What to do when your business isn’t making money…
One of the most frustrating things as a business owner is when you’re putting in so much work, so many hours, but your business isn’t making the money you’d hope for. Especially if you’ve been a business owner for a while.
What makes it even more frustrating is when you can’t figure out WHY you’re not making any money. Because without identifying the reasons why you might be at a loss, it’s difficult to know how to make the improvements – or at least the changes that will make a meaningful impact to your business.
So first, let’s take a look at some of the most common reasons your business might not be making money.
Why isn’t your business making money?
Your pricing is too low for what you offer
A huge reason you may not be making any money is because you’re not charging enough for your products and services. Why might this be? Maybe you struggle with pricing because you feel guilty for charging too much? Or maybe you simply don’t have enough knowledge of your industry to know that you could be charging more.
Charging more for your products and services will boost your income. Do some research into your competitors pricing and bump up your prices if you can. Chances are people will pay more for quality products and services.
You spend too much money on unnecessary things
Are you keeping track of your money? You may be spending too much on things that you and your business don’t really need. A good way to combat this is to create a cashflow forecast. Identify and map out your ingoings and outgoings, and see where you can make some cuts.
There’s usually something you can cut, but if not, maybe try to see if there is a cheaper version/option for some of your costs. Something that does the same thing, but doesn’t cost as much!
Your costs are too high compared to what you’re charging
This one kind of links points one and two together. But if your prices are too low, and your costs are too high, it’s going to be difficult for you to break even, let alone make a profit.
So again, look at your outgoings. What can you cut? Can you bump up your pricing?
Your market is competitive, and you don’t have a clear USP
Of course, there’s competition in every market. But naturally some markets are much more dense and competitive than others. If your market is incredibly competitive, it’s important you have a clear USP that stands out to potential customers.
Without a strong USP, it’s going to be hard to gain and sustain visibility for you and your business – which is going to reduce your income.
Your marketing strategy is not right for your business
Every business needs a strong marketing strategy. Although you may have one, have you considered if yours is right for your business? Does your marketing match your business and what it offers? Do you tailor it to attract your client avatar?
It’s a good idea to sit down and reflect, go over your marketing strategy and make sure it’s relevant, engaging, and reflects your business as much as possible.
What can you do?
Be clear on your client avatar
Always make sure you’re clear on your client avatar. By client avatar I mean the ideal person to buy your products or services. Think about what their biggest struggles or concerns based around your industry may be – do your products/services solve these problems? What are their values? Does your content speak to your client avatar? Make sure they can resonate, they’re more likely to buy your products or services if they feel heard and understood.
Keep track of your money
So many people don’t keep track of their money, and this can be a major downfall. Use cash flow forecasts to map out your in goings and outgoings. This way you can identify exactly how much money comes in and out of the business each month – and see where it goes! With knowledge of your financial situation it’ll be much easier to control your finances, and spend money only where necessary.
Research your market/competitors
You need to make sure you have a good knowledge of your market, and your competitors. Without this knowledge, it’s going to be hard to target the problem areas of the market, to be able to tailor your marketing, content, and products/services towards these areas. With research you will be able to identify what your business can offer that stands out from other competitors.
Re-evaluate your pricing
Like I said earlier, if you’re pricing your products or services much lower than your costs, you’re not going to make a profit, or any money at all. You may feel guilty about charging too much, or maybe you’re lacking confidence and don’t believe your business is worth higher pricing? Through market research and confidence in your products/services you will be able to boost your prices, which should help bring in more income.
Consider revising your products/services
Maybe overall the problem is your products and services? Think. Are they outdated? Are they relevant? Do your products or services appeal to your client avatar? If you’re not getting any sales, it might be worth considering revising your products/services. Make adaptations to appeal to your market, and hit the problem areas within.