I talk with small business owners almost every day. When it comes to money talk, there are four common pain points they often share with me.
- They’re not making enough sales.
- Their small business is barely breaking even or it’s losing money.
- They’re not able to pay themselves enough.
- Their business expenses are too high.
They wonder if spending more on marketing would help, or if working harder or longer could make a difference. Some even consider the idea of giving up entirely and closing their business.
Perhaps you’re feeling the same, worried about money and wanting to know what to do next.
There’s an option you may haven’t thought about: finding and homing in on a niche for your business.
The narrower your focus and the more defined your niche, the easier it is to speak directly to a potential client.
Not making enough sales
If you’re not making enough sales, maybe your message is too vague. It’s been said that appealing to everyone can mean appealing to no one. And I think there’s some truth to this.
The narrower your focus and the more defined your niche, the easier it is to speak directly to a potential client.
Is your marketing speaking to a “when” instead of to a “who”? For instance, I help creative people organize their finances for success. But if they’re doing fine with their own system, they probably don’t need me. It’s only when they want to scale and realize they don’t have the structure or systems in place. That’s when my help becomes valuable.
Small business owners often make the mistake of thinking that speaking to one type of client means they can’t talk to or work with a broader set of clients. That’s not the case. It’s just that finding that juicy center of the potential client pool makes everything easier, when you know the niche you’re going after.
I’m not a marketing person. But from a financial perspective, the best reason to niche is to not just target your message — it’s to optimize your efforts and marketing dollars. It’s also easier to calculate the ROI (return on investment).
When you serve one type of niche or one type of client need, you’ll be able to see the common problems that come with that niche.
Business is barely breaking even
If you’re frequently in the red with out-of-control costs, the lack of automated and repeatable business systems could be making things worse. And, despite what you might think, a boost in sales could cause even more headaches.
When you serve one type of niche or one client need, you’ll be able to see the common problems that come with that niche. Common problems have common solutions, and you’ll be in front of them when you already know the pitfalls.
You’ll get better results with less effort by replicating processes that work and eliminating what doesn’t. With a niche, you’re able to provide a consistently good customer experience without having to create custom workflows.
Ask your “niche-mates” (those business owners already having a strong target market focus) what they found to be most effective.
Get creative and think about ways to cut expenses without losing quality; for example, could you:
- Start a resource pool?
- Use a tool you already have in an unexpected way?
- Put off purchases that aren’t immediately necessary and innovate solutions?
- Put your creative skills to work in a new way?
With a niche focus, you should find yourself spending less time on routine tasks. This can be a boost to your bottom line.
Not paying yourself enough
The “repeatability” of working with a niche can translate into efficiency. Not only are you able to spend less time figuring out how to best serve your niche, it’s easier to communicate information (internally and externally) more than sharing a random collection of if/then thoughts.
It’s also easier to see gaps in your products or services or places where things are falling through the cracks. With a niche focus, you should find yourself spending less time on routine tasks. This can be a bottom-line boost, and efficiency — combined with cost-cutting — should help you take home more money.
Expenses are too high
Many small business owners I know often try to do everything themselves. They’re either too busy or too proud to ask for help. Or they don’t want to spend money to get the resources and expertise they sorely need.
If your expenses are high, you could hire a financial expert to evaluate your expenses and recommend what you can cut. (This is something Moxie offers, by the way, via our Profit First consulting that helps business owners improve cash management.)
What expenses could be reduced or cut that could make a difference for your business? If you have software subscriptions, are you using them for every job — or just occasionally? If it’s the latter, is there another way to get the task done? Could you use a free version of the software or cut the expense altogether?
It’s also important to understand the difference between an expense and an investment. Every dollar you spend should bring real value to the business by making you more efficient, increasing your capacity, and keeping you doing the work that only your business can do.
With Profit First, we help business owners establish an expense framework with a set amount of money to allocate for each expense category.
Finally, make sure that the money you spend benefits your clients’ desires. A cool, new technology might be fun, but if it isn’t solving a problem your customers or your business has, it may not be worth the money.
How can you tell if your expenses are too high? Are you paying yourself enough (or too much)? With Profit First, we help business owners establish an expense framework with a set amount of money to allocate for each expense category. (If you’re curious, the categories are Owner’s Pay/Payroll, Operating Expenses, Taxes and Profit.) Allocating a set percentage to business expenses helps you see instantly if you’re spending too much.
If you’re interested in learning more about the Profit First system, start by downloading the first two chapters of the best-selling Profit First book.
Riches are in the niches
If the idea of a defining or tightening a niche is now more appealing to you, that’s great. Small businesses can bring in more sales with a niche-focused mindset. I’ve seen it happen!
More sales for your business will not just mean greater riches — more money to pay yourself or more money set aside for profit — you’ll find greater satisfaction in knowing and understanding your niche. This expertise will make a difference in how you feel about running your business. And my bet is, it’ll be a positive difference.