When I started my business, I knew I was gonna make millions.
Yeah, it didn’t quite work out that way…
Chances are, when you started your company, you were planning on cashing in as well.
But what happens when hitting the motherlode Month 2 doesn’t?
What can you do when your business isn’t making money?
Does a zero profit margin mean you have to say “goodbye” and “no more” to your business brain child, or is there a few Hail Mary’s you can claim to give your entity a fighting chance?
Let’s look at five things you can do when your business isn’t making any money:
Look at Your Marketing
First place to look when dealing with disappointing revenue, is your marketing strategy. It doesn’t matter how great your product or service is if no one knows about it! Products and services don’t sell themselves – they all require some sort of effective promotion.
As a marketing consultant, I’ve worked with a number of companies that had a fantastic product but weak marketing strategy, resulting in slumped sales. “We just never felt the need to get on social media,” or “Investing in marketing isn’t something we wanted to do until Year 3,” are just a few of the misguided statements I’ve heard from business owners experiencing low sales. Don’t let your fabulous business fail due to a lack of effective advertising and promotions!
When starting a business with a chunk of change, it’s tempting to overspend on overhead – office space, equipment, e-commerce platforms, etc. Sometimes these startup expenses are necessary, and contribute to sales. Other times these expenses are just that – expenses – that don’t contribute anything to your bottom-line.
Inventory your reoccurring expenses. Think about what is necessary, and what’s not. Analyze which expenses contribute to your revenue, and which have yet to. Make an executive decision to trim the fat – eliminating unnecessary and un-helpful (is that a word?) expenses from your business model. A high dollar web platform that doesn’t convert traffic into sales, a downtown office that does nothing for generating new clients, and a flashy company car that gets poor gas mileage and has high insurance payments are exactly helping your business’ bottom-line. Cut those suckers!
Revamp Your Offerings
Maybe last year’s product offerings are so last year…
Maybe your “goldmine” services have been outdone by automation…
Maybe your company just doesn’t have “it” – offerings that consumers want – anymore.
Slumped sales (or no sales at all) can be a cold splash in the face for daydreaming entrepreneurs. Just because something sold well last year, doesn’t mean it’s still the next big thing. Just because consumers used to need your services (Hello VCR Repair Guy!) doesn’t mean you’re still in demand.
Business is a dynamic discipline – its’ constantly revolving (and evolving) in response to a variety of market variables. Everything from changes in the political climate to technological innovation to competitor landscape can influence your quarterly revenue. It’s important to stay on top of market changes and routinely reassess our offerings to ensure we’re positioned to profit.
The Kerosene Theory
“For the first few years I made decent money,” my client said, “but this year just sort of fizzled out.”
“How much money did you invest back into your business?” I asked.
“Oh – none. I’ve never put any money back into my business. I just pulled everything I made out to pay myself,” she replied.
“Okay…,” I started, easing the client into a lengthy discussion on the importance of reinvestment, “Remember what they say: it takes money to make money!”
It’s totally cool to pull profits from your biz to feed yourself; however, most business require a little something to run on – a percentage of the proceeds designated to help “grow” the business. Some allot a portion of the bounty for advertising, team expansion, product innovation, etc.; the “what” your business needs to run on is case-dependent.
In the case of my client above, her website was seriously out of date, she’d burned through her personal network as customers, and she’d neglected to allot any resources for recruiting new clients or even encouraging referrals. She needed to add some “kerosene” to her slow burning “fire”. While her business model was sound, it needed some additional resources to reach its full potential. By channeling some of her profits towards business development, this client was able to experience rapid sales growth from small reinvestment.
Bring In Outside Help
Being “down in the trenches” of your business 24/7 can skew your perspectives, leaving you with a non-objective view of what your business needs. When this happens, it can be helpful to bring in an experienced, outside perspective to assist with market positioning and operations. Working with clients in a variety of industries, I’m always surprised when something that I view as a no-brainer, such as video promo or public relations, is something they’d never considered.
We all have unique strengths and weakness. Chances are no one can run your business like you can; however, addressing market shifts and solving complex business problems may be something that would benefit from having an experienced consultant assess. When faced with a business crossroads (like “I’m not making any money!”), consider bringing in outside help to provide perspective.