When your project isn’t making money

It might be that you’re losing money on every sale

(Which means that each and every item you sell, every service you perform, costs you money. Bigger won’t make you better…)

  • Because you’re not charging enough.

(Low price is the last refuge of leadership that doesn’t have the guts to make a great product and tell a true story to the right people)

  • Because you’re selling to the wrong people…Choose your customers, choose your future.

(Some customers want to pay more than others, and some customers want to get more—of something—than others)

  • Because it costs you too much to make what you sell.

(Your factory processes may be unsophisticated)

Are you aware of work in process, cash flow and cycle times? Are you doing custom work in a batch business, or vice versa?

  • Your supply chain may be undeveloped.

What are you outsourcing? Is the time and money you spend on every step rewarded by the customer you serve?

  • Your people might not be motivated or trained to be efficient.

(Because people do what they want, and they respond to training and respect and opportunity)

  • Your debt service might be too high

(And that’s a hard one to fix)

  • Your competition might do the work in a totally different way, one that you can’t compete with unless you change significantly.

(Systems thinking matters)

It might be that your costs of acquiring a new customer are more than that customer is worth

(Because your marketing message is incorrect)

Because there’s a mismatch between your story and the worldview of those you seek to serve.

Because the people you seek to serve don’t think they need you.

Because it costs too much to tell these people you exist.

Because the people you seek to serve don’t trust you.

Because you’re lying when you make promises.

Because you’re overspending or underspending on marketing.

(often, it’s the underspenders that are in real trouble)

Because you’re focusing on the wrong channels to tell your story.

(just because social media is fun to talk about doesn’t mean it works)

Because you don’t have a connection ratchet, a business that leads to a network effect, where success begets more success because the more people use you, the more they want their friends and colleagues to use you as well.

Because your product isn’t sufficiently developed.

Because the people you seek to serve don’t talk about you, thus, you’re not remarkable.

Or the people you seek to serve don’t like to talk about anyone, and your efforts to be remarkable are wasted.

Because your product doesn’t earn traction with your customers, they wouldn’t miss you if you were gone–the substitutes are easy.

Because even though you’re trying hard, you’re being selfish, focusing on your needs instead of having empathy for those you seek to serve.

It might be that your scale is wrong

You may have created an organization that’s profitable at a much bigger (or smaller size) but the mismatch between your overhead (all that rent, all those people, all of those services you pay for) and your total sales is way off.

It’s smarter than ever to be very small–but occasionally, there are significant rewards for being the efficient giant.

It’s rare that being in the middle is the Goldilocks happy medium you were hoping for.

That’s it, that might be all of it.


Either your marginal costs are too high compared to your price, or the fixed price of marketing is too high, or your overhead is too high (meaning your sales are too low for the size of your organization).

Within those three areas, there are many sub-riffs:

It might be that you’re too early to the market.

There are early adopters, certainly, but maybe not enough, or not willing to pay your price…

Being too early also means that your costs are higher and your forward motion is slower.

And it might be that you’re too late.

Which means that the people who were interested, interesting and willing to pay extra already have their needs met, and all you’re left with is bottom-fishing, bargain-hunting late adopters.

It might be that you’re slow moving when those you seek to serve want speedWhat you make isn’t usually as important as how it makes your customers feel.

You might not be focused enough on a specific segment of the marketplace, a place where you can cross the chasm and reach the customers who are waiting for a tested and proven option.

It’s possible you say ‘yes’ when you should frequently be saying ‘no’.

You may have a staffing problem, with senior people doing their job instead of working on the mission of solving interesting problems and scaling up their tactics.

It’s likely that you’re being reactive, doing what the market tells you instead of bending the market in the direction you want it to go

(But, it’s almost as likely that you’re spending too much time and energy bending the market in a way it’s not eager to bend, and if you spent more time fitting into the slot that’s being offered, you could generate the traction you’re looking for.)

A lot of this is called “marketing” but too often, when faced with problems like these, we end up spending time shouting, hyping and cutting promotional corners instead of doing the hard work of understanding what we make, how we make it and who we make it for.

I know this is a long list. But the good news is that once you find what’s broken, you can fix it.

       


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