Have you just started your business and it’s not working as it should? You’re not the first business to have this happened. The first two years of life for companies are measured in terms of survival and adaptation. But, as with thousands of other SMEs, the solution can be found.
And for this we have prepared this article with the most common mistakes that are usually made when running a business and the main solutions to correct them. We hope you find it useful.
Why is my business not working?
Some of the most common mistakes when a business is not working are:
1. Not having a specific business model defined
For a business to work, it requires intense prior planning that clearly defines the basic principles on which it will be based. And for this, a business model is developed. Some of the questions you should ask yourself in relation to your company are:
- Do I correctly define the target audience I want to address?
- What differentiating factor can I offer?
- On which channels will my product be distributed or my service promoted?
- What are my sources of income?
- What resources do I need and what capacity do I have to obtain them within a given period?
- Which suppliers, collaborators, investors or partners can I count on?
- Do I have a correct cost structure defined and planned?
- Are my company’s short-, medium- and long-term objectives defined?
It is important to know how to answer these questions correctly, as they will serve as an initial guide to know where you want to go or what the root of the problem is.
And even more important is to know all the company’s expenses and adjust them to income. Liquidity is the engine of your company. And it’s the first thing you should keep in mind.
2. Not having a Communication Plan that suits my business needs
For a business to work, it is not enough to have a brilliant idea or have a product or service that can optimally cover a need. We must communicate and distribute our product or service correctly.
Attending to the previous point, once we know who our potential customer is, we should not stop there. We must also know their motivations, how they think and how they relate to each other. We should not presuppose or make assessments based on personal opinions.
For example, one of the ideal customers at Ibercenter are entrepreneurs. You may think that entrepreneurial people are mostly young, false. According to the latest report by the RED GEM Spain Entrepreneurship Observatory, the average age of entrepreneurs in the initial phase is 40 years old.
Studying and researching which are the best ways or channels to reach and connect with our audience is key to the success of our business.
Therefore, we must define the main communication routes and discard those that do not generate any relevant activity.
Planning this phase will be key to focus in one direction and not waste resources on actions that do not generate any return on investment.
3. Not measuring or tracking our business actions
Measurement is key to being able to know to what extent our actions are meeting the objectives we have set ourselves. It will allow us to validate which actions are working, which ones to discard. Likewise, it will allow us to learn from our mistakes and optimize resources.
4. Not having a Contingency Plan
When we have knowledge about the terrain in which our business is developed, we can anticipate the possible scenarios that may arise.
Raising and researching what the possible contingencies are is key to being able to draw up an action plan and respond in case difficulties arise in a company. This way we can prevent a snowball from being generated that can finally be uncontainable.
5. Lack of motivation and perspective
Lack of motivation can arise at times when we are not getting the expected results or we are stuck. We can start a project with a lot of strength and optimism, but let’s remember that it requires time and perseverance to achieve the expected results.
Lack of motivation can be as harmful to our activity as any other external factor, since it will make us deviate from our roadmap and lose our business perspective.
What to do when my business is not working?
1. Identify what the problems are
Knowing our business well or having developed a constant measurement of our actions will allow us to identify which are the points that we must work on or change.
In order to solve a problem, we must first identify it. A formula that we can apply is by analyzing it from the 4P’s:
- Is it the product that’s failing?
- Is the pricing structure correct?
- Am I using the right points of sale?
- Is the promotion correctly focused?
2. Prioritize and focus on what’s important
In times of uncertainty, we can act impulsively out of desperation and lose perspective on those aspects on which we should focus.
This is a decisive moment and we must not waste strength on what does not work. It is time to act decisively and focus the effort on the point of conflict.
3. Stating the magnitude of the problem
We must ask ourselves what kind of problem we are facing:
- Is it a problem of a stationary nature?
- Is it a circumstantial obstacle or is it permanent?
- Do we need to reinvent ourselves or is it better to close and start from scratch?
Asking ourselves these questions will allow us to attack the weakest areas.
4. Optimize resources
Make a list of available resources and prioritize those that are essential for our activity. Rationalize and value those that are not ultimately bringing us the greatest benefit.
5. Redefine cost structure
Review the accounting. What are the fixed expenses and current expenses in recent months to assess a redefinition of our capital.
We must detect possible unnecessary costs and unjustified cost overruns to discern whether we are investing in the resources that provide more value and greater benefits. This will also help us to determine if we have made correct use of financial resources.
6. Redefine revenue streams
Another point we must consider is whether we have correctly distributed and prioritized the sources of income. If we have opted for certain products or services with the expectation that they would generate more income than others and in the end the expected result has not been obtained.
Tracking our actions allows us to detect the points that work best and gives us a certain margin to be able to modify our strategies if necessary.
7. Renew business vision and mission
In the event that we are clear that we want to renew the business, we also have to renew the mission and vision.
Sometimes, despite being clear about our mission, it can lose relevance when the environment has changed or as the business grows and evolves. It is time to ask ourselves certain fundamental questions again.
Was our article helpful? Leave it in the comments and we will gladly answer your questions.
