Owning a business is easy. However, SUCCESSFULLY running a business is a different story. If your business is fighting to net a profit, it can be frustrating trying to pinpoint what is going wrong. Today we will look at five common reasons businesses struggle and what you can do to change that.
Your product or service does not meet a need
You can put countless hours of time and energy into a product or service all to realize there isn’t really a need for your invention. Sometimes when you originally come up with an idea it can sound great in your head but it doesn’t make sense when it comes to fruition. Or maybe it’s something your inner circle of family and friends encouraged but ultimately the general public doesn’t have a use for it. Make sure before investing a significant amount of time, energy, and resources in to a business that is actually something people will want to buy!
Shoe umbrellas, a perfect example of a useless product.
You are not marketing your business right
Everyone knows they need to market their business, but rarely do people know what will actually give them a good return on investment. For example, a lot of businesses will use Groupon to drive in new clients. Initially, you DO get a huge wave of new clients, however these clients rarely return and pay full price for a future service. This ends up costing a business thousands in discounts. Groupon, like any advertising tool, has it’s time and place for marketing, but make sure you do your research first to make sure it’s a good fit for your good or service. Oftentimes grassroots efforts such as networking, word of mouth referrals, or volunteering for a public speaking event will give you a lot of exposure for next to nothing on investment. Also, honing your “elevator pitch” is critical. People want to understand your business in a quick and easy explanation, without feeling overwhelmed. A succinct elevator pitch will do that. Practice and perfect one! Finally, many marketing agencies will do a complimentary marketing analysis for you to see what advertising would be the best fit got your business.
You have too many competitors
Oftentimes when starting a business, entrepreneurs fail to do their due diligence in selecting a true market need. Right now we see this happening with breweries…they are popping up at a rapid rate, require a significant investment in equipment, yet many fail to offer something the community actually needs. Is there a demand for craft beer? Of course! But does every town need their own brewery? Absolutely not. It’s crucial to make sure there are actually consumers looking for the good or service you provide. Now, if you’ve already started your business and are coming to the realization that it’s an oversaturated market, taking a good look at your competitors. Your goal in business should never be to directly compete with anyone, but to respect what they are doing well, and strive to do it better. If all you are doing is duplicating the competition’s business model, that’s a waste of time and not likely to result in a profitable or successful business. But if you learn from the competition and take it up a notch from what they are doing, then that could be a winning formula for you.
Pricing our products or services too strongly can have long term damaging effects on your business. You only get one chance to make a first impression and if the customer’s first impression is that you’re too costly, it’s unlikely they will return in the future to consider doing business with you. Remember that if you are charging a premium price, you better be able to back it up with a premium product. Make sure you fully understand the demographic and target client you are going after and price accordingly. Now that being said, don’t swing so far to the other end of the spectrum that you aren’t charging what you’re worth. There is definitely a balance to be found!
You’re in the wrong business
Maybe you were a rockstar sales person in a past career or a leader in your niche industry. That doesn’t mean you will necessarily be a great business owner or that your skills will transfer to a different industry. We see this a lot in the restaurant industry. Entrepreneurs with no direct experience think that owning a restaurant will be fun and easy, when in reality restaurants are some of the most challenging businesses to run lucratively. Not to mention that a work life balance is very hard to achieve when you own a restaurant. If you are stepping into a business that is uncharted territory for yourself, it may be wise to find an experienced business partner or at a minimum a mentor that would be willing to engage with you and educate you.
So now what?
If you have done all the diagnosing you are able to do and still unable to get your business in the black, it may be time to bring in some outside perspective. A reputable consultant can help get to the root of the issues in your business and help put a processes and goals in place to improve. Or perhaps they help you develop an exit strategy to hand off the business to someone better suited to run the daily operations. Devoted Foundations is a not-for-profit organization, whose sole purpose is to better the business world including companies and individuals by providing free or affordable consulting, professional guidance, and development and leadership both personally and professionally. Please feel free to reach out to our team for a consultation at any time. Contact us any time or call us directly at 952-582-4669.