4 Ways To Close The Revenue Gaps In Your Business
If you ask most entrepreneurs why they decided to start their business, you’ll likely get a whole host of answers that range from wanting to make an impact in the world, wanting more freedom and flexibility to be their own boss, and/or doing work they’re passionate about.
If you keep digging, you’ll likely get another answer: to make money.
If you dig a bit more, sadly, you’ll find that many entrepreneurs aren’t making the money in their businesses that they anticipated or that they want. If you’ve been on the revenue roller coaster or keep bumping up against a revenue ceiling you can’t seem to break, you know how frustrating that can be.
What’s at the root of this?
In my work with female founders, I’ve consistently come across four reasons why your business might not be making the money you want and how to address them.
Inadequate Financial Acumen
We’ve made a lot of progress when it comes to talking about money. It’s no longer taboo, at least in the business circles I run in, but talking about your numbers and understanding them are two completely different things.
I’ll be honest and say that increasing my financial acumen has been a focus area for me for the last few years. The more I dig in, the more fascinated I am by the numbers, something I couldn’t say before, but there’s something deeply empowering about being able to look at my financial reports and make sense of them. The more I learn, the more confident I feel, and as a result, the better decisions I make.
This confidence is important. According to Oberlo, SEMRush, and 99Firms, over two-thirds (66%) of small businesses significantly struggle financially, and this is compounded for female founders who still lack confidence (not ability) when it comes to financial literacy.
In fact, a report by The National Women's Business Council shows that only 25% of women business owners feel very confident in managing their business finances, compared to 43% of male business owners. (Source: National Women's Business Council, "10 Million Strong: The Tipping Point for Women's Entrepreneurship").
Increasing our financial acumen is essential to growing a strong and healthy business. It allows us to understand whether or not the business is in a good place, make strategic and thoughtful decisions before investing in new team members, professional development, or other resources we think we need, manage our cash flow (the lifeblood of the business), and ensure we’re able to pay ourselves a consistent salary.
Practical Ways To Close This Gap:
1. Educate yourself on the basics of financial management. This may mean taking a course on business finance or hiring a financial coach who can guide you through this. My financial coach has been an absolute game changer for me, and I can’t imagine where I would be without her.
2. Start looking at your numbers regularly. Schedule a monthly finance date, just like you do with CEO time, and see what you notice. How close are you to your revenue goal for the month? How are your expenses looking? What do you need to do to hit your goals? Baby steps forward will make a big difference and increase your profitability over time.
Poor Market Positioning Rooted in Not Being Clear on Purpose
I’ve spoken often about the importance of your big idea and really being clear about your unique value proposition, but many businesses struggle to make money because they don’t know where they stand on critical issues or in their own market.
In many cases, this problem is rooted in a lack of clarity around the purpose of the business. When you're not clear on your purpose, it's difficult to articulate the benefits of your services in a way that resonates deeply with your ideal clients.
Practical Ways To Close This Gap:
1. Revisiting your purpose and mission statement. Why did you start your business in the first place? What kind of impact do you want to make in the world?
2. Once you've clarified your big idea, spend some time looking at your marketing to ensure it speaks directly to your target audience. This may involve repositioning your products or services, revamping your marketing strategy, or refining your sales pitch.
Lack of a Strong Client Attraction System
Even if you have a strong connection to your big idea and a solid understanding of your finances, you may still struggle to make money if you don't have an effective client attraction system in place.
Consistently generating leads and converting them into paying customers is the lifeblood of your business. Without a steady stream of revenue, it's difficult to sustain and grow your business over time.
I’ve written often about the five phases of a client attraction system. Make sure you’re taking consistent action to move people through your system.
Practical Ways To Close This Gap:
1. Audit your client attraction system. See where your strengths and opportunities are and actively build a plan to amplify and/or close them!
2. Take consistent action. This may seem obvious, but most business owners get bored or give up before they actually see results. It takes 90 days to get real traction, so pick a path and stick with it!
Inefficient Operations
Inefficient operations or inadequate systems and processes can also contribute to the revenue rollercoaster. If you're spending too much time and too many resources on non-revenue-generating activities, you may be missing out on opportunities to grow your business. These inefficiencies also lead to higher expenses and lower profitability, making it difficult to achieve financial stability.
This section of the business can seem overwhelming, especially when you look at your tech stack, your process and system documentation, and hiring an effective and aligned team, but it doesn’t have to be.
Practical Ways To Close This Gap:
1. Do an operations audit. Take a hard look at what you want your business to do and how you want it to run, and then examine the gaps in your system. It may also be helpful to hire an Fractional Chief Operations Office to help you evaluate what’s working/not in your business and develop a strategy to move your business forward strategically.
2. Leverage tech and automations to tackle repetitive tasks and help streamline your back office. This can include, among many things, your onboarding and offboarding processes, some lead generation, and invoicing.
3. Outsource some of your non-core activities. As the leader of the company, you can’t possibly do everything. Hiring a VA and/or other staff members will greatly free up your time and allow you and the team to operate in your respective zones of genius.
As a business strategist, my goal is always to help business owners reduce the stress associated with running their business, so they can get back to the real reason they began this adventure in the first place. When you know how to leverage your business finances to make strategic decisions, understand the impact you’re trying to make and ensure everything in your business is aligned to it, have a client attraction system that actually works, and leverage tech and your team to make it all run smoothly, you can’t help but thrive.
Having a consistently profitable business doesn’t have to be a pipe dream. It starts with an honest assessment of what’s working and what isn’t, for you as the leader and within the guts of the business.
Which area can you tackle today?
FREE RESOURCES
10 Questions to Align Your Big Idea And Your Business Strategy
