One of the most difficult challenges that most businesses come up against at the start of their journey, is getting their finances right. When you’re yet to start trading or make any significant profit, you won’t have much money to start off with and there’s not much room for error if things go wrong. So if your sales start to wane it can really be a worry for any business but especially if you’re only just getting established. Here are some areas to look out for.
What you’re selling isn’t up to scratch
If your business isn’t making as much money as you’d like, the first thing to take a look at would be what it is you’re selling and make sure it’s up to scratch. You can get everything else right in your company from the premises to marketing initiatives to your staff compliment, but if customers aren’t buying what you’re selling then it’s never going to be a success. If you’re a new business then it’s important to conduct market research before putting your product or service on sale. It enables you to ascertain if it’s something people actually want as well as how much they’re prepared to pay for it. It allows you to make tweaks and changes so that your product/service is the best it can be, and it’s these small details that can be the difference between something that’s successful or unsuccessful. If you’ve had your business for a while but have noticed declining sales then ask yourself if anything has changed. Have you changed suppliers or staff? Have you changed the materials of a product you’re manufacturing? This might have been done due to convenience or to cut costs, but ended up having a knock-on effect on sales. Whatever it is you’re selling is the heart and soul of your business, it absolutely needs to be right if you want to be a success.
It’s the time of year
If you’re a new business then you might not be aware of how the time of year can affect your sales. There are peaks and troughs in sales for most companies, exactly when these are will depend on what you do and what you sell amongst other things. For example, most companies will see more profits around public holidays and then less for a little while after which reflects people’s spending habits at these times. April tends to be a quiet month, especially in the business to business sector since this is when tax needs to be paid. Factors like the economic climate can also affect business, look at the impact the recession and Brexit have both had. Sometimes you can expect slower sales and sometimes it will be out of your control and unexpected, so it’s crucial to be prepared. Make sure you’re budgeting correctly so that you can afford to get through those leaner times. This is especially important if you’re a newer business without much capital behind you as a buffer.
Speaking of budgeting, overspending will of course result in slimmer profits and so taking a look at your accounts is not bad thing. In business you really do need to spend money to make money, but it’s important to know where to invest a little extra and where to make savings. Try and make savings in the wrong places and you’ll seriously jeopardize your venture. A poor quality website for example will put people off at their very first interaction with your business. Poor marketing efforts mean you’ll never reach the right amount of people. Cutting staff wages can lead to a high turnover rate and actually cost you more in the long run with more hiring, interviewing and training costs. Don’t overspend but don’t scrimp in the wrong areas either.
Productivity is low
In some cases, dwindling profits can be a result of the work not getting done or not getting done fast enough. There are many reasons for this, have a think about what they could be. Are your staff unmotivated? Minimum wage and poor working conditions can result in this. Are they lacking the equipment they need to do their job properly? Slow computers and crashing software can slow them down. Take a look at your business strategy, enterprise mobility solutions can give productivity a boost and make sure that the work is being done as quickly and efficiently as possible. A slow turnaround can mean deadlines are missed with clients, potentially costing you the contract. It can mean customers are slow to get their orders with you, leading to complaints and bad reviews. It generally makes your business look unreliable and untrustworthy and can become a vicious cycle of reduced customers. Treat your staff well and keep their morale up, and ensure they have everything they need to do their job well. Your staff are important, they’re the people that make your business run so it needs to be a mutually beneficial agreement between you. Provide them with rubbish wages and poor work environments and they’re not going to do their best work for you.
Profits dwindling can be stressful. In some cases it can highlight a major issue within your business, but sometimes small tweaks are all that’s needed to get things up and running again.