Ask any small business owner how things are going, and chances are that the answer will come back something like, “Oh man, we’re slammed.”
And it’s probably going to be said with a tired smile, a half-empty coffee cup in hand, and a to-do list that’s longer than a CVS receipt.
Here’s the uncomfortable question, though. Slammed doing what, exactly?
Because here’s the thing nobody really wants to admit out loud: being busy and being profitable are not the same thing. Not even close.
And there are plenty of small businesses that are running at a hundred miles an hour and are still not making any real money at the end of the month. The hustle feels productive and the calendar certainly looks impressive…and yet somehow the bank account isn’t telling the same story.
Let’s talk about why that happens, and more importantly, what to do about it.
Busy Is Not a Strategy
Somewhere along the line, the word “busy” became an honored title. Business owners proudly boast of how busy they are. Employees compete to see which one can work the most hours. It’s as if everyone in business agrees that working long hours and forgoing lunch is evidence that there must be some productive activity occurring!
But here’s the reality: the word “busy” is essentially meaningless. A hamster running on a wheel is busy. A puppy chasing its tail is busy. Neither will generate wealth across generations.
Generational wealth is created by accomplishing the right things repeatedly…not simply accomplishing more things.
What Profitability Actually Looks Like Day to Day
A company’s profit is made from hundreds of day-to-day choices each and every week. And a profitable small business will have the following: their costs clearly identified, pricing that reflects the value they deliver, time that is productively focused to help grow their business, and having an effective measurement process to determine if everything is working.
When you can have each of those for your business as well, profitability won’t be by chance. It’ll simply come naturally with good management.
Profitability ultimately comes down to the following two principles:
- The cost of doing business is fully defined. Not only does this provide clarity around what it takes to run the business, but it also allows owners like yourself to make informed decisions when evaluating new opportunities.
- 2. Price is based upon the perceived value that is provided to the client/customer. This is different from setting prices based solely on competition.
The Patterns That Keep Owners Busy but Not Growing
Now for the slightly painful part. There are a handful of patterns that tend to trap small business owners in the busy-but-not-profitable zone.
They’re sneaky, but only because they often feel like productive work at the moment.
Doing Everything Personally
When the owner is the salesperson, the bookkeeper, the marketer, the customer service rep, the website manager, and the person who orders the office coffee, growth grinds to a halt.
There are only so many hours in a day, and the business can’t scale beyond what one tired human can handle.
Chasing Every Customer Instead of the Right Ones
Not every customer is a good customer. Some pay slowly, some require five times the support, and some negotiate every invoice down to the bone.
Saying yes to all of them may keep the calendar full, but it’ll quietly drag margins through the mud.
Skipping the Numbers
A lot of small business owners run their businesses on gut feel. That works for a while, but eventually the gut feeling is going to run into reality.
When you’re not actually tracking what’s making money and what isn’t, decisions are going to get made by you and by other people based on hunches instead of facts.
Tool Overload
Here’s a fun one. Many small businesses end up with one tool for scheduling, another for invoicing, another for email marketing, another for customer records, and a spreadsheet (or three spreadsheets for that matter) duct-taping it all together.
Each tool feels helpful on its own, sure, but the constant tab-switching, double-entry, and missed updates are going to eat up hours every week.
How to Shift From Activity to Actual Results
There’s good news. Breaking out of the busy trap doesn’t require some massive overhaul.
Instead, it usually starts with a few intentional shifts.
Get Clear on What Actually Drives Revenue
Look closely at the following:
- Which of your services and products are creating the greatest profit margin for you?
- Who is your most profitable customer base to target?
- Which of your marketing efforts are creating real lead generation (as opposed to merely providing an outlet for social media posting)?
When you have that type of clarity around what’s working for you, it makes it a whole lot easier to focus on the high-value work so you can move quietly out of the low-value areas.
Build Systems for the Repetitive Stuff
If you are spending a lot of time repeatedly performing tasks in your business (such as appointment reminders to customers, follow-up emails to customers, sending invoices to clients, etc.), you should know that you could probably be automating those tasks.
And the more time you can save by automating repetitive tasks, the better you will be able to spend that time developing client relationships, closing sales, and creating new opportunities for growth.
Track What Matters
A business owner doesn’t need to become a data scientist. But knowing a few key numbers (like average customer value, repeat customer rate, conversion rate from leads, and monthly recurring revenue) will make a world of difference.
That’s because these numbers tell the truth about what’s working and about what isn’t.
Make Decisions Based on Data, Not Drama
Every small business has its own version of “the loudest fire wins.” In other words, whatever feels most urgent gets the attention, even when something less urgent is actually more important.
Looking at the data regularly, however, will help cut through the noise and focus on what’s actually moving the needle.
Better Systems Equal Better Profit
Many small businesses overlook this relationship. Better systems positively affect how much you profit from your customers, which is a whole lot more than just making your day-to-day work easier.
Having all of the information about your customers together will help to make sure that no one misses an opportunity for follow-ups and it also increases the chance of returning business.
Using automated marketing tools also makes it very easy to nurture those who have expressed interest (leads) with emails or other communications without needing to be reminded. Having access to data on the success of the efforts of both your team and company is exactly what will allow them to make smarter and more informed decisions.
How Townsquare Interactive Helps Small Businesses Turn Effort Into Results
When you have all your pieces of a puzzle (i.e. customer contact management, automated communication, tracking marketing, seeing what works, etc.) in one spot, it’s much easier for small business owners to run their businesses without having to worry about how many different pieces they need to put together.
This partnership will also extend beyond the technology itself. Townsquare does not offer long term agreements and our customers never experience an empty support ticket queue. Each and every customer has access to a dedicated specialist who knows their business and their goals.
We also allow people like you to spend more time running their business and less time trying to figure out the next piece of software. This gives you better information and also a better way of doing things, as well as the ability to scale so that “we’re slammed” can become “we’re growing.”