Many small businesses have trouble making and maintaining profit. There are several things that can eat into your income without you realizing it. It is important to keep an eye on your business so that you can quickly identify why your small business is losing money. The faster you track down the areas where you are leaking from, the better for you since you would able to take the necessary steps to solving the problem.
Businesses could lose money due to various reasons which are also unique to each one. Therefore the points listed in this article are tips that apply generally but not specific to a particular business. Without further ado, here are six (6) tips that will help you stop losing money in your business.
1. Set the right price:
Do not overcharge or undercharge your products or services. If you set your prices too high, fewer customers will buy your products. On the other hand, If you set your prices too low, more customers will buy your products but, the prices might barely turn a profit. It is a bit tricky.
Prices should align with factors such as your total cost, quality or value you’re providing and what your competition charges.
As a rule of thumb, avoid guesswork when fixing prices and ensure to revisit your pricing regularly to avoid losses.
2. Have a strong online presence:
We want to believe that since It’s the 21st century, everyone is online and if you’re not maximizing the online space as an entrepreneur, you are flushing money down the toilet! There are millions of potential customers on social media, millions more with smartphones with access to the internet looking for makeup artists to glam them up for an event or simply searching for the nearest restaurant where they can get spicy jollof rice. The possibilities are almost endless these days. There is no better time to be an entrepreneur.
If your business has no social media pages or website, it means you don’t want to be seen by potential customers; and this could be a reason that stops your business from making profit and losing money.
3. Don’t use one account for personal and business purposes:
As small business owners, it is easy to combine personal and business transactions using one bank account. This could kill your business faster than you think. No matter how small your business is, make sure to open a separate business bank account.
This is crucial because your money from both ends could become muddled, making it difficult to monitor and track business financials or stick to an effective cash flow management. The only way to clearly assess the money that belongs to you, and that of your business, is to have separate and not combined bank account.
4. Automate where possible:
Develop processes and figure out software that will save you time and avoid potentially losing money. You can create something as simple as a spreadsheet document to help you enter data, track your expenses and check your finances at a glance. When you automate some processes, you might not have to hire more employees plus it will give you substantial time to attend to customers, acquire a business skill, upgrade products or your services, etc.
5. Train your employees:
If you have employees, you should not neglect them. Training your staff is an investment that yields returns all the time. If you want to avoid losing money, you should be comfortable with giving your employees the right training so that they can handle your business properly and fetch the business more money.
6. Treat your customers as real people not numbers:
Customers want to know and feel like they matter. To retain customers, show them that you truly care about them and not just their money or how many products they buy from you in one transaction. Treat them well by sending them a message on their birthdays or holidays that they observe because these things make you stand out and will always make them remember you in a good way.
Keeping a small business running profitably can be daunting. But you have the upper hand when you know every little detail about your business. This way, you can effortlessly tell why and how you are losing money and then know how to navigate from there.