Most often the prices don't cover the real costs, a few costs have crept up without anyone watching them, or money you're owed is sitting in someone else's bank. Busy isn't the same as profitable.
The phone rings, the diary's full, you're working every hour you've got. And still, at the end of the month, there's not much left. If that sounds like you, you're not doing anything wrong by working hard. The money is just leaking out somewhere you can't see yet.
How can a busy business still be short of money?
Picture a café that's full every lunchtime. The owner thinks each sandwich makes a decent profit. Then we add up everything that sandwich really costs: the bread and fillings, the packaging, the card fees, the food that gets thrown away, and an hourly wage for her own time. Suddenly the best seller is barely paying its way. More customers would just mean more work for the same money.
Do your prices cover everything?
Pick your best-selling product or service. Add up every cost of delivering it once, including your own time at a fair hourly rate. If the price doesn't cover all of that with something left over, it's time to look at your prices.
Which costs have crept up?
Costs rarely jump. They creep. A subscription here, a supplier price rise there, an insurance renewal nobody checked. Put this month's bills next to the same month last year and circle anything that's gone up by a lot.
Who owes you money right now?
Unpaid invoices are your money sitting in someone else's account. Make a list of who owes you and since when. A friendly reminder to the oldest one today can make a real difference to this month.
What is your best seller really worth?
The thing you sell the most isn't always the thing that makes you the most. Work out what's left over from each of your top three sellers after their costs. You may want to push a different one.
Where should you start?
Start with real figures, not a feeling. That's why our Business Health Check shows you how your business is doing in real money, not percentages. You can also take our free checklist, Where is your money going? It's ten quick checks, and it takes about ten minutes.
Questions owners ask
Should I just raise my prices?
Not before you know your real costs. Once you do, a small, clear price rise on the right products often fixes more than working longer hours.
Do I need an accountant for this?
Your accountant is great for tax and year-end. These checks are about the day-to-day, and most owners can start them with last month's bank statement.
Want a hand with this?
Book a free 30-minute chat. No rush, no jargon, no sales push.
Don Miller runs Melior Studio in Leicester, helping small businesses anywhere get found, earn more and work less.