Let’s assume you launched a business to make money. Seems reasonable. But how’s it working out? Are you in the red or turning a tidy profit? Are you somewhere in the middle, surviving but not raking in the dollars the way you wanted?
If your business hasn’t flourished yet, you’re certainly not alone. Statistics vary about what percentages of businesses fail versus how many become truly successful. And “success” varies from one owner to the next.
But if success for you means more revenue, it’s time to take command of the situation. So let’s look at the common root causes of why businesses don’t make enough money—and come up with actionable solutions to kickstart your profits!
1. You’re charging too little.
Low costs appeal to consumers. But underpricing your products or services isn’t the best idea for your bottom line. If your profit margins are razor thin, you can’t grow (unless you’re dealing in bulk, à la McDonald’s selling 6.5 million burgers a day).
How to fix it
Charge what your products or services are worth. Research market rates or prices, both nationally and locally. If you’re charging less, is there a valid reason (other than trying to undermine the competition)?
If your products or services are of equal value to others, increase your prices accordingly—and communicate the value to consumers. Explain why they’re still getting a great deal! Maybe you offer better customer service or specialize in something hard to get, for instance. Raising prices might seem risky, but if you’re not making enough money anyhow, it’s probably time to try it.
Also keep in mind, at the end of the day, consumers know they get what they pay for. So having super low prices may send the wrong message about the quality of what you’re selling.
2. You’re overspending on supplies, services, or both.
It costs money to make money. And it costs money to run a business whether you’re making money or not!
That’s why businesses operating in the black should tighten their belts and cut back on discretionary spending. Part of that may include shopping for better deals on supplies, services, or other costs.
How to fix it
Every business has its list of “wants” and “needs.” Audit your expenses and find areas where you can trim the fat. If you don’t need it (or it can be replaced with a more affordable alternative), make adjustments accordingly.
One quick and common means to cut costs is to use a virtual receptionist versus an in-house one. You might be surprised how much money you can save—while adding a ton of new benefits such as 24/7 phone coverage.
3. Your day-to-day operations are inefficient.
Every organization has a laundry list of known and unknown inefficiencies. These wasteful processes are a leaky faucet, slowing but surely draining your bank account.
How to fix it
Stop procrastinating and look for leaky faucets in your workflow.
Take a hard cold look at your business processes. Are there not some repetitive or redundant tasks that could be dispensed with?
Couldn’t you implement a simple technology solution here or there to streamline aspects of your operations, so you don’t have to pay full-time workers to do those things manually?
If a new way of doing things is likely to reduce waste and boost productivity, we say keep an open mind and try it out!
4. Your value propositions aren’t strong enough.
Why should anyone come to your business and give it money? What’s in it for them?
“They come when they have a problem,” you say, “because you’ve got the solution!”
That’s great, but do they know that? Your value proposition must tell potential customers what unique value your product or service offers them. If that message isn’t getting through, they’ve got no incentive to do business with you.
How to fix it
Do you know your value proposition? Is it crystal clear…or a hazy blur?
Dig back into your business plan and try to refine that message by focusing on what makes your business special—and why anyone ought to choose you versus your competition.
5. You’re not reaching out to potential buyers enough.
Tied into the above, if nobody knows how incredible your business is, they won’t know they should check it out!
The days of “if you build it, they will come” are gone (if they ever existed). If you build it, you’ve got to tell as many people as possible (and give them clear directions on how to find you).
How to fix it
It’s on you to get the word out through creative marketing. Going back to the “it takes money to make money” idea, we suggest allocating enough funds for your branding, marketing, and ad spend to increase your visibility and reach a wider audience.
Get proven small business marketing tips and ideas in our lead generation playbook.
6. You haven’t established trust in your market.
Consumers can be a finicky lot, prone to suspicion and world-weary distrust. With so many scams, ripoff artists, and shoddy products out there, who can blame them?
So why should they trust you then, eh?
What can you do to put them at ease so you can build their confidence?
How to fix it
Credibility is key. Modern consumers are on the lookout for anything phony or insincere. This is especially true for ads and business websites, which are often the first impressions a potential client or customer has of your business.
Use your site and ads to tell your story, explain your values and mission, and share testimonials. Trust can make or break a consumer’s decision to proceed or go elsewhere.
7. Your business isn’t easy to reach.
The inability to conveniently contact you immediately can be a deal breaker.
The easier it is for potential customers to contact you, the better the odds they’ll reach out and you’ll be able to do business.
On the other hand, any obstacle to their reaching you is a nuisance that could drive them into the arms of the competition. That includes their not being able to reach you because your line is busy or you’re out of the office.
How to fix it
Make sure your contact information is clearly visible on all platforms—your website, social media pages, ads, business cards, etc. Additionally, make sure someone is covering your phones and website chat at all times! If that sounds like too heavy a lift, remember, you can always outsource it to Ruby!
We can help you gain and retain business.
At Ruby, we’re here to help small businesses like yours identify and solve their biggest problems. And over the course of 20+ years, we’ve been honored to provide solutions to over 14,000 businesses and counting!
If you aren’t making as much as you’d like, odds are it’s due to one (or more) of the reasons listed above. We can help with some of those, such as providing 24/7 virtual receptionist and live chat support to free up your time and ensure no customer query goes unanswered!
