1. Inability to reach desired sales goals.
If you are not making the kind of sales that you need, your losses multiply as you find it difficult to meet your fixed costs requirements, such as payment for your inventory and overhead..
What to do: While you may not have sold anything before, now is the time to get your chin up and learn those selling techniques. You simply have no choice: don’t sell and you may be forced to close the business.
One strategy you can also use when sales (and profits) are low is to cut prices. This could attract customers, helps cover your costs, and buys time until your business rebounds. A price cut can also boost sales quickly, especially when there is no money for advertising or other promotions.
However, the downside of this strategy is that you may find it difficult to increase your prices back to its original level. Consumers may even peg you into the “cheap” category, thus putting your hard-earned image at risk.
2. Wallet is not big enough.
You gather all the resources you can to start a business you withdrew all your life savings, borrowed money from your parents, even “maxed-out” your credit cards. When you open for business, alas, you find that customers and sales can be pretty elusive. You wait, and wait, and wait, but cash is running out. Without money coming in, you decide to cut your losses and close down the business.
What to do: The first step to addressing the problem is to review how you performed against your business plan. Did you spend beyond your planned expenditures? More often than not, your problem lies in a genuine misguided and unrealistic expectation of finance.
Try to explore other avenues of financing your business, even opening yourself to accept equity financing where you will be required to sell an ownership interest in the business in exchange for capital. Your choices may be to build the business yourself and push it to success, then later sell your interests for a fair profit; or be repeatedly frustrated in attempts at financing a business that cannot achieve its potential because of insufficient capital.
3. Product has no sizzle.
Your success depends on whether you provide products or services with value to your customers. Many small business entrepreneurs fail to effectively communicate to their customers the benefits of their products or services. This is particularly true of many home-based Internet entrepreneurs, who have been misled to believe the myth that “if you build it, they will come.”
What to do: The acceptance of your products will depend on how well you are able to represent your business in the minds of your customers. If you know that you offer good quality products or services with value, the next step should be to get that information across your target market. Generate customer interest in the product through advertising and promotions.