My business isn’t making money, what can I do?
Being a business owner is not easy. There are guaranteed long hours and responsibilities which are worth it when you are in charge of your own life and raking in the dollars. But without solid processes in place the business is unlikely to fulfill its potential. When the balance sheet falls into the red – and stays there – take action to prevent it from failing altogether.
Face the issues
When things aren’t going well, resist the temptation to hide from the truth. Face up to it and seek out where the business is going wrong. It takes courage but if you genuinely want to turn the tide around this is the starting point. Pull out all the financial reports, customer surveys and online analytics and see what story they tell.
It is funny how the little expenses add up. The accumulation of dollars spent unnecessarily adds up to significant amounts which can be put to use by reinvesting in the business – which is how you will build growth.
There might be practical changes to make, like changing utility providers for a better deal. Or, if travel costs are high only book flights once several appointments are lined up in one day to avoid extra trips. Keep in mind that cutbacks only work if the consequences of every action are considered carefully. For instance, it is a poor decision to fire a staff member to save on their salary when they bring in the majority of clients.
For future, put processes in place measuring how each dollar spent returns the investment. Generate clear reports so the business has visibility over financial activities and assess these on a weekly or monthly basis at least.
When customers are buying your products but covering costs is still a stretch, the problem may lie in a low price point. Undervaluing a product gets customers through the door initially but it is a short sighted strategy.
The cost of selling a product should be built into its retail price including a healthy profit margin on each sale; are your prices covering rent, wages, production and other outgoings? Some people feel a sense of guilt when applying profit. Let go of that feeling because without profit, the business cannot last.
When it comes to increasing prices, communicate the change with customers, and raise prices gradually to avoid passing on bill-shock.
Understanding your customer is crucial. Without fully grasping why they need your products, money and time is wasted chasing the wrong people. For example, a high end clothing label assumed its buyers were professional women in their early thirties. However, results of an online survey revealed customers were actually in their late forties and fifties. Young women simply couldn’t afford their expensive clothes. Armed with this new information the label reviewed their store location, clothing designs, marketing and branding to optimise sales opportunities.
Businesses that don’t understand their customer lose out on potential profits. Reach out to the people loyal to your brand with surveys, and conversations in-store and online to see how your business can improve alignment with their needs.
Businesses without a marketing strategy are simply wishing and hoping for customers to find them. It is your responsibility to let everyone know you’re here.
All businesses need an online presence. It is a non-negotiable in this day and age. The outlay for user-friendly websites and social media accounts are minimal. Through digital you can target your ideal customers with engaging content in a manner true to your business or brand. All consumers expect quality and consistency, so if you’re not confident with your web skills hire a professional. It is worth doing well.
Offline, consider what marketing activities you can do to get people interested and talking about your business. Are there community events to speak at or do demonstrations? Can you create an opportunity for press or blogger coverage through a collaboration with another brand? The more inspiring and creative, the more people will want to write about it.
Leaving the business
Leaving the business is ultimately a personal decision. You might have more family life, less mental stress and better finances in paid employment. They are all valid reason to close or sell a business. If the business has been unprofitable since day one, finding a willing buyer will be an uphill battle. Closing is a realistic option. But, if you have lost the passion, wish to retire and you can prove the business has a profitable history then research an exit plan right away – selling a business can take years, even if you are transferring ownership to a family member. Figure out the businesses market value, what its future profits may be, value of assets and client goodwill and you are on your way to new life.