It’s not meant to demoralise you, but even if you work your absolute hardest it’s generally accepted that a new business will struggle to see much profit over the first couple of years. In some cases you might be putting in so many hours against what you’re earning, that your hourly rate is well below minimum wage. Running your own business can become worth it after putting in the slog, but in the meantime, here’s some possible reasons that you haven’t hit profit just yet.
Are you under pricing your goods and services?
One of the core reasons why you might not be turning over a profit is that you simply aren’t charging enough. This can be quite tough to get to grips with at the beginning, especially if you’re worried about putting off customers.
Setting up your prices based solely on guesswork can often be the culprit here. Once you have a good idea on how much your time is worth, how much your materials cost to gather and where your product fits into the market, you can start to put together a more comprehensive pricing structure.
Make sure to research what other people are charging too. If your product is vastly cheaper than the closest competitor then you may run the risk of people thinking your product is cheap for a reason, or even inferior.
You may have lots of expenses
Another great way to improve profits is to try and cut expenses. Some companies believe that to look professional they need a shiny new office with all the latest equipment. This simply isn’t true. Many companies survive for years being run from spare bedrooms on ageing laptops.
If you have to purchase materials for your company, aiming for a more economical source can lower expenses. Unless you are specifically running a ‘locally sourced, organic business’, there will likely be cheaper suppliers out there just waiting to be found. Capitalising on these while making sure your product is priced properly can help boost profits, without sacrificing your company’s principles.
You’re not promoting yourself effectively
Simply putting your service out there and waiting for the customers to roll in doesn’t quite cut it these days. Without a solid marketing strategy, you’ll find your product can be quickly lost in a sea of cheap alternatives! A well thought out marketing plan will help you keep focus when starting out and can be adapted once you start to gain traction. Make sure you’re always doing something to further your business.
Some things to consider if your profits aren’t great are the following:
- Follow up with happy customers – try to gather positive reviews for others to see online.
- Increase your web-presence – With the majority of customers buying online, making use of social media platforms can really help you connect to customers.
- Follow up on dead ends – Abandoned shopping baskets, quiet customers or dead leads should all be followed up regularly to make sure you are actively improving your business to avoid it happening again.
While the ideas above may not lead to new, big and exciting leads, they can help retain customers and capitalise on new opportunities that may have been lost otherwise. Consistency is key in self-promotion so, making sure you stick at it day in and day out will benefit your business in the long run.
And, absolutely key, stay on top of your finances! Understanding what is happening within the the business will help you make much more effective decisions.
Have any of the above tips helped your business out? Did you start from humble beginnings, what helped you progress past the low-profit hump? Let us know in the comments section below.