Let’s face it — owning a business is rarely easy. Your employees can often clock out, go home for the day, and do whatever it is they do with their lives. But, unfortunately, you may not have that luxury.
Business owners have a million and one things to worry about at all times: revenue, employee satisfaction, growth, expansion, customers, and so on. When business isn’t going too great, it can be challenging to avoid despair. First, you need to figure out exactly why your business isn’t doing well and then solve those problems.
Within this article, you can find explainers for a few of the primary reasons your business might not be doing so well, as well as the initial steps you can take to solve those problems.
However, you should remember that every business is different, with different needs. Therefore, what works for one business may not work for another. That said, these tips should at least get you on the right path to profitability.
Your Prices Are Too Low
How much should you charge for your products? It’s a difficult question to answer, and the answer differs depending on what kind of goods and services you’re selling. The metric you should be looking at the most is your profit margin. One report found that the average net profit margin in the United States, across industries, is 7.71%. The vast majority of the money you make goes back into your business.
Software business and consulting firms, which tend to have low overhead, have the highest profit margins. On the other hand, restaurants have some of the lowest since food costs, rent, and salaries can be very expensive.
Plus, diners generally don’t want to pay high prices for their meals. The problem is, restaurants tend to undercharge — raising prices at your restaurant can be a difficult balancing act.
Research what the average profit margin is for your industry. Talk to people who own similar businesses in your area, see if they’ll share information about their profit margins. Raise your prices where you can — it’s preferable in the long run to cutting costs. You don’t want to compromise on your goods and services, so try to pass the cost to the consumer where you can.
You’re Not Tracking Income and Expenses Correctly
This follows from the above point. Suppose you aren’t maintaining detailed documentation of how your business is both spending and making money. In that case, you’ll never be able to figure out where you have an opportunity or need to raise prices or cut costs.
Documentation is everything. You should be maintaining spreadsheets detailing every cent your business spends and earns, so you can catch exorbitant, unnecessary spending and get it under control.
You Lack a Solid Marketing Strategy
Do potential customers even know your business exists? If the reason your business isn’t making money has anything to do with a pure lack of customers, it’s time to start spending money on advertising. Yes, it might seem counterintuitive at first to spend money you’re not making, but it should pay off in the long run. As the saying goes, you have to spend money to make money.
Have you never done any marketing activity before? Don’t worry, it’s not as difficult as it might seem. First, read about the marketing funnel to help structure your efforts. Then, make a plan to purchase both local, physical advertisements and digital advertisements.
If you’re not sure how much money you should even be spending on marketing, read up on how to set a marketing budget. Then, read about how to build a brand from scratch. Some advertising and marketing tips are only relevant for specific contexts — if you’re wondering how to advertise a small business locally, read a specific guide.
You don’t have to start with billboard advertising. You can start with digital ads on platforms like Facebook. Maybe grocery store advertising is right for you.
Marketing matters. Even small, local businesses will benefit from a basic marketing strategy. Do your research, make your strategy, then execute. It might take a few months, but a solid strategy will pay off in the long run.
You’re Not Thinking About Your Competition
Unless you have an extremely specialized business, chances are you have competition. Whether from local businesses or national chains, you have to think about your competition.
If your business is new, and it’s not very different from an existing business in your area, you shouldn’t expect customers to flock to you and give you their money. They already trust the existing business — why would they?
Figure out a way to stand out in your field. Offer unique products. Offer limited-time offers. Offer an incredible customer experience. Figure out what your competition is lacking and take steps to fill the gap.
Look, we get it. The life of a business owner is hard. Just stay motivated and keep trying new things. Build a community with other business owners in your field or area — learn from them and teach them.
Do your own independent research online. Talk to business owners in other industries that you admire. Talk to your customers. Be curious. Document everything your business does. Build a marketing strategy. Hire professionals to help you fill in the gaps. It may not be easy, but owning a business can be very rewarding if you put in the work.