Why isn't business going? Things are not going well in business: reasons and ways to solve the problem Business is not profitable

If your business constantly requires more and more new investments to stay afloat, know that this is not normal and the situation needs to be corrected. In my two years of working in financial consulting, I have talked to a bunch of entrepreneurs who suffer from this problem. I myself came out of such a problematic business in 2015 with a debt of 1.5 million rubles.

Businesses are different, but the problems are the same - and they are not always that the product is bad. I’ll tell you about the three most common mistakes that prevent your business from making money.

Frequent mistakes of entrepreneurs

1. You believe that all the money in the business is yours

Entrepreneurs often live with the attitude “I = business, company cash desk = my wallet.” If they want to go on vacation, they take it from the cash register. You need to fill up the car - they go to the cash register again. They are the owners, so it’s possible.

Actually you can't.

The money you have in your cash register or checking account is not necessarily yours.

If you work on a prepaid basis, it could easily be your clients’ money, and you are already spending it, although you have not yet fulfilled your obligation. For example, you make websites, spent an advance payment, and the client changed his mind and asked for the money back. There is nothing to return.

Or you will need this money in the future. For example, on the 10th you took money from the cash register for a new phone, and on the 20th you have to pay your salary. Some of them will be left without a salary because you bought a phone with someone else’s money.

2. You are chasing more sales.

The concept of profit is taught in high school social studies classes. But entrepreneurs, adults, seem to forget about it - and evaluate their business by the amount of money in their current account. Indeed, they are easier to calculate than profits. But they don’t say anything about work efficiency.

For example, an entrepreneur sold 300 belts in a month with an average receipt of 3,000 rubles. I multiplied the numbers and got 900,000 rubles. After that, he will deduct the purchase price at most - there is, say, 300,000 rubles left. Seems to be OK. He earned money and is happy.

And if you subtract the salaries of sellers, transportation of goods, rent of premises, marketing costs, taxes, you will get not 300,000 rubles, but minus 50,000 rubles.

3. You can’t quantify management decisions.

Every action in business must be evaluated through the prism of profit. There are no good and bad management decisions; there are profitable and unprofitable ones. But entrepreneurs do not calculate the effect that their actions bring.

Are you planning to increase your conversion? Create a sales funnel and see what increase in revenue and profit this will ultimately give. Do you want to automate business processes? Estimate how many your employees have. Then consider whether this time could be spent more profitably.

For example, you have a store with one cashier who, on average, serves one customer in 30 seconds. You have automated sales, and now the cashier spends 15 seconds per customer. But does this make sense? If there are queues at the store, then yes. People will stop getting nervous and leaving, and there will be more sales. Next, you need to calculate how much more and when this increase will pay for the automation.

And if there were no queues, then automation will not bring any benefit. Unless the cashier will sit around a little more.

Of course, there is no need to fanatically calculate the effect of moving the cash register 3 centimeters to the left. But the key decisions in which you invest time and money are necessary.

How to avoid such situations

1. Take money from the business according to your roles

Most likely, you have two of them: the owner and the director. The owner has the right to dividends from profits. Determine what percentage of the profit you will keep for yourself, and stick to this number. The director has the right to a salary. Look at how much directors earn and set yourself the same amount.

Dividends and director's salary are yours. Everything else is business.

2. Remember that increasing revenue does not always mean increasing profits

Open any book on economics. It says: as sales volume increases, the price falls and the cost per unit of goods increases. It happens that one sells 10,000 units of goods a month and works at a loss, while the other sells 1,000 units - and in chocolate. Increase your sales volume only as long as it gives you an increase in profits.

3. Draw up a financial model when you plan to change something in your business

A financial model is a table that shows how a change in one indicator affects all others, including the most important one - net profit. It makes it easy to understand whether you should work on this or that indicator or whether it is ineffective.

conclusions

The problem for entrepreneurs is a phenomenon I call the absurdity of doing. A person works 14 hours a day, always coming up with something, solving some problems. With this approach, the process comes to the fore, not the result. I do and do, but I don’t know what it gives.

I'm for a different approach.

The main indicator that a business is operating efficiently is not the number of actions, but profit. Every action should lead to profit. And each action must be assessed from the point of view of how it increased profits.

And in order to evaluate a business through the prism of profit, you need to keep financial records: know the business resources, key indicators and growth levers. Read more about what financial accounting is and why an entrepreneur needs it in our previous one.

Each of us, without exception, has come across the concept of business, and every second one has thought about how to organize our own business so that it brings in a decent income. Of course, everyone wants to work only for themselves, without depending on outsiders, and at the same time receive good money without putting in much effort when the business is well developed. But not everyone understands how much work needs to be put in to create, and most importantly, develop this very business.

It is due to ignorance and unpreparedness that many novice entrepreneurs quickly complete their activities. One of the problems and the most common is improper budgeting, which leads to bankruptcy and sometimes to huge debts.

In addition, there are other problems that arise when conducting a business. Therefore, it is worth understanding why the business is not growing and what factors influence its unsuccessful development.

Main reasons for failure

As a rule, all the difficulties in developing a business are created by the entrepreneur himself, who, most likely, miscalculated at some point during the preparation of the business plan. There are several reasons that become fatal for the development of an entrepreneur’s business:

1. Insufficient control over the expenditure and income of funds from the work of the company.

Problems arise in the fact that if some of the expenses and income are nevertheless subject to control and analysis in order to further determine profitability, then there is another part that is often overlooked. We are talking about advertising a developing business. Every entrepreneur strives to promote his business as quickly as possible and achieve net profit, and to ensure this, it is necessary to order high-quality advertising that will work for the company. Often, having ordered such advertising, an entrepreneur forgets to track whether it brings at least some income or is just a bright sign that does not attract potential customers. Without tracking the effectiveness of advertising, it will not only not bring you profit, but will also deplete the company’s budget by a decent amount every month.

The effectiveness of advertising is verified by the amount of profit that was received with its appearance. If the average indicators in comparison with the previous ones have not changed significantly or have not changed at all, then you should refuse this type of service or turn to another advertising agency.

2. Uncontrolled reduction in prices for goods and services for the purpose of fair competition.

To date, there are many companies and organizations engaged in providing various services. Due to such an abundance of competitors, it is not easy for newcomers, because clients prefer to contact, as a rule, trusted organizations. In order to somehow attract customers, the entrepreneur tries to make the cost of services lower than that of his competitors. Such manipulations with funds very often have a negative impact on the company's profits, which can decrease significantly and become insufficient to cover all the company's expenses.

3. Insufficient development of cooperation with existing clients.

As a rule, all work on promotion and advertising of a business is based on attracting new clients, otherwise called potential. But in essence, it is much easier to draw attention to the products of a client who has already purchased a service from the company, rather than a new consumer. Often, insufficient customer service leads to zero profit, which could be covered by the funds of consumers of an existing customer base.

4. A very important factor is human laziness.

The desire to receive easy money without making any effort will accompany the entrepreneur at the very initial stages of forming a business. Due to insufficient attention and lack of timely return to this matter, major problems with entrepreneurial activity may arise. This work requires special attention and constant monitoring, especially in the initial stages.

5. Refusal of modern business methods.

In this case, the entrepreneur refuses to create an additional source of advertising - an Internet site. At the moment, many people use the Internet and get information from there, which means that creating your own website will allow you to attract more attention to your services, especially if the site is built correctly and interestingly.

How to solve business problems

When resolving this issue, you should not take drastic actions. Before changing anything, it is necessary to analyze the document drawn up at the initial stage of organizing the business. It is he who reflects all the steps that an entrepreneur takes. Based on the plan data, it is possible to identify at which point the businessman made a mistake.

It is worth remembering that to raise a business from its knees, additional capital investment may be required, since, most likely, the initial capital was not used rationally.
To solve the problem, you may have to take a radical approach by reconsidering the type of services that the company offers. In turn, it is possible to determine whether this is required or not only after analyzing the product market and consumer needs.

Should a beginner start a business?

There are no beginners in this business. Every entrepreneur once started from scratch. There is no need to be afraid or avoid organizing your own business. The right approach, clearly organized work, and your own desire and dedication are the main key to success in the development of a business idea. In addition to enthusiasm, of course, sufficient capital investment will be required, based on which the entrepreneur will form the entire economic base of the company.
Thus, the development of a business or its stagnation is the result of correctly or, on the contrary, incorrectly organized activities of the entrepreneur himself.

You, of course, know the situation when you invest and invest money in advertising, in renting premises, rearranging equipment in a store, but sales have not grown and are not growing. You have a good product (or service), reasonable prices, but customers don’t understand this and prefer cheaper and lower quality products. Where's the justice?

There are no sales, which means no profit, and your business may soon turn into a hobby that you do at your own expense. What to do? To improve something, you first need to find out what exactly and what problems exist in your business.

Another important problem for small and medium-sized businesses is when a network company comes to their region with its multimillion-dollar advertising and marketing budget and begins to offer goods and services at a lower price. Such companies have huge discounts on bulk purchases and can afford to hire the best specialists in all areas. Your business is like a drop in the ocean for them, and they can even afford to work for a very long time at zero or even in the minus, waiting for local firms like you to not stand it and leave the market.

How to resist online Godzillas? What will keep you afloat?

There is only one answer - a well-built sales and marketing system will not only allow you to survive in the market, but will also ensure good sales growth for your company.

In this case, there is a very apt saying: There is a whole ocean of opportunities to earn a big income. The problem is that most people approach this ocean with a teaspoon.

Most small businesses don't pay much attention to marketing at all. This is the biggest mistake that is made.

So that you know what is stopping your business from growing, here are 10 key problems inherent in any business, and if you solve them, you will get amazing results!

1. Businessmen don't know their numbers.

Check yourself - do you know what your revenue and profit were for the past month? How much did you keep for yourself “to live on”, and how much did you invest back into the business? Believe me, these are not the numbers that influence increased sales! The overwhelming majority of entrepreneurs have no idea how much each client costs them, how much they earn from each client, from each product, from each group of goods. What material result does each advertising campaign bring? There are no reports, no systems to track the effectiveness of advertising. As a result, huge amounts of money are wasted on unnecessary advertising.

Without knowing the numbers, it is very difficult to make decisions. As a result, the decision is made not based on how much advertising earned, but simply “how much did we earn in total.” But this is completely wrong! Knowing the numbers of how much profit this or that advertisement brought in, you can decide which advertisement to invest in next time.

2. Trying to compete on price.

This is another challenge for SMEs - trying to compete on price. What does an entrepreneur do when he sees a similar product from competitors? That's right, he reduces the price of his product and thereby spoils the market for himself and his competitors. Endless dumping does not lead to anything good.

Few people understand that sometimes selling at a higher price is easier, and if you use two- or three-step sales, it turns out to be even better.

Selling at a high price is much easier and more profitable. Let there be fewer clients, but there will also be fewer problems, costs will be reduced, and as a result there will be more money. Build your sales in such a way that customers value you not for your low price, but for the value you give them.

3. Lack of work with the existing customer base, with a constant desire to increase it.

This problem lies in the fact that the entrepreneur already has a decent base - 500-1000-1500 clients, but he does not know what to do with it. A client came, bought something, was added to the database and left. That's it, this is where the contact with the client ends.

What to do next? The base doesn’t actually bring in any money, but, as you know, your own customer base is actually a “golden asset” for any business. It has been proven that selling to an existing client is 5-7 times cheaper than attracting a new one! Everyone wants to sell to new clients, but few work with old ones, although with the right approach you can earn many times more from them.

4. The system for converting leads into actual buyers is like a leaky bucket.

The essence of the problem is that no one really deals with the clients who apply - the client came, looked and left, the money is lost. If you focus on closing every person who comes in or calls to buy, you'll immediately make extra money for your business!

Remember, if the client made an effort and called you or came, he is actually ready to make a purchase, you just need to push him to do it with the right actions.

5. The entrepreneur has no desire to change anything in his business.

By nature, it is human nature to be lazy. Few people are ready to “move mountains” today just to get results tomorrow. Everyone wants results now and immediately! And strategies to increase sales work gradually and not immediately. Therefore, many are limited by the existing state of affairs and available income. People are simply wallowing in the swamp of their business and do not understand how to take their business to the next level.

6. Many businessmen, instead of working “on” their business, work “in” their business.

Entrepreneurs spin like a squirrel in a wheel, and the more they spin, the more clients come to them, the amount of work grows, it requires more and more additional time, and there are only 24 hours in a day. The result is a vicious circle.

It turns out that the person simply hired himself to work, but thinks that he has a “business”.

You need to understand that business for business's sake is the wrong approach. Business should be done to achieve your goals!

The problem can be solved by building new management systems and “distance” from the business of its owner.

7. Direct sales have practically stopped working.

Everyone starts by trying to sell directly, but now this method no longer works. If you only use this method in your business, alas, you are doomed. The real sales are where the two-step sales system is used. For example, you can not just sell, but first train clients, then next time they will come to you and buy.

8. Your site doesn't sell.

This problem is especially relevant for small businesses. An entrepreneur either does not have his own website, or formally has this website, but in fact it does not contribute to sales. A website is quite a powerful resource for business nowadays. Having a good “selling” website can attract enough customers, even in a small city.

By the way, in the West they already say that if you are not on the Internet, then you are not in business!

9. Perfectionism.

This problem lies in the fact that you first try to make all processes ideal, and then just launch them, and then everything will be fine. Making it perfect can be done endlessly and you will never start the process. You need to make some kind of prototype and launch it, and then you can improve it. Remember how software products are released - first a beta version, then they begin to release new and new versions, improving the shortcomings, while simultaneously carrying out the sales process.

10. “I know this won’t work for me.”

There are entrepreneurs who are initially confident that one strategy or another is ineffective. Often, they didn't even try to do something. That's just what they think. In fact, everything works, you just need to take it and do it, take it and do it. The effect depends on the number of attempts.

For those who do not want to test new strategies, there is only one answer - if you want to get paid like everyone else, do like everyone else! If you want to get like others, do it differently!

So now you know what is stopping your business from growing. All that’s left to do is implement strategies to increase sales and solve problems, one after another, systematically and persistently.

All life has a wave-like character, and it is not strange that even the global economy, not to mention the national economies of individual countries, obey one simple and not tricky rule: today you are on the rise, and tomorrow you are going down. You may ask, what do global trends in human development and economics have to do with the topic of the blog?

The answer is quite simple, the rule is not exceptional and applies directly to the person himself, that is, even this morning you write with optimism and are “eager to fight,” and by the evening, under the influence of external factors, you fall into a stupor and begin to calculate your options. An interesting observation: all calculations made under the influence of negativity predict complete negativity. And the question immediately arises, what to do?

Really, what should you do if problems suddenly pile up and, on top of that, you fall into a slight depression (although, of course, not one real man will admit to this; it’s easier for the fair sex in this regard) and the clump of problems grows, and of course the depression intensifies. And if you add a little “pepper” and imagine that your first business project turned out to be a dummy and for some reason did not work, then the situation becomes even more difficult.

Actually, there can be a lot of options for why a certain “recession” occurs, from the most banal to quite objective, for example, fatigue. Let's just try to consider several options for the development of events and answer a number of questions, what to do if...

First and most importantly, try not to think about problems, there are many options for this:

• - go to the forest to pick mushrooms
• – read a book
• - watch a couple of films
• – go and organize a beer (or maybe not just beer) party with a friend or friends. By the way, this method will first allow you to be distracted as the party itself gains momentum, and in the morning your head will be occupied with completely different problems. So you won’t have to think about problems for at least two days.
• – go to a social network and chat with friends or just look at photos; as a rule, time flies quickly in such cases.
• – well, or another option that is closer to you.

The main thing to do is to completely throw all problems out of your head and for a certain time simply not think about the problems themselves and work. Moreover, this needs to be done in any situation, that is, reschedule meetings, postpone things. Why is it important?

The formed negative potential will put pressure on you and will not give you the opportunity to make correct and reasonable decisions, and problems will accumulate like a snowball. And the more problems there are, the less opportunity there is to adequately assess the situation and make correct and, most importantly, rational decisions.

What will such a break give? It will allow you to throw off negativity from your subconscious and, after a short rest, tackle the problem with renewed vigor; practice shows that with a positive approach and “fresh” views, most issues are resolved 3-4 times faster and, most importantly, more effectively.

That is, a paradox arises: being in a state of “when everything falls out of your hands,” you solve problems longer than if in a situation where you “rested and relaxed” for half a day or a day and took on the issue with fresh strength.

What to do if your business idea doesn't work?

First and most importantly, review the strategy and essence of the business idea; you need to try to understand the reason why the business idea itself did not work. If the business line exists in the region, then be sure to take a closer look at your competitors, what you do differently from them. If the idea is new and there is simply no one to draw analogies with, then you need to try to find information about successful projects in other regions. And again, compare how your business works and how their business works and highlight the main differences. Actually, this advice is not something new and many people talk about it, however, very often it is very difficult and even unrealistic to actually compare your own business model with a successful business model.

Then the second question arises: what to do if there is no one to compare with or it’s impossible?

The best option in this case would be your own analysis of all processes and, most importantly, look not only for shortcomings in the operation of your business model, but also try to find opportunities to modernize the entire business idea.

As a simple example of what to do if.

You decided to organize a workshop for the production of foam plastic, it seems like you did everything right and the price for the finished product is normal, but there is no profit in sight. What do we do in this case?

Of course, the thought immediately comes to mind about working with customers and expanding sales, that is, we go shopping and look for buyers, and so on. Yes, in fact, the train of thought is correct, but let’s think about it, because the business is really seasonal and it may well be that right now the season has started to decline and sales volumes have fallen. So what to do next?

The answer lies in the opportunities to expand the range of products produced; for example, construction foam plastic is not available, but foam plastic products can sell with a bang. For example, on the eve of the New Year, the demand for small New Year's toys made of foam plastic, such as snowmen, increases. It remains to study the question of how to produce such products and how much it will cost the business. There may be many answers here, but the main thing is that it is quite possible to start such a business and expand the range of products without significantly changing the production cycle. There is no need to say what this will give, a larger assortment and, as a result, an increase in sales and the entire business project reaching break-even.

This is just an example. Such changes and modernizations are possible in almost all types of small businesses, including those with minimal financial investments, for example.

It is worth noting that it is possible to find an option to expand your business in almost any area of ​​production or services, the main thing is to approach the issue with creativity and some creativity.

As a simple example, in the following articles I will describe how in two years we managed to jointly transform one business project from a small part-time job to a real small business. Moreover, I can note that the business idea itself was suggested to me here on the Internet. Don't forget to subscribe to the blog

Six reasons why your business isn't making money

When your business does not bring you money, it happens for the following reasons:

1. You don’t have enough incoming requests from new clients,

2. You make few deals from the incoming flow,

3. You earn little on each purchase,

4. Customers buy once and never return, the share of recommendations is minimal,

5. You don’t have time to fulfill orders, and some customers who are not ready to wait go to competitors,

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