You have a business.
It’s making money. But not as much as you want. But because you’re committed to succeeding, you’ve tried to find ways to ramp things up.
Maybe you’ve looked to your overarching goals and strategy. Tried a a SWOT analysis, hoping to capitalise on your strengths and opportunities. Or maybe you’ve looked straight to your market appeal and have gone through a new rebranding overhaul, or marketing campaign.
Or maybe you’ve tried all that and you’re thinking your problem, and the answer to transforming your sales might lie in your mindset, so you’ve gone to work on that.
But despite your passion and determination, the things you’ve tried haven’t worked the way you’d hoped.
And you’re wondering what you need to do next to switch things up.
You are not willing to throw in the towel. You’re committed to your business.
In this post I share 5 factors necessary to make good money in your business. (In other words, whether you make the money you want or not!)
These factors are the underlying realities you need to pay attention to.
They are also some of the critical things that business owners and managers often (unknowingly) ignore at their peril, resulting in big mistakes that, without realising it, affect their income and financial future.
Five Factors You Need to Have Right to Make Good Money in Business
There are a number of factors that influence whether you make good money and succeed in business.
A lot of people just don’t know what the factors are. So they go about their business, trying this and that, and hoping it works.
Sometimes this ‘hit and miss’ kind of approach works. But when it doesn’t, it can leave you very confused.
Many of these are within your control – or at least your influence, while some are outside your control.
But, if you’re clear on what they are, and how to work with them, this will improve your chances of making the money you want in your business.
As you look at these factors with your business in mind, some may currently not be good. (That’s okay. We all have to start somewhere.)
Ready to kick into them?
My recommendation is that you grab yourself a piece of paper and a pen, so you can capture some of the things that you are maybe doing well, or not so well.
Factor #1: The match between your offer and the market
One of the most common mistakes businesses make is not having a good match between what they offer and what the customer wants.
An offer is made up of multiple elements. These are the things that customers may need to see as part of the offer. They could include many different elements, including price, quality, customer service, look, feel, guarantee, results, payment options, warranty, etc.
If you are not making many sales right now, it’s possible this is the reason. (It’s a very common issue!)
If what you offer isn’t attractive to the market, you’re stuffed. If the market wants something that you don’t want to offer, you’re also stuffed.
So understanding what the market wants (that you also want to offer), is critical.
Most of the time when there is a mismatch, it’s because the person or people creating the products or services have been looking at the offers from their own point of view.
They might think it’s great. (Of course they do. They came up with it.)
They know the problems it solves or what it’s trying to do. Perhaps they would even buy it themselves. They know the ins and the outs. And with that in mind, they get to work on thinking about the marketing of the offer. But that thinking is premature.
You can think you offer the coolest product or service in the world, but if your potential customers don’t think so and don’t want it, your enthusiasm is irrelevant! You make no money!
The first problem is that they haven’t considered what their target market wants.
The second problem is that people don’t know how to think about their offers and the market. One of the things I hear a lot when talking to people is that often what they think their offer is, is not often what their offer actually is (or needs to be to sell).
In my 2-day workshop on ‘How to Create Irresistible Offers that your Target Market Can’t Refuse’, we explore how to think about offers from the customers point of view. And how to create a match between what you want and what the market wants.
A Common Misunderstanding…
When I ask people about what they offer, often what they’ll come up with is not their offer.
More often than not, they’ll come up with a marketing spiel they’ve obviously rehearsed. Sometimes their explanation will includes several elements of their offer, but often it’s more of a marketing presentation than a demonstration of true clarity on what their offer actually is.
To understand this factor, please realise that I am not talking about your marketing of your offer. Your offer is not the same thing as your marketing – or what you say about your offer. It’s about what your offer actually is. The actual thing itself.
Why is this an important thing to get right?
Being clear on your offer enables you to ensure it matches the wants and motivations of your target market. It also enables you to know what to include in your marketing.
If you don’t have enough clarity about what your offer is, it’s very difficult to present your offer to your potential customers in a way that enables them to connect in their minds what you’re offering with what they want.
Not sure if you have a good match between your offer and your market – and want to make sure you get this right? Book a strategy session with me and we can explore this together. Or you can check out my workshop here.
Factors #2, 3 and 4: Current market share, total market and competition
If you haven’t gone to business school or are new to business – or if you don’t really want to think about what others are doing, these factors can sound scary.
But it’s helpful (and smart) to understand the basics of where you fit in the ecosystem of the market. So I’m going to break it down for you.
So here are the basics…
I have bundled these three factors together to explain them, because they all work together.
#1. Starting from scratch in business, you have zero market share. Your goal is to gain at least some market share. Enough at least to earn what you want to earn.
You may not need a lot of market share (customers) to make the money you want, especially if you charge higher ticket prices. But it’s important to understand that you are operating in a market where you probably have competitors. Competition is fine. But you need enough of a market share to make the money you want.
#2. Markets change.
It is helpful to understand that markets change and evolve.
They appear and grow. While some industries have been around for generations, new ideas and innovation create whole new industries all the time. This is a creative process with no guarantee for success, but great opportunity if you can pull it off.
They evolve and change as customer needs and competition evolves.
And they also decline and disappear. Sometimes as if overnight. This happens for a variety of reasons which are often out of your control.
Why is it good to understand this?
Understanding that your customers needs may change over time is important for making decisions about:
- what offers to create
- your marketing
- how to distribute or make your offers available
- which offers to ditch when they’re no longer motivating to your market.
#3. Competition changes.
Competition may or may not be a factor (or significant factor) for your business.
If it is, your current and future sales are likely to be affected to some degree by what your competitors are doing. And what they do is largely out of your control. But it can help to pay attention to see what’s going on.
Are they offering products or services that are more on-point with what the market wants? Do they make their offers easier to obtain? Are they investing more money, or more focus on getting people finding out about their offers?
It may or may not be important to pay attention to what others are doing. But if it is a factor for your business, then it is a factor that contributes to your success 0r failure.
Factor #4: Capital
Many small business owners start up businesses without realising the importance of start up capital for the basics.
Some businesses may be able to scrape through on a tiny shoe-string budget.
But to get your business off the ground, there are things you are likely to need money for.
In the early days, there are some things that are smart to spend money on, and some things that are premature to invest in.
Unless all of your business comes from free channels, which would be wonderful, but rare, marketing is an important one to have money available for.
It costs money to make money, as they say! Which is also why it’s so critical to make sure you have a good match between your offer and your market, otherwise your marketing spend will be a waste!
Factor #5: Relationship between capacity and workload
This factor is about how much time and resource you have for the amount of work you have to do.
Small businesses find two major problems:
- They either have insufficient sales (and too much time on their hands where they aren’t earning money); or
- They have too much work on to get the work they need to get done done for the present – and the future.
How you solve these two issues depends on your individual scenario. I don’t give advice on this without first getting a clear understanding on your specific situation. (If you need help with this, reach out.)
But understanding that you want to have a good balance between these two things is important to knowing how to address them to begin or continue to run profitably.
Three key takeaways to come away with from this post…
There are a number of factors that contribute to making good money (short and long term) in your business.
If you have:
- a good match between your offer(s) and your market (in a growing or at least not rapidly declining market) including getting your pricing right, so you turn the profit you want/need to stay in business
- capital available to do what you need to grow your business
- a good match of capacity to workload
- sufficient market share to meet your sales/income goals
… then you are giving yourself a good shot at success.
If you suspect that you have one or more of these out of kilter and that is affecting your business in either the short term, or risks the longer term sustainability of your business, address it as quickly as possible.
Got questions, or want help? Feel free to send me an email.
On Facebook? You can connect with me here.
Big love to you – and your successful business!
P.S. Want to receive new blog posts direct to your inbox? Fill in your details below.