If your business isn’t doing as well as you thought it would, don’t panic. We’re here to help you troubleshoot the issue.
It can be really difficult to be objective when looking at your business. However, don’t be afraid to receive criticism. If you need to, get someone else to review everything with you. This can be an employee or another business owner. We’d suggest you avoid getting help or feedback from family and friends as they may not have the knowledge to help you and they might be too kind!
Whether or not you think the problems below affect you or not, it’s always a good idea to run through these once a year anyway. Make sure you bookmark this page to come back to later.
Why your business is not making enough money and how to fix it:
- You’re not tracking your finances.
- Your overheads are too high.
- You don’t have a marketing strategy.
- There’s no demand for your product or services.
- You’re targeting the wrong audience.
- The competition is tough.
- Your product or services are priced incorrectly.
- Your offering is not good value.
- Your product or service is not good enough.
- There’s been a change in the market or economy.
- You’re afraid of change.
Problem: You’re not tracking your finances.
If someone were to ask you what your biggest business expense was, would you be able to give them an answer? Or would you be fumbling in the dark? Before you continue it’s really essential that you get a handle on your finances first. Until you know your business numbers inside out it will be almost impossible for you to work out what the issue is.
Solution: Make a plan to sit down each month and track your incomings and outgoings. We’d recommend hiring a bookkeeper and also an accountant. You can speak to us here – we’re always happy to help.
Problem: Your overheads are too high.
This goes hand in hand with the last problem. It’s really easy when you’re new to business to get over-excited and buy everything you see. Everything feels essential but in reality, it isn’t. Conversely, if you’ve been running a business for a long time then there will be things that you pay for and no longer question.
Solution: Sit down and go through all of your expenses and ask yourself whether or not it is essential. Are there things you could source cheaper? Remember, cutting down on everything isn’t always a good idea. You need to put your business hat on and learn where it’s good to save and where to invest.
Problem: You don’t have a marketing strategy.
Most people have a general idea on how to find new customers. We’ve all heard of social media and Google.
The mistake that most business owners make is they utilise all of these tools with no strategy. You’ve created a website, signed up to social media and started blindly posting. But do you know when, why or even who you’re speaking to? You’ll need to work out where your ideal audience is and which platforms they hang out on. Also, don’t discount old fashioned marketing techniques. Newspaper ads might work wonders depending on your business. If personality is what sells you, you might also want to consider things like trade shows or in person sales
It’s also important to note that you should have more than one successful marketing platform. If 80% of your leads come through Google for example, then you are potentially leaving yourself vulnerable if that dries up/changes.
Solution: Create a list of marketing methods and how you could utilise them. Could you have a referral scheme? Write down the pros and cons of each.
Problem: There’s no demand for your product or services.
It’s unfortunate but sometimes there just isn’t a demand for a particular product or service. People see a “gap in the market” and think this is a good opportunity. Sometimes, however, this can be a sign that the idea isn’t viable. If you’re not getting enquiries or sales then you might put this down to not having a marketing strategy. It could also just be you offer something nobody wants..
Solution: Conduct some market research and see if there are any other businesses out there offering the same. If not, you could try asking your ideal market whether or not what you’re offering is something they’d purchase.
Problem: You’re targeting the wrong audience.
We’ve mentioned ideal audiences a few times already so thought we’d get to this next. What you’re offering, your marketing and who you’re offering it to might be misaligned. You’ll know this is the case if:
- you’re not getting the desired response after delivering your goods or services or
- you’re getting visitors to your website or store but they’re not converting.
Solution: Go back to the drawing board and work out who your ideal customer is. Do they have enough money to buy from your business? That’s often a good place to start. Work out their demographics and then work out where they hang out. This will help you to inform your marketing strategy and the wording used across your brand.
Problem: The competition is tough.
You’re really passionate about what you do but then you find that 100 other people in your area are too. It can be difficult to be seen, heard and to convince people to hire or buy your goods instead of the competitions.
Solution: Try and offer something different to what your competitors are offering. This may sound scary but it doesn’t have to be complicated – we’re not asking you to reinvent the wheel. It can be as simple as taking your customer service to that next level or offering a unique experience and real value. After that, it’s all about your marketing. You need to make sure you’re being seen.
Problem: Your product or services are priced incorrectly.
If you price your products or services too low you’re not likely to make a profit. If you price them too high, you might put off potential customers. An aspect people often don’t consider is if you’re marketing your business as a premium or luxury brand, a budget price could put off consumers too.
Solution: Sit down and work out your cost of doing business. Work out how much you’d like to earn. You should now have an idea of the minimum you need to be charging. Conduct market research and see what your ideal customers are willing to pay for your products or services.
Problem: Your offering is not good value.
This differs slightly from the last point. Regardless of budget, everyone likes value and getting what they think they should get for their money. We all know how people respond whenever Walkers put fewer crisps in their bags. Having said that, if you offer too much then this might confuse your customers. You need to get the balance just right.
Solution: Work out what your core offering is. Does this provide good value? Is this what customers are expecting to pay? If not, think about other things you can include. Focus on things that either enhance the customer experience or help solve their problems.
Problem: Your product or service is not good enough.
If you sell cakes but they don’t taste good then it’s no surprise they’re not flying off the shelves. To run a successful business what you offer needs to be really good – if not, amazing.
Solution: Test your products and services. Get feedback from people who are likely to give an impartial opinion. If you need to, invest in training or better products.
Problem: There’s been a change in the market or economy.
Market and economic changes unfortunately happen all the time. How you respond to them is what counts. Loads of businesses showed fantastic innovation during covid for example by offering their services online or by offering home delivery where appropriate.
Solution: It’s always important to respond to changes ahead of time or at least be responsive when you note something new. Expecting things to get better and affect you is where businesses fail (take blockbusters for example).
Problem: You’re afraid of change.
This is allied to the previous point. A lot of businesses know what they should be doing but are too afraid to make changes. Also, a lot of people have the opinion that if “it isn’t broken, don’t fix it”. Everything around us is constantly changing, which means your business will need to as well.
Solution: Encourage and reward innovation amongst your team. Constantly challenge your products, services and procedures. Try and think how you could do things differently but better. Remember, if something doesn’t work, you can always change it back. Testing these things will greatly improve the knowledge of your business.
If your business isn’t making enough money then it’s important to take action. Take the time to really understand your business, your products and your customers. Take time to review all components of the business regularly and don’t be afraid to make changes in good time. Get a great team around you and know when to take on experts to cover appropriate roles. Develop good processes and don’t be afraid to reach out for help. If you need expert business advice, the team at The Smart Business Hub can help.
