5 things to check when your small business isn’t making enough money

Is your small business just not making enough money?

Does looking at your accounts depress you?

Are fed up with working hard and not seeing the results?

Firstly, it is important to remember you are not alone. There are plenty of small businesses that don’t make enough money, but that doesn’t mean you have to stay in this financial position.

In order to move forward, you have to take an honest look at your business and work out where the issue is.  In this article, I’m sharing 5 things you need to check when your business isn’t making enough money.

 

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1. REVIEW YOUR FINANCIAL TARGETS AND PLANNING

‘Enough’ is a subjective term that is different for everyone. However, if you don’t feel as if you are making enough money then hopefully you are based enough on the financial goals or targets that you set for your business.

Financial planning can be tricky. As an established business owner it is likely to be easier because you have existing data to work from, but if you are a new solopreneur you could have literally been plucking numbers out of thin air or trying to match your previous salary.

Either way, you should go back over your financial planning and try and judge whether you were realistic. If you look at your numbers and feel as if you were optimistic (there is nothing wrong with that), have a go at re-forecasting. However, if you are confident with your forecasting and your targets then you need to dig deeper.

 

2. ANALYSE YOUR PRICING STRATEGY

When was the last time you looked at your pricing strategy? Don’t be ashamed if it was months or maybe years ago. It is common for business owners to spend some time originally setting their prices and then forgetting about it.

Firstly, does your pricing allow you to reach the financial target you’ve set? When it comes to calculating sales revenue the formula is as follows:

Sales Revenue = Average Selling Price x Number of Customers/Clients

 

Therefore in order to see if your pricing strategy is right you need to do

Sales Revenue divided by Average Selling Price = Number of Customers/Clients

 

Now, this is super easy if you have one product, service or day rate. If you have a number of products or services you’ll need to look at your revenue on a line-by-line basis.

When you have worked out the number of clients and customers you should be able to firstly work out if it is physically possible and then work out if it is feasible given your current business situation. For example, if you realise you need to work with 100 clients across the year and you each client requires 5 days of work then it isn’t physically possible.

If your pricing model works from a business perspective (ie the number work on paper) the next thing you need to look at it your target market. Are your target market able and willing to pay the amount you are charging? The willing part is really important. Just because your target market can afford what you are offering doesn’t necessarily mean they are willing to buy. If they aren’t willing you need to consider whether there is anything you can do to make them more willing. If you can’t think of anything then you’ll need to review your pricing and work out whether you can change your pricing and still hit your overall target or whether you need a new target market for your business.

 

3. ANALYSE YOUR MARKETING

If you are confident in your forecasting and happy with your pricing structure the next thing you have to do is analyse your marketing. Very often if you aren’t making ‘enough’ money it is likely to be a marketing problem. If you aren’t making enough then you are probably making some sales, but just not the volume you would like.

Some questions you will need to ask are

• How many people are visiting your website?
• How many enquiries are you getting per month?
• How many people are on your mailing list?
• What am I doing to move people along the customer journey?
• Does my branding align with my pricing strategy?
• Are you proud of your website?
• Does my website have all the information a potential customer / client may need?
• What am I doing to make new people aware of me?

By asking these questions you’ll hopefully begin to get a better picture about where your marketing is going wrong. Some common marketing issues are:

• Branding and pricing don’t match (premium pricing by mass-market branding)
• There is a hole in the sales funnel
• You’re not making enough to your current audience
• You’re not doing enough marketing that is focused on making new people aware of you
• Your website is out of date and doesn’t have all the information a potential customer or client needs in order to buy
• You have a website you are embarrassed off and therefore don’t promote enough

 

If after analysing your marketing you realise there are some issues then you need to rectify them. Luckily marketing issues can easily be addressed. I would recommend you go back to the beginning and create a marketing strategy. Now, this is something you can do by yourself or you can work with a marketing expert like myself.

If you are confident with your marketing then the next step is to look at your actual products or services.

 

4. REVIEW YOUR PRODUCTS AND SERVICES

Are you offering something that want?

There is a common business phrase “People buy what they want, not what they need”. Earlier I asked whether people would be willing to buy what you are offering. So if they are willing to buy, but aren’t you have a problem.

Are there any changes you can make to what you are offering to make it more appealing?

At this point, you may need to look at other services or products in the marketplace. How does what you are offering compare with other solutions people have to solve their problem?

You may decide to make some changes to your current offerings or maybe even add something new in.

 

5. YOUR MONEY MINDSET

If you’ve gone through everything and can’t highlight any issues then it is time to look inwards instead of outwards. It is time to look at your money mindset. Your money mindset is simply your attitude to finances.

Whether you realise it or not you’ll have thoughts about money and this impacts how you earn and spend money. As children we learn lessons from parents and then as we grow older we build a more complex picture based on our experiences of money.

Now I know it might sound crazy to think you are purposefully holding yourself back from earning money, but it is actually a very common problem. A negative money mindset might result in you:

• not investing enough in your business in order for it to grow
• struggling with selling because you think people can’t afford that
• holding yourself from making great wealth as you are worried about how money will change you or create more work in your life

If you think your money mindset is holding you back there are lots of free content out there and you could also read You Are A Badass At Making Money by Jen Sincero or Get Rich, Lucky B*tch by Denise Duffield-Thomas.

 

There you have it. You now know the 5 things to do when you aren’t making enough money in your business.

I really hope by looking at your financial targets, pricing strategy, marketing, offerings and money mindset that you’ll be able to identify what is blocking you from creating a successful and profitable business.

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If after all of this you still can’t work out where the problem is then you may have to call a professional in. Sometimes we are too close to our own business to take an objective view and identify the problem.

Find out how to work with me here.