Your small business has been operating for years. According to conventional wisdom, you should be within the profit margin at this point. However, your balance sheets continually show that your business is not making money. How can this be remedied? There are five reasons why many businesses are still unprofitable. For example, your business may operate online, but you do not take advantage of online shipping products that will reduce your expenses.
Still Not Profitable? Here’s Why
There are hundreds of reasons why a business may be unprofitable; however, these can be narrowed down to five — from an unproductive mindset to outdated technology — that are causing your business to stagnate.
1. A Self-Defeating Mindset. Regardless of how long you have been in operation, if you are still unprofitable, you may have a bleak outlook. It’s time to forgive your past failures and stop dwelling on them. According to INC, an entrepreneurship publication, focusing on the past inhibits your ability to plan for the future and complete today’s tasks. Additionally, when you are talking with prospective or current customers, your negative mindset will be apparent, even if it’s subtle. Refocus on why you started your business, rediscover your passion for what you do and go forth with a positive outlook.
2. Ineffective or Outdated Marketing Techniques. Marketing and sales are the lifeline of any business. Your business must attract new customers in order to enter the realm of profitability. If your current marketing techniques are not bringing in a significant amount of new customers, change them or get rid of them. If you are still relying on radio and TV ads, it’s time to head online and start using online marketing techniques. Having a successful blog with an effective social media presence will help increase your exposure. By regularly marketing yourself online, you will bring in new customers who didn’t even know you existed.
3. Outdated or Inefficient Technologies. New technologies have been deployed that change the way infrastructures are configured, servers are provisioned and employees access their work. Even having old computers can cause a delay in productivity, which will move you farther away from the profit margin. Upgrading to cloud computing solutions will reduce your IT expenses and help employees access required data more efficiently. Even if your business does not heavily rely on technology, equipping employees with tablets can help them access product inventories or take customers’ orders more efficiently.
4. Not Using Financing Methods. Most businesses have several lines of credit available to them. Bank loans, credit cards and equipment leases are common methods; however, there are additional sources of financing that can help you expand your product offering, quickly fulfill orders and avoid the invoicing cash gap. Use factoring to immediately receive funds for fulfilled orders, or look into purchase-order financing to fulfill larger orders. You can even use your on-hand assets to receive additional sources of funding. Using every available source of financing will increase your capabilities and take you into the profit margin.
5. Improper Use of Time. The way you and your employees spend your time impacts the growth and profit potential of your business. How much time is being spent attracting new employees or servicing old customers? Are employees spending more time socializing or working? Are there any outdated processes, policies or procedures that are wasting your employees’ time?
It’s Never Too Late to Turn Around
There is only one point of no return when it comes to creating a profitable business: closing your doors. As long as your business is still in operation, you can turn it around and create a profitable enterprise. Closely examine your business and see if any of these reasons are applicable to you. If they are, take steps to correct them.
About the Author: Wilson McNeil is a contributing writer and small-business consultant. One of the biggest reasons he has found that his clients don’t make money is high operating costs. He suggests using the products available at www.DYMOEndicia.com to reduce shipping expenses.