Sometimes it is not about money. But entrepreneurs are driven by the ideas of large or small business, in which they believe in so strongly that they give up their jobs, sleep, and many other things. And yet, a lot of them are trying hard to gain some financial rewards. They are inspired by billionaire heroes like Richard Branson, Mark Cuban, or Oprah Winfrey. The question here is: What should the person do when instead of making it rain you are barely making it? I read a comment from an entrepreneur once, he says:
“I left corporate in 2013 and created my solo consultancy. I have *not* reached my corporate salary(not even close) and while I have been incredibly successful in terms of business, clients, 80%+ client-referral, outcomes, etc… the financial success is not there. I know every ‘freelancer’ and solo entrepreneur knows what I am talking about. I am now focusing on and building a strategy to grow my services business. I am trying to remain open-minded to growth ideas that I rejected in the past.”
The current small business area is lower-paying than previous corporate role:
The business owner of a small business considers that he is making less money in this particular role when he compares his current business situation with his previous corporate role. But, it is not a fair comparison. Your previous job might serve more clients than in your current business. Your previous job might give you long term benefits, multi-departmental projects, while the current business is a kind of solo business with smaller and discrete pieces of work.
You have to make sure that you have financial potential in your current business before you expect it to replace your previous corporate salary. Depending on your financial obligations, you may not need to replace your salary. Instead of thinking about your salary as a measure of your worth, consider it what market is willing to pay for your skills, knowledge, and experience at this point.
Pricing is too low:
If your current business is in the same field as your previous corporate job and you are still not making enough money, then this is a very serious problem. If not exceed, you should earn at least the same amount of money as your former salary. If you are making the same amount, then do not lose hope because it is just the beginning of your new business.
Considering that, if you are doing a similar kind of work as your previous job but not earning much money, then look at your pricing. It might be the case that you are pricing too low, i.e. like a small price for a small store or shop, rather than a big price for a large company or business. Just like other businesses, you might have strong sales but ask yourself are you pricing high enough with each sale? In short, you have to work on your pricing strategies in order to determine your small business in the world of successful businesses.
Costs are too high:
A consulting or services business typically does not have as complicated or high-cost structure as a product business that has materials, manufacturing, storage, and distribution costs. It is obvious that all businesses should make money, and if your business is not making enough then you have to review yours. Ask yourself, if you are having strong sales but do not feel you are making enough money, then you have to look at your cost structure, which may be too high for the prices you are charging.
Volume or turnover is too slow:
First of all, let me tell you what turnover is. Turnover means the rate at which inventory or assets of a business “turnover”, i.e. sell or exceed their useful life. Let us consider your costs are minimal and your pricing is in accordance with your market. Your profit seems high each time you make a sale, but when you draw the money at the end of the week, or month, you see that you are not making enough. Your individual sale might seem just fine but on the whole, you are not making enough money. You should keep this thing in mind that not having enough volume isn’t a reflection of doing a good job. It can be simply caused by a long selling cycle or a conscious decision about not taking as much work. If you take a conscious decision of limiting your number of clients, then you have to charge a premium to your clients.
Pricing does not include enough margin:
The time that you spend on selling is a real cost that could mean the difference between a profit margin and making enough money. You should also spend time on operations like keeping your books in order, collecting and invoicing payments, maintaining your website or brand. You need to account for all these activities when you set your pricing to ensure that it has enough margin to cover not just executing the work, but all of your operations. Most of the small businesses’ pricing does not include enough margin. The reason for this can be that the owner of small businesses considers the hours they are actually executing the work or because they always underestimate how much time is spent on business activities.
Client targets are too low:
When you come up with a price that accounts for all your time, you must see that the break price is much higher than you have been charging to date. You might think that your clients will not be able to pay for this increase. This causes fear and this fear may seem unbounded, because if the clients have been happy with you, then they may not want to lose you. You should increase your prices gradually as there are various ways to negotiate a price increase. You might find that some of your clients do not want to pay higher prices. All you need is to build your business around the clients who can pay the prices you need to achieve your targeted earnings. (Get tips on marketing)
Do not have a specific Income Goal:
The main thing that you might lack is that you do not have a specific income goal. You have to take your business idea and create structure and strategy before carrying it out. You have to set goals for your income, services, growth, and products. If you set a goal for your income, it will keep you motivated to face the challenges to get a better result. This, in turn, makes your business profitable. It is also a great way to stay accountable especially when you tell people what your goal is.
If your small business or freelancing career is not making enough money, there are many other things to do in order to improve your efficiency and profitability. Look for the areas that you can improve in your business based on the profit you want, as well as the psychic and lifestyle benefits you wish to retain. The key to making a profit is to approach this issue from a logical perspective by considering all these things in mind. Remember that, you are an entrepreneur and you are a risk-taker. You have to take a risk in order to achieve something.