No two days are the same as a business owner and your profits can ebb and flow making for challenging and risky times. That element of excitement vs the predictability of a monthly salary is one of the reasons why people love working for themselves. However, there are also some strategies you can follow to build a sustainable and profitable business, helping to stop you from wondering whether you’ll be able to pay your mortgage next month!
Think of your business like building a house. If the foundations are weak, the whole building will crumble in years to come, and the same is true with your business. Following our 5 steps below will help build those foundations and lead you through some critical decisions to develop a profitable business.
1. Setting goals
It’s always useful to think about why you started your business in the first place. It’s called your ‘Reason Why’ and knowing this will get you through the tough times. It could be financial independence, changing the world, flexible working, or something completely different. It must have been stronger than the many reasons there are not to start a business in the first place and will be the thing which keeps you on track.
Ask yourself what inspired you to start your business and which tasks you love, or make you feel fulfilled. Then look at where you want to be in six months, a year or five years. Once you know the answers, put together a plan for how to get there and consider what actions you can take today to get started.
2. What makes you unique?
Business owners often wonder how they can stand out from the crowd and gain customers in a saturated market. The challenge is to offer something so valuable that people will pay your prices, without being the cheapest option. This could be via a specific niche, your brand personality or the offer you put together.
To help uncover your niche, research your market so you can answer the following questions:
What problem does your business solve?
How do you differ from your competitors?
Who are your dream customers?
How do you help them and what results do they see when buying from you?
When you know this, you can work out the unique offer which will make you the natural person customers turn to when they want their problem solving. Remember that niches are more than just products or services. They also cover specific sectors, customer service and your values.
To give an example of how niching really works, consider this. If you want someone to paint a mural on your bedroom wall, do you look for a painter who does everything or a painter who specialises in murals?
3. Marketing schmarketing
Marketing is often an afterthought for businesses but if you don’t put a plan together and allocate some time towards sharing what you do, how will your dream customers know you have the perfect solution to their problem in the first place?
It can sometimes be trial and error to find which method works best so, to get started, ask yourself:
How do I reach my customers?
What is my goal?
What is my budget?
What is my message?
How am I going to share my message?
Email newsletters and social media are an easy way to get started but make sure you know which social media platforms your customers use before investing time and effort on ones which will never work. Customer testimonials are always great for establishing trust and giving your business credibility. You could also offer referral discounts to turn your previous customers into advocates.
Content marketing will help drive new people to your website and has the added benefit that Google loves it when websites are updated regularly (which helps even more people see your business in their search results). Think about publishing regular blog posts, videos or podcasts which show expertise, build trust and are a great way for people to share your business.
4. Money, money, money
If you’re launching a new business, it’s important to know how much money you need to get started and, crucially, how much to operate for a few months so you don’t run out of cash before the sales start rolling in.
To build a profitable business, you’ll also need to keep revenue producing activities at the forefront of your plans. It can be a juggling act for solo business owners but, for example, if you’re a website designer and focus only on your current client without doing any marketing for the next one, you’ll have a time lag between contracts meaning a period of time without income.
Tactics which can help to increase sales include referral networks with other business owners, cross promotion of complementary businesses and discounting when products or services are purchased in higher quantities.
Gone are the 9-5 days! Running a business takes lots of commitment.
Starting or growing your business usually means long hours. Even when you’re not physically in the office, you’re likely to be preoccupied with something which has happened and if you need to learn a new skill or develop your knowledge, it’s likely to take place on evenings or weekends.
In the early days of your business, you may have no personal income until regular sales start flowing in. In tougher times, it could mean re-mortgaging your home or forgoing luxuries like holidays.
It also takes mental and physical energy and can put a strain on family relationships at home. Small or solo business owners are responsible for everything, from production through to marketing, sales, finances, and more.
The dedication needed to run a business comes back to the point we made earlier about understanding your reason why. Remembering this and committing to your vision and goals will help whenever you hit a stumbling block.
Regardless of your product or service, building a profitable business takes lots of planning and strategic thinking. However, with these tactics and a bit of hard work, you’ll be able to hit the ground running and reap the rewards later.