Senior executives and entrepreneurs are driven by ideas they strongly believe in so strongly that they may forgo sleep. However, despite this personal conviction, too often financial metrics are not met. Over and over again the financial reports show unwelcome figures.
A common business grievance is that firms are not making enough money. In fact, it seems that no one ever feels like they’re making enough money, even if, statistically, they are making a lot.
What is the root of this problem? It could be many different things. We will now examine the five common sources of financial problems, and then provide advice on how to repair them.
Reason #1: Mediocre Pricing Strategy
Solution: Reverse engineer your prices.
Think about the origins of your pricing strategy. Is your price based on business expenses, operating costs, and/or target profit margins? Many business leaders base their prices on flawed metrics and logic.
To improve your pricing strategy, it is vital to have a firm understanding of your business expenses including your tax liability, business debt, and payroll.
Reason #2: Unviable Product
Solution: Pivot (Perhaps).
This is likely a two-pronged problem:
1. Your product isn’t viable because it’s too expensive to produce (in which case, you’ll need to revisit your pricing strategy) and
2. Your product is not viable because of lackluster consumer demand.
If and/or when your organization is not attaining your financial goals no matter how you structure the pricing, a product pivot could correct the problem.
Reason #3: Unsatisfactory Customers
Solution: Define your ideal customer.
Creating a customer avatar could help you identify the ideal client.
A customer avatar is also known as your buyer persona or ideal customer. Look at your current customers or clients who love your product or service. All of your marketing communications should flow from your customer avatar. Without one, you’ll try to target everyone, which will lead to you attracting no one.
Top questions to ask yourself right now to determine your ideal customer:
· Who are the customers who rave about my product without prompting?
· How old are they?
· What is their job title?
· What is their income level?
· What do they worry about?
· What were the latest purchases they made?
· Which brands do they love?
· How does my product or service solve a specific problem they have?
Once you define your ideal customer, take the following actions to attract them:
· Write a clear tagline
· Go where your ideal customer hangs out
· Revise your advertising target audience.
Reason #4: Poor Financial Tracking
Solution: Update your cash flow statement and income statement weekly.
“What gets measured gets managed,” as the old saying goes. If you have no idea what your business cash flow or income are, then you will never have a good grip on your business’ finances.
Reason #5: Your Relationship with Money is Flawed
Solution: Reframe the way you think about money.
The way you think about money will affect your pursuit of it. If you constantly fear you’re not making enough money or if you constantly agonize over losing money, you will never feel like your business is making enough—even when you are a millionaire.
Resolving these five items will alleviate most of your concerns.
Contact Falcon Project Consultants to help your organization to reach its financial goals.