Why Most Businesses Lose Money on Ads (And How to Fix It)

Most entrepreneurs treat ads like some kind of magic bullet—something that will instantly bring in leads, sales, and solve all their business problems.

Then they run ads… and realize they’re just losing money.

The truth? Ads aren’t the problem—your system is.

In this post, I’ll walk you through:
✅ The true purpose of ads (hint: it’s NOT to make money upfront)
✅ The three stages of offer validation before running ads
✅ How to stop burning cash and actually scale profitably

Let’s get into it.

The True Purpose of Ads

Ads don’t exist to magically turn cold traffic into customers overnight.

The real purpose of ads is to scale what’s already working.

If your offer isn’t already selling, ads won’t fix that. Instead, they’ll just amplify whatever’s broken—meaning you’ll lose money even faster.

This is why so many businesses fail with ads.

If your offer isn’t validated, ads won’t help.
If your sales page isn’t converting, ads won’t fix it.
If you don’t have a backend system, ads won’t make you profitable.

Ads are fuel—they don’t create fire, they just make an existing one burn bigger.

If you have no fire to begin with, all you’re doing is pouring gasoline on cold wood and hoping for the best.

The Big Mistakes People Make with Ads

Most people fail with ads because they run them at the wrong time or without a real strategy.

Here’s what that looks like:

❌ Running ads before the offer is validated.

You don’t even know if people want the product, but you’re throwing money at it anyway.

❌ Expecting ads to “fix” a bad funnel.

If you have a weak offer or a broken sales process, ads won’t suddenly make people buy.

❌ Not testing with cold traffic before scaling.

What works for your warm audience (email list, followers) won’t work for cold traffic unless you structure it correctly.

If you’ve made any of these mistakes, don’t worry—it’s fixable.

How to Know If You’re Ready to Run Ads

Before you even think about running ads, your offer must be validated.

Here’s the three-stage validation process I use:

✅ Step 1: Get Your First Sale

Your goal is one cold sale—just to prove the idea works.

If at least one person who doesn’t know you is willing to buy, that’s a good sign.

✅ Step 2: Get 10 Cold Sales

Ten separate people, who aren’t friends, family, or referrals, need to buy.

If 10 people buy with no personal connection to you, you’ve got a validated offer.

✅ Step 3: Sell 100 Units Organically

This is the final test before running ads.

You need at least 100 cold sales before scaling with ads.
If 100 strangers are willing to pay, you’re ready to pour fuel on the fire.

Most businesses skip these steps—which is why they lose money on ads.

If you can’t sell at least 100 units manually, running ads is just going to accelerate your losses.

The Smart Way to Test Offers Before Ads

So how do you validate your offer without wasting money on ads?

I use a spearfishing approach:

🎯 Find communities of your ideal buyers.
🎯 Post valuable insights that attract attention.
🎯 Get them to raise their hands (without spamming DMs).
🎯 Make sales directly from these conversations.

If you can sell 100 units using this method, you know your offer is strong enough for ads.

This process costs nothing and proves whether cold audiences will buy before you start spending money on traffic.

When to Start Running Ads

Once you’ve hit 100 cold sales, you can start testing ads.

At this point, ads will help you:

✅ Bring in more buyers at scale
✅ Break even or make a small profit upfront
✅ Feed your backend sales process (where the real money is made)

But here’s the key…

Ads alone won’t make you rich.

The real money comes from what happens AFTER the first sale.

How Ads Fit into the Bigger Picture

A well-structured growth system looks like this:

1️⃣ Ads attract cold buyers at cost (or small profit).
2️⃣ Those buyers move into a backend ascension system.
3️⃣ High-ticket sales drive the real profit.

This is exactly how I structure my ACCER model:

Attract → Use ads to get buyers at cost.
Capture → Ensure good average order value.
Convert → Upsell buyers into the next step.
Engage → Build trust and remove hesitations.
Refer → Get word-of-mouth sales.

Most people focus only on ads (Step 1) and forget the entire backend (Steps 3-5).

That’s why they lose money.

How to Avoid Wasting Money on Ads

If you don’t want to burn cash running ads too early, follow this process:

✅ Validate your offer with 1, 10, and 100 cold sales first.
✅ Test marketing messages with cold traffic before scaling.
✅ Ensure your backend system is set up to turn buyers into repeat clients.
✅ Run ads only when your numbers make sense.

A successful ad campaign isn’t just about ROAS (return on ad spend)—it’s about building a system that turns ad spend into long-term profit.

Final Thoughts: Ads Are Just One Piece of the Puzzle

Ads aren’t a magic bullet.

They’re a tool—one that can explode your business or drain your bank account depending on how you use them.

Before running ads, make sure:

🔹 Your offer is validated.
🔹 Your funnel works for cold traffic.
🔹 Your backend system maximizes lifetime value.

When you get this right, ads will scale what’s already working.

If you’re serious about scaling ads the right way, click below to access the full ACCER model training inside GM+.