4 Reasons Why Your Business Could Be Losing Money
You want to make a profit in your business, but there may be specific reasons why you are running at a loss each month instead. In some cases, the answer will be obvious – perhaps because you’re not making enough sales – but in other cases, the answer may be less obvious. Consider the following reasons for example.
Money Waster #1: Your overheads
These include your electricity and heating bills, as well as insurance, advertising, and administrative expenses. If you’re paying over the odds for each, you need to do something about them. You may have to do something practical. For example, LED lighting in offices can reduce costs, so replace any energy-consuming light bulbs. You should also unplug any items not in use to further conserve your energy-usage. Then use a price-comparison service to find a cheaper utility company, and do the same for anything you’re paying insurance on. If you’re spending too much money on your marketing costs, cut down, and focus on free ways to advertise your business, such as on social media or through your company website.
Money Waster #2: Your technology
Technology is great, but it could be costing you money. As we mentioned, leaving everything plugged in is going to hike up your electricity bill. You should also look out for any signs indicating that your tech may be outdated. If you are using older equipment, it may not be energy-star guaranteed (another reason why your bills are high), and it might also be affecting productivity by not functioning correctly. Replace your older stuff with something new. Yes, it will cost you money at the outset, but in the long term, you will reap the financial benefits of having something that actually functions as it should, while being energy-efficient to boot.
Money Waster #3: Your business-model
This is subjective, as there may be a number of reasons why your business model may be flawed. You may be targeting the wrong customers, for example, or you may be neglecting the threat of your nearest business rival. Go back to your business plan. Look at how you are conducting your business and look for any mistakes or weakness. Sit down with your team, and thrash out a SWOT Analysis to give you a better perspective on where things may be going wrong. If you need to, give your business an overhaul in key areas, and conduct research into other businesses to gain inspiration on how to better manage your business.
Money Waster #4: You!
How dare you, we hear you cry. As if you could be the reason why your business is losing money. You may not be, but if you are…not working as hard as you could be; being too hard or soft on your employees (affecting their productivity); or failing to balance your accounts effectively, you may be the reason why your profits aren’t what they should be. Focus on self-reflection, ask others for feedback, and sort out any issues that may be revolving around your business practices.
If any of the above are relevant to your business, now is the time to do something about them before more money is wasted. You will start to feel the financial benefits if you do.