Why budgeting is so important when you’re struggling
I meet so many business owners that are living hand to mouth. They have that nervous feeling in their stomach every time they need to pay bills. Worried that this is the month they’re not going to be able to make payroll, or wondering if they can pay themselves enough to cover their mortgage. Budgeting can help.
Maybe you’re just starting out. If that’s the case, then this is to be expected. It takes a while to build a business, any business. But if you’ve been in business for a few years and it’s still like this, please – stop the madness! It doesn’t have to be this way!
It’s time to make some changes. This is no way to live. Here are three areas to look at to change the path you’re on.
Market/Sales
What are your sales doing year over year, month over month, do you know? Are they flat, decreasing? Do you know why? What’s going on in your broader market that’s affecting your sales? Are there adjacent markets you could be serving? Other or different products your clients need? Are you just not getting the word out effectively anymore? You need to really dive in here. Be creative. Experiment with some new marketing techniques (and measure the results!) Do some analysis about which of your clients and market segments are still doing well and go find more of those. Talk to your best, worst, and former clients about their businesses and needs. There’s something there, you just need to find it.
Expenses
Requote everything! Utilities, vendor contracts, rent/lease if you can, If you have any debt, see if makes sense to restructure it. Do you need all the space you have? Could you move somewhere smaller? Do you need all the staff you have? I know, this is a tough one, but we’ve got to consider it. By this time, you may feel that you’ve cut everything you can but take another look. See if you can get creative, but remember, you can’t cut your way back to health. Which brings us to my favorite area of potential……
Efficiencies
Most businesses have so much opportunity here. Are there ways to improve your throughput, are there investments in equipment that will pay off with greater efficiencies, lower costs, higher quality. Could you focus more on one market, service, or product (ideally the most profitable one – not the one with the most revenue) and do that really, really well? While all of these areas could benefit from the help of an outside expert, this one really screams for it. An outsider is going to see things with a fresh eye, Things you’ve taken for granted, things you’ve always done the way you do them. In those blind spots, there’s gold!
If you’ve covered all of these areas fully, you’ve enlisted the help of a fresh set of eyes, and you’ve still come up with nothing you can change, it may be time to think about winding down the business (or unprofitable product), especially if you’re losing money. Continuing to run a losing business is just going to lose you more money. I know it’s a hard decision, but you need to stop!
If you need help with any of this, I’m happy to have a conversation. Just reach out to me anytime here