Will Increasing Sales Really Solve Your Problem?

Cash crunch. Tough times. Slow sales. So you do anything and everything you can think of to bring in more customers. But is that really going to solve the problem? Short term, sure. And I know it’s hard to think long term when you’re stressing out about paying the bills! There are some other factors to consider though, and it’s worth thinking about before you take drastic action to bring in more sales this month. Because believe me, short term gain can bring long term pain if you’re not being strategic with your business. Use the following checklist next time your business hits a lull in sales:

  • Are you operating within your margins? If you don’t have a solid system in place keeping your overhead low and ensuring a decent profit from each transaction, you’re not going to be profitable no matter how many sales you bring in. Seems simple, yet a lot of businesses fail here. I know of cafe that used Groupon to bring in new customers, but the deal they offered was too good–almost bankrupting the business.
  • Is your product or service truly awesome? Be honest about this. If you’re selling sub-par stuff, people might come by for a big sale or special event, but they won’t stick around, they won’t come back, and they won’t recommend you to their friends.
  • Are your employees happy? If your staff is stressed out, miserable, bored, or they feel unappreciated, your bottom line will suffer. Of course, I believe in treating employees well because it’s the right thing to do (and it feels good to go above and beyond to make my staff happy!) but in a very practical sense, unhappy employees cost you money, big time. They won’t be as efficient or engaged, they won’t deliver great customer service – potentially alienating customers, and you could have employees stealing from you because they don’t feel any sense of loyalty. Plus, it costs a lot to hire and train new employees, so you’re much better off making an investment in your staff to keep them happily employed with you.
  • Are you selling the wrong product or service for your market? I was very careful in choosing a product that would be popular in my market – my current business specializes in fruit smoothies, which goes over well in my area because of the dry desert heat. People are always looking for refreshment during the hot summer months! If I was in a cooler, wetter climate I don’t think I would be doing as well. If you didn’t do enough market research before you started your business, and your sales are down, take some time to research now. If you need to switch gears, it’s better to find out sooner than later.

 

18 Responses to Will Increasing Sales Really Solve Your Problem?
  1. marquita herald
    July 22, 2011 | 6:57 pm

    You’ve really listed some heavy questions here Natalie – sometimes I wonder how truly objective we can be (especially once desparation moves in) about how awesome our product(s) are. It’s one thing if the issues are clear and glaring, but sometimes I really think what’s needed is a fresh eye – a consultant or maybe what’s needed is to just bite the bullet and invest in some serious customer surveys … but only if they’re prepared to really listen.

    • admin
      July 22, 2011 | 10:19 pm

      Excellent point, Marquita – sometimes a little perspective from an outsider can go a long way. But sometimes we just know when we’ve created something that isn’t truly stellar: we haven’t put our heart into it, we slapped it together quickly, or we just don’t believe in it all that much. Maybe we were just looking to make a quick buck, or we jumped on a bandwagon. Whatever the reason, it’s obvious we didn’t hit a home run. The hard (but necessary) thing to do is not judge ourselves, but learn from the experience.

      • Yanni
        July 23, 2011 | 5:40 pm

        Indeed.
        In the face of failure, or just lack of success, it may be both difficult to listen and incorporate criticism from others, without being negatively reactive. Or accept the gut feeling that things haven’t resulted exactly the way one would like, without trying to first justify with an excuse or passing it off as an uncontrolled circumstance.

        As you said above, “…but learn from the experience,” must be first and foremost in reviewing both good and bad outcomes.

        Yet we can’t forgot one of your earlier posts involving goals and appropriate measures. Is $$ the only measure? If so, it’s not a very flexible one and does not calculate aspects of business ethics nor personal interaction).

  2. admin
    July 23, 2011 | 6:20 pm

    Thank you Yanni. You’re right, I definitely don’t see money as the only measure of success! Rather, it can be a trigger for those who aren’t measuring success on multiple bottom lines, to see how they can be operating from a more holistic place.

    My advice here is for those who are panicking, feeling stressed about mounting bills and slow sales. My hope is that people recognize simple solutions like massive discounts could do more harm than good in the long run.

    • Yanni
      July 23, 2011 | 10:22 pm

      Ah, yes.
      The common dilemma: short-term gain vs. long-term stability. Seems to apply similarly to business, health, and relationships.
      Well-written, Nat.

      • admin
        July 25, 2011 | 4:10 pm

        Too true! :)

  3. Dr. Bob Clarke
    July 24, 2011 | 6:46 pm

    Hey Natalie, you’ve made some great points here.

    The one that really resonates with me is about being within your profit margins.

    I know someone who, so anxious to bring in more business that they offered private coaching at a ridiculously low price. The result?

    He got the business alright. But he spend so much time coaching that he didn’t have time for anything else, and almost bankrupted his business.

    Good stuff, Natalie!

    • admin
      July 25, 2011 | 5:36 pm

      Thank you Bob – it’s painful to watch people make those mistakes, isn’t it? Competing on price isn’t the best strategy for most businesses, unless you’re WalMart! Charge what you (or your products) are worth, and deliver great value. Everyone wins!

  4. Hi Natalie,

    All the things you mentioned should be considered as part of long term structure for a business. It should be noted that large business start ups think in terms of five years before breaking even. If you have to make enough to live on right away, I think it would be better to start part time and keep your day job.

    Lou

    • admin
      July 25, 2011 | 4:13 pm

      Great point Lou. My intention with this post is to help people who maybe weren’t thinking strategically in the first place, who are panicking and need to take a step back and rethink. Better late than never!

      And you’re right, starting part-time is a great option, and can help avoid the short-term reactive thinking that gets businesses into trouble.

  5. Jayne Kopp
    July 25, 2011 | 10:31 pm

    Hi Natalie, yes desperation can cause a person to leave out the ‘thinking things through’ part.

    I do believe that market research to determine demand is a must do in every business, online or offline.

    In a Brick and Mortar business, your staff is your best asset, so you absolutely must keep them happy. (my opinion from experience)

    Regarding Groupon, (and similar) this is not the first time I have heard of people ‘giving’ so much away it is damaging.

    Even online, I get emails every week for people asking for help. Since I am a coach and quite busy ) with it, I can only help out so much (naturally),but I have to keep in mind the value of my time so as not to water down my efforts just to keep the kettle boiling so to speak.

    Good advice. I can imagine smoothies should be great in Kamloops… that is of course unless you have had a cold and rainy summer as we have.

    Best

    Jayne

    • admin
      July 26, 2011 | 9:36 am

      Thank you, Jayne. I can appreciate the challenges of being a coach, as I offer business coaching services myself. Valuing your time is key!

  6. Ankesh Kothari
    July 27, 2011 | 2:06 am

    Hi Natalie;
    Your point about operating within one’s margin was well taken. Not only are the large discounts not sustainable but over time they reduce the apparent value of your product/brand as well.
    Although I think short term sales, that last only a day or even only a few hours, can be a effective mean of increasing sale without exceeding the margin. Think of them like a practical application of intermittent reinforcement psychology. :)

    • admin
      July 28, 2011 | 11:53 am

      Hi Ankesh – you’re right, sales do have their place! As long as they aren’t done from a place of desperation… and I like your comment about the danger of devaluing your product/brand. So true…

  7. Rowena Bolo
    July 29, 2011 | 2:25 am

    Hi Natalie,

    I am honoured to know you. I read your About Page and it’s really impressive! I am in awe to learn that you started being an entrepreneur at age 19 :-) And when I saw the various activities and projects you currently are a part of, I am even more impressed..

    Now, I am sure people will be listening to all the tips you shared here, as you have built successful businesses yourself.

    You pointed out a very interesting case study for Groupon. I completely agree too on how you focused about products and employees.

    I know that I’ll be back here often. I am so excited about your new book too. All the best, Natalie.

    - Rowena

    • admin
      July 30, 2011 | 1:18 pm

      Thank you very much Rowena! It’s great to have you here :)

  8. Marcus Baker
    August 3, 2011 | 5:27 am

    Hi Natalie,

    The questions you list definitely pose a reality check for any entrepreneur Natalie and that’s exactly what’s necessary. There’s no point in buying into some illusion when it comes to business or we are just wasting time.

    I always find it incredible when quite large businesses go broke and then say that they had no idea this was happening. How could this ever possible? One has to continually be asking questions about the health of one’s business.

    ~Marcus

    • admin
      August 3, 2011 | 7:16 pm

      Absolutely, Marcus – it can be so easy (and very dangerous) to get complacent and stop questioning our strategies… or to have no strategy at all!

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