account and credit cards to import transactions automatically. This feature is available with most banking institutions.

• Employee payroll. Offered as an add-on service, QuickBooks Payroll can manage employee payroll, calculate payroll taxes, and handle direct deposits, simplifying employee compensation and compliance.

• Sales tax management. Configure and track sales tax so your business is compliant with tax laws that vary across different jurisdictions.

• Time tracking. Track hours for specific clients or projects so you can bill your clients correctly. You can also use QuickBooks to track your own or your employees’ time for payroll purposes. Time can be marked as billable or unbillable.

How to use QuickBooks for small business accounting

1. Sign up for QuickBooks
2. Fill in your company information
3. Connect your business bank account and credit cards
4. Establish your chart of accounts
5. Customize your sales preferences and set up online payments
6. Integrate your ecommerce platform
7. Set up and manage inventory
8. Regularly reconcile your accounts
9. Review financial reports
10. Consult with an accountant

If you set up your QuickBooks account correctly from the start, it ensures accuracy, maximizes automation, and offers you a better understanding of your business’s financial health. For ecommerce businesses in particular, a thoughtful setup can streamline everything from sales tracking to inventory management. Here’s how:

1. Sign up for QuickBooks

When evaluating your options, don’t just pick the cheapest QuickBooks plan. Instead, align your choice with the needs of your business. Successful ecommerce businesses typically need robust features like the ability to add additional users and access to industry-specific integrations. With the free trial, you can try the product before you spend any money.

QuickBooks offers several tiers ranging in price based on the available features and number of users. Here’s a breakdown of the plans:

• QuickBooks Solopreneur. For individuals managing a one-person business, like freelancers or gig workers. This is a simplified solution focused on separating business and personal expenses, tracking income and mileage for tax purposes, and basic invoicing.

• QuickBooks Simple Start. Ideal for very small businesses or freelancers needing basic income and expense tracking. Provides access for one user.

• QuickBooks Online Essentials. Geared toward growing businesses, adds features like bill management and time tracking. Can accommodate up to three users.

• QuickBooks Online Plus. For established ecommerce businesses, provides features like advanced inventory management, project profitability tracking, and adds access for up to five users.

• QuickBooks Online Advanced. Designed for larger businesses requiring more powerful reporting and dedicated support and access for up to 25 users.

Example: Imagine Dedication Nation is an online boutique specializing in customized jewelry and accessories, primarily sold through its Shopify store. The owner selects the QuickBooks Online Plus plan, which is driven by the ability to scale as her business grows.

2. Fill in your company information

Make sure you are accurate when completing your company information since it will auto-populate on your financial statements, invoices, and tax forms. Double-check every detail. A thorough setup process ensures that your financial reporting is reliable.

Example: When setting up her company information in QuickBooks, the owner enters all of Dedication Nation’s legal details: the company name, physical and mailing address, her employer identification number (EIN), and contact information.

3. Connect your business bank account and credit cards

Connecting all business bank accounts and credit cards helps eliminate the need for manual data entry and provides a real-time view of your money. Always use different bank accounts to separate your business and personal finances.

Example: The owner signs on to her QuickBooks Online account and connects Dedication Nation’s business checking account, savings account, and the credit card used for purchasing supplies. QuickBooks automatically imports past transactions (typically 90 days or more) from most banks, and continues to pull in new ones, keeping her financial data up to date.

4. Establish your chart of accounts

The chart of accounts forms the structure of your bookkeeping system. It’s a list of accounts or categories (sorted by income, expenses, liabilities, and equity) that form how you categorize every single transaction. Tailor it to your business to get granular insights. For ecommerce, you’ll likely use detailed categories for expenses like shipping, merchant fees, and cost of goods sold.

Example: The owner navigates to the chart of accounts section. She customizes the default list to reflect the needs of her business. She adds accounts like Online Sales, Shipping Expenses, Payment Processor Fees, Raw Material Purchases, Online Advertising, and Packaging Supplies.

5. Customize your sales preferences and set up online payments

At this stage, you’ll determine how you pay invoices and decide if you want to accept payments through QuickBooks Payments. You’ll also configure your sales tax settings based on your state.

Example: The owner personalizes her sales receipt and invoice templates in QuickBooks with Destination Nation’s logo and branding. She makes sure that her sales tax settings are configured based on sales volume and locations where she does business.

6. Integrate your ecommerce platform

For ecommerce platforms, including Shopify, QuickBooks integration minimizes manual data entry and ensures your QuickBooks account accurately reflects your sales and expenses.

Example: The owner accesses the “Apps” or “Integrations” section within her QuickBooks Online account to connect her Shopify store using an app like QuickBooks Sync. With this integration, QuickBooks can automatically import daily sales data, product details, customer information, refunds, and associated fees, which will be categorized into the correct accounts.

7. Set up and manage inventory

Keeping a close eye on your inventory helps you avoid stockouts and identify consumer trends. Beyond tracking, inventory management within QuickBooks can provide financial insight that complements your ecommerce platform.

Platforms like Shopify offer powerful inventory tracking. Specialized apps like Shopify’s Stocky app excel at operational tasks such as managing purchase orders, receiving inventory, and optimizing stock for in-store sales (especially when using Shopify POS). QuickBooks integrates this data directly into your accounting records.

This integration impacts your COGS and reflects your inventory’s real-time value on the balance sheet. This means QuickBooks can help automate the calculation of COGS as sales occur and generate detailed financial reports that go beyond simple stock counts. These insights can provide a complete picture of your product flow.

Example: The owner connects her Shopify store to QuickBooks using an app like QuickBooks Sync. This syncs her inventory and pricing information with QuickBooks. For her popular items, she sets reorder points, so QuickBooks can send her low stock alerts, prompting her to order more beads or clasps.

8. Regularly reconcile your accounts

Reconciliation is a non-negotiable step to keep your financial data current and accurate. You’ll be able to catch missed transactions, duplicate entries, and even fraudulent activity more easily, providing clean books for tax season.

Example: Every month, the owner diligently reconciles her accounts and credit card accounts in QuickBooks against her actual bank statements. She goes through each transaction, matching them off. If a discrepancy arises, she investigates it immediately, ensuring her QuickBooks balances exactly match her bank’s records.

9. Review financial reports

Don’t just input data—use the software’s features to generate reports. QuickBooks offers dozens of customizable reports. Analyzing your financial information regularly helps you identify sales trends and inefficiencies, plan budgets, and strategize for the future growth of your business.

Example: The owner regularly generates and reviews her company’s financial reports, like the P&L to assess monthly profitability. She also looks at the cash flow statement in order to monitor the funds flowing in and out of Destination Nation. She generates specific reports like “Sales by Product” to identify her bestselling jewelry lines and “Expenses by Vendor” to track her expenses for each supplier.

10. Consult with an accountant

Even if you manage your daily bookkeeping tasks, speaking with an independent accountant or a QuickBooks Online Accountant can be very useful. They can provide expert guidance, ensure compliance, and interpret complex financial reporting, among other things. They can often save your business time and money in the long run, especially if you are dealing with the nuances of accrual accounting or multi-state sales tax.

Example: While the owner handles her company’s day-to-day bookkeeping, she has enlisted the expertise of an accountant who specializes in ecommerce accounting for QuickBooks users. This accountant reviews Destination Nation’s books on a quarterly basis, offers advice on maximizing tax deductions, ensures sales tax compliance, and handles year-end tax filings. The owner grants her QuickBooks Online Accountant direct access to her account.

Small business owners and entrepreneurs need to keep accurate records of every financial transaction. This is where journal entries come in: They’re the foundation of accounting. A journal entry consists of at least one debit and one credit entry, a brief description of the transaction, and the accounts affected. Learn more about journal entries and how to set up a system to track and manage them.

What is a journal entry in accounting?

In accounting, a journal entry is the first step in the accounting cycle that details which accounts are affected by a transaction and by how much, and whether they are debited or credited.

This recordkeeping is part of the double-entry accounting system, which is commonly used and is the core principle of modern accounting. This system states that every financial transaction has two or more equal and opposite effects on at least two different accounts. Every debit has a corresponding credit of an equal amount. This inherent balancing mechanism is a reflection of the fundamental accounting equation as follows:

Assets = Liabilities + Equity

These elements, which reflect a company’s financial position at some specific point in time, are listed on the business’s balance sheet and must always be equal. The double-entry method significantly reduces errors and offers a complete picture of each transaction’s impact.

These are the common types of journal entries you’ll encounter as a business owner:

Opening journal entry

This is the very first entry made when a business opens, or at the beginning of a new accounting period. Opening entries establish the internal financial position by showing existing assets (such as cash or equipment), liabilities (such as loans), and equity (such as the owner’s initial investment).

Compound journal entry

When a single transaction affects more than two accounts, involving multiple debits, and/or multiple credits, it is a compound journal entry. An example might be purchasing equipment (assets) with a down payment (cash) and the rest on credit (accounts payable), affecting three accounts.

Adjusting journal entry

Made at the end of an accounting period, an adjusting journal entry ensures that all revenue earned and expenses incurred during that period are accurately reflected on the financial statements, no matter when cash was exchanged. Examples include recording depreciation, accrued expenses (like utility bills not yet paid), or unearned revenue that has now been earned after a business delivers a product or service.

Closing journal entry

This journal entry is made at the very end of an accounting period to transfer the account balances of temporary accounts (revenue, expenses, and owner’s draws or dividends) to permanent accounts, typically to the owner’s equity account. This effectively “closes out” the temporary accounts, returning them to zero for the start of the next accounting period, so the new period’s performance can be measured independently.

Reversing journal entry

A reversing journal entry is an optional entry that is made at the beginning of a new accounting period specifically to reverse certain adjusting entries from the previous period. They are used to simplify the recording of routine, recurring business transactions by avoiding the need for a complex adjusting journal entry in the new period.

How debits and credits work across account categories

In the double-entry accounting method, debits and credits are the two components of every journal entry, representing the opposing sides of a financial transaction. They are not synonymous with “increase” or “decrease” in a general sense; rather, their effect depends entirely on the type of account they are impacting.

The core concept remains balance: For every transaction, the total value of debits recorded must always equal the total value of credits recorded. This is the golden rule of double-entry accounting. To truly master a journal entry, it’s important to understand the rules of debits and credits for each major account category:

Assets

Assets are resources owned by the business that have future economic value (e.g., cash, accounts receivable, inventory, equipment, buildings).

• Increases in assets are recorded with a debit

• Decreases in assets are recorded with a credit

Liabilities

Liabilities are obligations or debts owed to outside parties (e.g., accounts payable, loans payable, unearned revenue).

• Increases in liabilities are recorded with a credit.

• Decreases in liabilities are recorded with a debit.

Equity

Equity represents the owner’s claim on the assets of the business after all liabilities are paid (e.g., owner’s capital, retained earnings, owner’s draw).

• Increases in equity are recorded with a credit.

• Decreases in equity are recorded by debit.

Income

Income, or revenue, involves increases in assets or decreases in liabilities (e.g., sales revenue, service revenue, interest income).

• Increases in income are recorded with a credit.

• Decreases in income are recorded with a debit.

Expenses

Expenses are costs incurred in the process of earning revenue (e.g., rent, utilities, salaries, cost of goods sold).

• Increases in expenses are recorded with a debit.

• Decreases in expenses are recorded with a credit.

Format of a journal entry

A standard journal entry includes several elements to ensure clarity. Adhering to this format makes it easier to read, understand, and post entries to your ledger.

• Date. The exact date the transaction occurred.

• Account titles. The precise names of the accounts being debited and credited. The debited accounts are listed flush with the left margin, followed by the credited account, which is typically indented to visually distinguish it.

• Reference number. This column is typically left blank during the initial process of entering the journal entry. It’s filled in later with a ledger account number or code once the entry has been transferred from the journal to the respective general ledger accounts. The reference number provides a cross-reference, creating a complete audit trail.

• Debit amount. The monetary value being debited from the account, always placed in the debit column.

• Credit amount. The monetary value being credited to the account, always placed in the credit column.

Here’s the typical format of a properly documented journal entry:

How to write a journal entry

1. Identify the transaction and date
2. Determine which accounts are affected
3. Classify the affected amounts
4. Apply debit and credit rules
5. Record the accounting journal entries

Writing accurate journal entries is an important skill for any business owner, and it becomes intuitive with practice. Here are the steps:

1. Identify the transaction and date

The first step is to determine what financial event has occurred. What was the core activity? Was it a sale, a purchase, a payment, a receipt, or something else? Also, pinpoint the correct date of the transaction. This is necessary for maintaining a chronological record and for accurate reporting periods. For example, did a customer pay you for an order, or did you pay your monthly internet bill?

2. Determine which accounts are affected

Every financial transaction, by definition, affects at least two accounts. Consider the direct consequence of the transaction. If you made a sale for your cash account, “Cash” is affected (you received it) and “Sales revenue” is affected (you earned it). If you paid your rent, the cash account is affected (it decreased) and “Rent expense” is affected (it increased). Identify all the accounts that have changed as a result of the event.

3. Classify the affected amounts

Once you’ve identified the accounts, classify each one as an asset, liability, equity, revenue, or expense. This classification is the key to knowing whether to debit or credit them.

4. Apply debit and credit rules

Then you can apply the rules of debits and credits to the journal entry:

• Expense and asset accounts. Increase with a debit, decrease with a credit.

• Liability, equity, and revenue accounts. Increase with a credit, decrease with a debit.

Always ensure that the total debits for the transaction are equal to the total credits. This is your internal check for accuracy.

5. Record the accounting journal entries

Using the standard journal entry format (date, account titles, debit, credit), formally record the journal entries.

1. Enter the date of the journal entry.

2. List the account(s) to be debited first, along with their respective amounts in the debit column.

3. Then, list the account(s) to be credited with their respective amounts in the credit column.

4. Finally, write a concise description that clearly explains the nature of the transaction. This narration should be brief but descriptive enough for anyone reviewing the entry to understand what occurred without needing additional information.

Your ecommerce success depends on countless moving parts working together seamlessly. But there’s one invisible technology quietly powering your most important business operations—and most store owners don’t even know it exists.

JSON (JavaScript Object Notation) files are the data messengers that make modern ecommerce possible. They’re what allow your inventory system to talk to your website, your payment processor to communicate with your checkout, and your shipping software to sync with your order management system. 

Without JSON, your store would be a collection of disconnected tools instead of a unified business machine. Here’s what you need to know about JSON files, their structure, and how they power your ecommerce operations. 

What is a JSON file?

JSON files are lightweight text files that store and transport data between different software systems. The JSON data format uses JavaScript object notation syntax, making it a widely used data format that’s both human-readable and easily processed by computers. Modern web browsers, mobile apps, and web services all rely on JSON files to function properly. 

Think of a JSON file like a digital filing cabinet with a standardized format that any computer program can understand. It stores data in key-value pairs, like labeled drawers (keys) containing specific information (values). You encounter JSON whenever you integrate software systems, manage ecommerce platforms, and use customer relationship management (CRM) tools.

JSON is essential for application programming interfaces (APIs), which enable data interchange between services—essentially how different software programs and data sources communicate. For example, when tracking a package through FedEx or UPS, your shipping software’s API communicates with the carrier’s API and receives tracking updates in JSON format.

How JSON files are used on ecommerce websites

JSON powers the real-time features that make modern ecommerce stores feel fast and responsive. It enables dynamic updates on your web pages by facilitating semi-structured data exchange between your website and back-end systems, all without requiring full page refreshes. This data exchange keeps web pages responsive and customers engaged, while reducing issues like outdated stock information during checkout.

Here are the main JSON files work behind the scenes in your ecommerce store:

• Cart additions. For example, when a customer adds items to their shopping cart, your website sends a JSON message to your server with details like “Customer345 added 2 red medium-sized shirts to the cart.” The server updates your database and responds with a JSON confirmation.

• Product information. When displaying product details, your website queries your inventory database through JSON. For example, your product page might request “How many red shirts are available in size small?” and receive a JSON response with the current stock level.

• Payment processing. JSON handles the secure transfer of payment information. Your checkout page sends JSON data to your payment processor with customer info and purchase details. The payment processor responds with a JSON confirmation or error message.

How JSON files benefit ecommerce websites

JSON’s lightweight data interchange format makes it more efficient than other standard programming languages like XML and YAML, letting JavaScript parse it easily. This efficiency results in faster page loads, smoother checkouts, and ultimately, better customer experiences.

Think of JSON as the behind-the-scenes assistant for your ecommerce site, ensuring fast, accurate data storage and retrieval so customers can enjoy a smooth shopping experience.

Example of how JSON files work

Here’s how JSON enhances a typical shopping experience at SportGear Pro:

1. Sarah searches for “women’s running shoes.” Her request sends a JSON file to the server, which returns a list of available products with prices and stock levels, all without reloading the page.

2. She clicks on a pair of Adidas shoes. JSON checks inventory and displays “only 4 left in your size,” creating scarcity urgency.

3. As Sarah browses, JSON works continuously in the background. It checks her customer status and applies a loyalty program discount, updating the prices she sees in real time.

4. Adding shoes to her cart triggers multiple JSON operations. JSON instantly displays her cart total, calculates shipping costs, and shows personalized product recommendations, all without page reloads.

5. During checkout, JSON coordinates multiple systems simultaneously. It validates her address through postal APIs, calculates delivery costs through shipping carrier APIs, and securely transmits payment information to the payment gateway. If her card is declined, JSON can suggest alternative payment methods without losing her cart contents.

6. Once Sarah completes her order, JSON orchestrates the final steps. It simultaneously updates inventory, generates tracking numbers through shipping APIs, and triggers confirmation emails—all in seconds.

Without JSON, Sarah would face slow page loads, outdated inventory information, clunky checkouts, and delayed order processing. With JSON, SportGear Pro delivers a smooth purchasing experience.

Elements of a JSON file

In JSON configuration files, data is expressed using key and value pairs, with data separated by commas. Curly braces hold objects (grouped collections of related data about one thing) and square brackets hold arrays (lists of multiple items of the same type). This creates structured data in a human-readable format.

Understanding the following elements helps you work more effectively with developers and troubleshoot data-related issues in your store.

Key-value pairs

JSON structures data using key-value pairs, defined by the person creating the file. A key identifies a specific piece of data (like productName), while the value represents the actual data (such as “Wireless Headphones”).

Keys must always be text strings enclosed in double quotation marks. Values must be a valid JSON data type (string, number, object, array, boolean, or null). For example:

“productName”: “Wireless Headphones”

“price”: 99.99

“inStock”: true

The first line sets the key productName to the value “Wireless Headphones.” The price key holds the product’s cost, and the final pair indicates the item is in stock.

Strings

Strings are sequences of stored text data enclosed in double quotes. Keys are always represented as string values. For example:

“customerName”: “Sarah Johnson”

“shippingAddress”: “123 Main Street”

“orderStatus”: “Processing”

Numbers

Numerical data is stored without quotation marks. Number values can be integers or floating-point numbers with decimal points:

“totalAmount”: 156.47

“quantity”: 3

“discountPercent”: 15

“inventoryCount”: 250

Objects

Objects group related data within curly braces. All data within objects must follow standard JSON syntax rules. For example:

“customer”: {

“name”: “John Smith”,

“email”: “john@email.com”,

“memberSince”: 2020

}

The key-value pairs within the object represent customer data, such as name, email, and membership year. Strings are enclosed in double quotes, while numbers (like 2020) are not.

Arrays

Arrays store lists of data and represent collections of items, while objects typically represent a single item with various attributes. Think of an object as a suitcase containing labeled compartments, and an array as a packing list of similar items. 

Array must follow standard JSON syntax. For example:

“orderItems”: [“laptop”, “mouse”, “keyboard”]

“availableSizes”: [“small”, “medium”, “large”]

“monthlyRevenue”: [45000, 52000, 48000, 61000]

Each array holds values of the same or mixed data types, enclosed in square brackets and separated by commas.

Boolean values

Boolean values store true or false data for information that has only two possible states, like whether a product is on sale or a user has access permissions. For example:

“isOnSale”: true

“membershipActive”: false

“emailVerified”: true

“shippingRequired”: false

Booleans are written without quotes and are useful for representing yes/no or on/off conditions.

Null values

Null values represent intentionally empty or undefined data. They indicate that no value has been assigned yet, signaling that the absence of data is intentional, rather than an error. Think of it like entering “N/A” in a form field to show you didn’t skip it by accident.

Here are examples of JSON null values:

“middleName”: null

“discountCode”: null

“cancellationDate”: null

Ecommerce JSON file format example

Here’s a complete JSON example showing how customer order data might be structured:

{

“orderId”: “ORD-2025-001”,

“customer”: {

“name”: “Maria Garcia”,

“email”: “maria@email.com”,

“isPremiumMember”: true

},

“items”: [

{

“productName”: “Bluetooth Speaker”,

“price”: 89.99,

“quantity”: 1

},

{

“productName”: “Phone Case”,

“price”: 24.99,

“quantity”: 2

}

],

“shippingOptions”: [“standard”, “express”, “overnight”],

“totalAmount”: 139.97,

“shippingCost”: null,

“orderComplete”: false

}

This JSON file contains multiple data types working together: It starts with the order ID, includes a customer object with contact information and membership status, contains an items array with product details, lists shipping options, and tracks order completion status.

When online businesses emerged at the turn of the millennium, the new dynamic revolutionized the world of shopping—and the world of shipping right along with it.

If you run an ecommerce shop, understanding shipping and different shipping methods—for both retail and freight—is a vital component of running a successful business. Here’s what to know about domestic shipping services and how to handle your shipments in an effective and cost-efficient way.

What is domestic shipping?

Domestic shipping refers to the process of moving products when the destination country and country of origin are the same. When shipping stays within your country’s borders, your goods aren’t subject to the regulations, tariffs, and customs that an international shipment faces. In the United States, domestic shipping includes delivery to all 50 states (though some carriers have special rules for Hawaii and Alaska), and it requires a shipper to follow rules of the chosen carrier.

What are regional carriers?

Regional carriers, as the name implies, are smaller carriers that deliver within geographical limitations. Depending on where you live and run your business, you’ll have access to different regional carrier companies—and possibly even local carriers. These carriers are limited by geographical restraints, meaning they won’t ship across the entire country. But they may give you more flexibility and speed when you’re shipping from one place to another within a specific region. This type of carrier includes United Delivery Service (UDL), OnTrac, and CDL.

What are national carriers?

National carriers cover the entire country with a sprawling infrastructure and shipping locations. Using a national carrier will get your products or materials from point A to point B, but there may be less flexibility and personalized service, since many of these carriers, such as UPS and FedEx, are massive companies that handle mind-boggling amounts of freight and packages every day. Take a look at some basic rates for the major national carriers—based on shipping a one-pound parcel across the US:

Single vs. multicarrier approach

You can choose to ship your packages via one carrier exclusively or via a combination of multiple carriers:

Single-carrier approach

A single-carrier approach uses one domestic shipping carrier for all domestic shipping. A company works with a single carrier (like UPS) to ship all its goods, meaning there’s only one interface and there will be consistent domestic shipping costs from one company. Though convenient, a single-carrier approach for your shipping strategy may not get you the best shipping rates for each package, and your company may be more vulnerable to unforeseen circumstances, like a company-wide outage at your carrier’s business or worker strikes.

Multicarrier approach

A multicarrier approach is a shipping strategy that relies on using several shipping carriers for your domestic shipping operations. Instead of choosing one company to do your business, you get quotes for each shipment (or type of shipment) from several carriers. 

This could include more than one large national carrier or several regional carriers. The benefit of multiple carriers is that your shipping operations are less vulnerable to single-company issues, and you can price shop based on the needs of a specific shipment. But this strategy will likely include more administrative tasks, and establishing a lasting relationship with a single carrier can mean better service.

Tips for optimizing domestic shipping

Compare carriers

When you’re looking for the best shipping options for your company, it can be cost-effective to compare both specific and average prices across several carrier options. Some regional carriers may offer better rates or flexibility between certain ZIP codes than national carriers.

Use insurance and tracking for important orders

It’s great if you find a shipping option that offers a low cost, but nothing can tank customer satisfaction like a lost shipment or damaged goods. If you run an ecommerce business that sells anything fragile, using shipping insurance can be a lifesaver, and using the variety of tracking tools from each carrier can assure you know exactly where your parcels are at any given time.

Only pay for speed when necessary

While everybody loves speedy shipping, expedited shipping is expensive. Reserving same-day or overnight shipping options, like USPS’s Priority Mail Express, for truly urgent shipments can save your company a lot of money. If you can wait five to seven business days to deliver a package, use cheaper options like basic ground shipping over pricey same-day air.

Try Shopify Shipping

Using a tool like Shopify Shipping can minimize the time-consuming task of shopping around for a shipping company, and it can optimize your shipping strategy, too. It allows you to see and compare relevant quotes from several carriers at once for any shipment’s exact specifications. Shopify Shipping also offers both international and domestic shipping, and it centralizes your shipping operations so you can quickly find everything you need in one place.

There’s an old business principle that suggests cutting prices can increase sales volume, which can offset the loss in revenue. Whether this is right is determined by CVP analysis, an analytical technique for examining the interaction between costs, volume, and profit and using that information to guide business decisions.

Learn more about the elements of CVP analysis, how it’s calculated, and the insights it provides for strategic planning and improving your business’s operations.

What is CVP analysis?

Frequently referred to as break-even analysis, cost-volume-profit analysis (CVP analysis) is a practical tool helping businesses understand how changes in costs, sales volume, and pricing impact their overall profit. By identifying the exact sales volume needed to cover all costs, CVP analysis makes it possible to determine when your company will break even and report a positive net income. 

CVP analysis also lets you forecast profit at different sales levels, set realistic income targets, and choose appropriate pricing strategies. It can help you analyze the role of fixed and variable costs in profitability to pinpoint cost-cutting opportunities and manage resources more effectively. Ultimately, CVP analysis is a tool to support decision-making and efficient planning across your business.

Elements of a CVP analysis

A CVP analysis contains different elements, many of which involve separate calculations. These elements are:

• Fixed costs. Fixed costs remain constant regardless of changes in the level of production or sales, such as rent, insurance, and salaries for permanent staff.

• Variable costs per unit. Variable costs are production costs for materials and labor, changing in direct proportion to the number of units produced or sold.

• Unit sales price. This is the amount a customer pays for one item or a single service.

• Break-even point. Your break-even point is the level of sales at which total revenue equals total costs, meaning your company isn’t losing money from its operations.

• Margin of safety. This indicates the difference between the current or expected level of sales and the break-even point, indicating how much sales can decline before the company starts incurring losses.

• Contribution margin per unit. Your business’s contribution margin per unit is the portion of each unit’s sale price that exceeds its variable production costs. This indicates how much the sale helps cover overall fixed costs and then contributes to profit.

• Contribution margin ratio. This is the percentage of each sales dollar available to cover fixed costs and contribute to profit.

How to perform a CVP analysis

1. Identify and tally total fixed costs
2. Determine the unit selling price
3. Calculate variable costs per unit
4. Calculate the contribution margin per unit
5. Calculate the contribution margin ratio
6. Use the CVP analysis formula to establish the break-even point

Here are the six steps for performing a CVP analysis:

1. Identify and tally total fixed costs

The key characteristic of fixed costs is their predictability. This means that whether your business makes 10 units or 1,000 units a month, these expenses won’t change. Some examples of fixed costs include monthly website hosting fees, office rent, insurance, and salaried staff. Adding these expenses results in total fixed costs for a specific period, such as a month, quarter, or year.

2. Determine the unit selling price

This step is straightforward, but it has significant implications for profitability. The selling price per unit is the amount of revenue the business receives from each individual sale of its product or service. Considerations when determining the selling price include:

• Cost structure. The selling price needs to cover all costs (variable and fixed) and generate a profit.

• Market demand. Determine market demand to assess how much customers are willing to pay for the same or similar products.

• Competition. Find out what competitors charge for their goods.

• Perceived value. The perceived value and uniqueness of the product influences pricing.

• Pricing strategy. This can vary from a cost-plus pricing, value-based pricing, or competitive pricing strategy.

3. Calculate variable costs per unit

This step focuses on the costs that can change directly and proportionally with sales or production volumes. If a business sells one more unit, its total variable costs will increase by the variable cost per unit. If it sells one less, total variable costs will decrease by the same amount. Examples of variable expenses include:

4. Calculate the contribution margin per unit

This calculation determines the remaining revenue after covering the variable costs associated with producing or selling each individual unit. It represents the portion of each sale that contributes toward covering fixed costs and ultimately generating profit.

Use the following formula to calculate the contribution margin per unit:

Contribution margin per unit = Selling price per unit – Variable cost per unit

5. Calculate the contribution margin ratio

This calculation expresses the contribution margin as a percentage of the selling price per unit. It indicates the proportion of each sales dollar available to cover fixed costs and contribute to profit. This ratio is particularly useful for analyzing the profitability of each sales dollar and for calculating the break-even point based on total sales revenue. To calculate the contribution margin ratio, use this formula:

Contribution margin ratio = Contribution margin per unit / Selling price per unit x 100

Multiplying by 100 converts the figure to a percentage.

6. Use the CVP analysis formula to calculate the break-even point

The break-even point is the level of sales at which total revenue equals total costs, meaning your business is neither making nor losing money. This calculation identifies the minimum number of units a business must sell or the minimum sales revenue it must generate to cover all its fixed expenses. Understanding the break-even point is necessary for setting sales targets and assessing the financial performance of the business.

Use the following formulas to determine the sales volume needed to cover all fixed costs:

Break-even point in units = Total fixed costs / Contribution margin per unit

Break-even point in sales dollars = Total fixed costs / Contribution margin ratio

CVP analysis example

Consider Crownpoint Headwear, a hypothetical online ecommerce business that sells custom hats. Relevant data about the company includes the following:

• Total fixed costs per month: $1,500 ($100 for website hosting, $300 for office rent, $50 for utilities, $150 for insurance, $900 for salaries)

• Selling price per hat: $30

• Variable costs per hat: $12 ($8 cost for materials, $2 for packaging, $1 for shipping, $1 for payment processing)

To calculate contribution margin per unit, deduct the variable cost per unit from the selling price per unit:

Contribution margin per unit = $30 – $12 = $18

To calculate contribution margin ratio, divide the contribution margin per unit by the selling price per unit and multiply that figure by 100:

Contribution margin ratio = 18 / 30 = 0.6 x 100 = 60%

To calculate the break-even point, use the following formulas:

Break-even point in units = $1,500 / $18 = 83.33 (or about 83) hats

Break-even point in sales dollars = $1,500 / 0.60 = $2,500

This means Crownpoint Headwear needs to sell about 83 hats, or generate $2,500 in total sales revenue, each month to cover all its fixed costs and break even.

Assumptions of CVP analysis

The usefulness of CVP analysis depends on several key assumptions, which simplify the complexities of the real world. However, you must understand these assumptions to interpret CVP results accurately and recognize their limitations.

Here are the primary assumptions of CVP analysis:

• Linear costs and revenues. Total revenue and total variable costs increase together at a constant rate, which implies the selling price and variable cost per unit remain unchanged, regardless of how many units are sold.

• Cost classification. Costs can be cleanly classified as fixed or variable.

• Constant fixed costs. Total fixed costs remain constant.

• Units produced equals units sold. There is no net change in inventory levels because of over- or underproduction.

• Constant sales mix. If a company sells more than one product, the proportion of each product sold remains constant.

• Changes in activity are the only factors. The only factor affecting costs and revenue is the change in sales volume or production levels. This excludes factors like technological innovation and inflation.