Many business owners have that constant feeling that their business isn’t making enough money.
As a business owner/entrepreneur, you will have most likely at some stage struggled to bring in online revenue. This problem can be caused by at least 1 of the following things.
1. Incorrect Pricing Strategy
Do you remember how you came up with the prices for your products or services? Was it something you thought was fair, or based on what your competition was pricing? Perhaps it was just a hobby so you were doing it more for fun and happy to make a few dollars on the side?The flaw with this is that this pricing doesn’t take into account what it takes for your business to be profitable and sustainable into the future.
A solution to the problem is to reverse engineer your pricing by starting where you want to finish. To do this you will need to know your business expenses and liabilities, any debt your business may have as well as how much you want to pay yourself. Once you have this final number break it down to the point you can see what you would need to charge for each product or service in order to get to your final goal. Remember, this is only your minimum pricing point. It’s up to you how much you grow from there.
2. Poor product viability
This could be a number of problems including either no one wants to buy your product or it’s just too costly to make and therefore difficult to recover your expenses. If your business is failing to make a profit then you really need to stop and review your business model and revalidate your pricing.
If you have a strong audience but are finding that sales are a low then take time to look at pivoting your product to suit your audience. Adapting your products/services to your audience is one way to keep profits growing as your audience’s needs change.
3. Attracting the wrong customers.
Begin by defining your ideal customer. If you don’t have a clear picture of who your business is for then this is your first problem. This leads to the wrong customers and more headaches than what it seems to be worth once you finish dealing with all the problems. If this is your problem then take the time to create your buyer persona. Begin by looking at who buys your products and crossing it with who you want to be buying your products. Once you have that information you are ready to set a new strategy.
4. Failing to track your cashflow
If you’re not measuring it, you’re not managing it. 38% of all online businesses still don’t measure how much in sales they are making. Therefore it’s hard to tell what a good month looks like and if sales have dropped then why, etc. If you don’t have the right information it is hard to make business-critical decisions.
You could have positive income but a negative cash flow or vice versa. Work closely with your accountant or set up some basic spreadsheets to manage your cash flow. 30 minutes a week can save you thousands and help you feel secure about your finances.
5. The way you think about money is wrong.
Just because you feel like your business isn’t making enough money, doesn’t mean your right. Sometimes it’s possible that the niche you are catering for in your region simply doesn’t have further demand for what you’re offering. Others fear that the wealth they have built will be lost and so they isolate themselves and begin a slow withdrawal which effects their relationship with family and customers.
As entrepreneurs and new business owners, the passion comes from doing something new or helping a new group of people. At some point, some people lose this passion/focus and instead focus purely on profits. This results in a company that eventually loses touch with its customer base and its purpose.
To help overcome this incorrect frame of mind try thinking about spending money on your business as an investment, you need to spend money in order to make money.Obviously, we are still talking about smart spending not splurging on items that are wasteful. Instead adapt your thinking to shift from a fear of losing money to thinking that you can always make more money, if your not sure how to do this perhaps it’s time to call in the experts.