At some point, your small business may become unprofitable. Maybe not overall, but during a month or a small period of time, you will most likely post a loss.
That can be a stressful situation for a small business owner. When your business is unprofitable, you have a decision to make: give up or proceed.
When your business is unprofitable, here is how you can proceed with confidence.
Believe In Your Business Investment
As your business grows, it will require more and more money to operate, but hopefully you will have some profits to invest.
You will most likely hit a crossroads where you will need to invest money into your business and take a loss in order to proceed. That is scary!
However, you need to make yourself okay with the fact that you will lose money for a short period of time in order to move forward. When I face this challenge, I often think to myself: one step backward in order to take two steps forward.
You need to believe in yourself and your business in order to make an investment in it. Investing in your business with confidence is crucial.
Hesitation Hurts Execution
Once you decide on a plan and feel confident in your strategy, don’t hesitate. Any hesitation on your part can hurt the execution of your plan. You can second-guess yourself and your plan all day, and all that leads to is delays — and, most likely, failure.
Make a plan, execute with confidence and iterate as needed.
Forecast and Monitor
Creating a forecast can help a business owner with doubts about their plan and the financial future of the business. A forecast can give you a glimpse into the future of your business — otherwise, you’re just making a plan and hoping for the best.
Your forecast should give you a snapshot of income, expenses and net income for several months down the road.
What if you go through this process and realize that the net income produced isn’t worth the required capital investment from you? Wouldn’t that be time well-spent? I would say that it absolutely would be a good use of your time.
Make Calculated Decisions
Good CEO’s use the information that their CFO’s provide to make calculated business decisions to move the business forward in the right direction. You should act like a good CEO.
The real key to moving an unprofitable business forward is to make a good plan, execute on it and monitor it closely.
You can monitor the results of your action plan before comparing your actual performance to your expectations. This is also known as a forecast vs. actual. If you notice things not going as planned, (Believe me — they rarely do!) you will have the opportunity to pivot and get back on track.