Top 3 Business Growing Pains (And How to Overcome Them)
Growing your business is every entrepreneur’s dream and oftentimes we talk about the successes, but not the hurdles that we overcome to get there. These hurdles are what we call growing pains. Many clients come to me with three top issues in their business when they're trying to grow and scale out of the startup phase. I want to go over those three and also give you some solutions for those three things as well.
1 - Burnout
The first growing pain that I commonly see is burnout. Burnout can be physical, mental, or emotional, and usually, it's a result of doing everything yourself. So, being the one-woman show in your business, you're just trying to do all the things, you're wearing all the hats, and eventually, it just gets very stressful and overwhelming. Oftentimes (and I say this from experience) we check out and we just say, “You know what, we're just going to forget it all.” We're just going to close up shop and just not worry about anything because it is so, so overwhelming. I see that a lot, especially with female entrepreneurs and moms. We're trying to juggle all the different tasks between personal life and business while working from home also contributes to this burnout. I'll give you some solutions here at the end for these as well.
2 - Cash Flow Management
The second growing pain that I see a lot is a result of poor cash flow management. If you have poor cash flow in your business, it simply means that the money has run out before the end of the month. So, you don't have enough money every month to pay your bills. Either your expenses are higher or you're pulling more money personally out of your business than what you are bringing in. This is usually due to not managing your finances on an up-to-date basis or maybe you are managing them.
Maybe you are tracking your income and expenses on QuickBooks Online or in a spreadsheet. You're doing those things properly, but you're not looking at the correct report. Maybe you're only looking at your profit and loss statement and maybe it's even showing that you have a profit at the end of the month. But then you look at your bank account and it's in the negative or there are only a few dollars left at the end of the month. So, your profit and loss statement doesn't match your bank account and the reason for that is your bank account also has something to do with cash flow. So with poor cash flow, that usually means you're spending more out of your business than what you're bringing in and not paying attention to that Cash Flow Report so you're only paying attention to profit.
3 - Underpricing Goods & Services
The third growing pain is underpricing your services or your products. Simply put it's just pricing below what's needed for business expenses. This is often a result of not having your finances in order so that you know what is actually taking to maintain your business every single month. You know what your expenses are, and how much you have to make to break even, therefore you can work on your pricing. I'm seeing a lot of people out there who have just thrown a dart at their pricing in the sense that they’re just guessing a number or even using their competitor’s pricing, but not really taking into account what their expenses are. So that's super, super important when you are pricing your services.
Those are your three top three growing pains that I commonly see and discuss when speaking to clients about their business. Again, the first one is burnout, then you have poor cash flow and underpricing.
Solutions
So with the solutions for burnout, remember I told you that this means you're doing all the things, you're wearing all the hats and you're trying to be everything to everybody all the time. Honestly, even in your personal lives, it's challenging to manage, and you'll hit burnout even on the personal side, whereas on the business side, it gets just worse.
So you add to all the business aspects, you’ve got marketing, finance, trying to find your clients with social media lead generation, you're trying to make your products or make your services and it's just too much and burnout happens. My recommendation for you with burnout is to delegate things that you aren't really familiar with. Things that you don't have time for are things that you just really don't like to do. So, write a list. I had a coach tell me that for a whole week start at the very beginning of your day and write down everything that you do and put a time stamp on it and then at the end of the week, look over what you did and see what things you could have outsourced. Could I have hired a VA to do it for me? Hire an ad manager to do for me? Hire a bookkeeper to do your finances? Look at those things that are just taking a big chunk of your time and outsource those items so you focus on the parts of the business that only you can do, right? There's only one of you and what can you do or what do you have to do in your business? That's where I recommend that you focus. What do YOU have to do in your business? Everything else can be outsourced.
I know outsourcing takes money, I get that. That's part of number two with cash flow is finding those moments that you can actually give the money that you can use to outsource so that you can continue to grow your business. With burnout, I want you to really step into the CEO role of your company and be the person that has to do what only you can do and then outsource everything else. The solution to poor cash flow number one is to keep your finances caught up to date. And when I say up to date, I don’t mean that we're in 2022 now, so I'm going to have everything done through 2021 and my taxes are completed. That's not what I'm talking about. When you're in business for yourself you should have your finances up to date at least until the prior month. If at all possible, I’d really like you to have them done every week but AT LEAST the prior month. So this July, you should know what happened in your business through June of the same year.
Number one, get your finances up to date. Once that is done, you can actually use QuickBooks Online, you can use a bookkeeper to help you with this, or you can use our Calculated Tax Planner - this is a good option for you as well. Whatever you use, make sure they are up to date. The second step to this is to review and analyze the data that is coming out of those reports. It's not just good enough to say check the box, I did my books for the month, right? You have to review them, look at them and read the story that it is telling you. I've done videos and blogs on this before about how to read a profit and loss statement and what those things should show you when you are looking at your profit and loss statement. Those numbers should jump off the page showing you where you can cut expenses in your business, or where you possibly have money to spend on things to help with the burnout, i.e delegation.
So look at your profit and loss statement. That's the number one report I want you to look at. Number two is your cash flow statement. Super, super, super important and so many people do not look at it. I actually find that most bookkeepers don't even talk about it. But guys, you can make a profit in your business and still not have money in the bank at the end of the month because your cash flow is out of whack. Okay, so analyze your cash flow statement. Figure out where's money coming from or going into your business. Where is it coming from? What type of services is it coming in from and where is it going? On a cash flow statement where your money is going could mean that you are getting your nails done every week or getting your hair done all the time, or you have a very expensive automobile payment that you're paying out of your business. Or maybe it just takes that much out of your business to pay your personal expenses. None of those things are going to show on that profit and loss statement, but they will show on your cash flow statement. That's what matters as far as running your business and making sure your bills are able to be paid. Also on your cash flow statement - If you are invoicing your clients and they're not paying, those things are going to show up there so you can see how much people owe you. That will enable you to start collecting on some of these invoices to increase your cash flow.
Number three is a solution for underpricing. Once you get your finances up to date, then you're able to know what your costs are. What are your fixed costs, those are going to be items that will not change ever, every single month, right? You're in a lease. Well, the lease payment is X number of years, that's a fixed cost. You have utilities, normally those are roughly fixed. You could always turn your air up or down or manage different things of that nature, but for the most part, those are going to be fixed costs as well.
You're also going to know your variable costs. Those costs are going to be if you have assistance, if you have payroll if you are in a restaurant, you have the cost of goods. If you're buying templates for your business, those are variable costs, not things that you have to have, not the bare minimum, right. So once you know what your costs are, because your finances are up to date, then you know what your break-even point is. And then you can back into your pricing structure. So again, remember it's kind of like the old story of putting the cart before the horse. If you've set your pricing before you know what your costs are, you're likely not going to price on the right scale. So you really need to know what your costs are before you start your pricing structure so that you know what it's actually going to cost you before you charge your client. The idea is to make money, so you need to make a profit on these items. Once you are able to know these fixed costs, then you can make the changes that are needed for your pricing.
I know that many, many, many people right now in the service industry, especially, are experiencing these growing pains. Don't be ashamed of this, talk about it! I encourage that so that we all have financial clarity around our business and so many times we talk about the positive things, we talk about the success, but we forget to talk about the hurdles. Then when other businesses, other entrepreneurs, or even your children when they're coming through later in life. They need to see the obstacles that you've had in your business if they become entrepreneurs themselves. As a mom, that's, of course, my dream for my children is to become entrepreneurs. I want them to see my struggle so that they can see when they become entrepreneurs, that it's okay, that it's not always been perfect and that life is not perfect, and neither is business. We all go through growing pains during different phases of our business. It's something that we just have to keep reevaluating!
