Problems Keeping Your Business From Being Profitable
People become business owners for a whole variety of reasons, ranging from love and passion to simple convenience. At the forefront of your mind will be different ways to increase profits for your business.
While you shouldn’t jump into the business world with the sole intention to get rich, most entrepreneurs are also striving for some sort of financial reward.
After all, if your company doesn’t make money, then it won’t be able to carry on anyway. Unfortunately, the majority of startups out there fail due to the reasons covered in this post. To keep yourself from doing the same, here are five problems that could be keeping your business from being profitable.
1. Wrongly Priced Products
Setting prices for your product or service is one of the first and most important decisions an entrepreneur makes. If you set these prices too high, then no customers will want to shop with you, but, if you go too low, then you won’t make enough to cover the costs of running your company.
To get your prices right, you should do plenty of market research and consider your margins carefully. Don’t be afraid to charge a little extra if your product or service is worth it.
You might also consider continuing to increase your prices over time for things like coaching and training. This can be one simple way to increase profits for your business.
One foundation to your business success is to continually focus on personal development and improving your skill-set. That being said, if you are continually getting better and improving yourself, there’s no reason you shouldn’t be able to charge more for your services.
This makes starting a coaching program or mentorship program a very profitable branch of your home business. If you’re strapped for time you may consider doing a group coaching program, versus individual coaching.
Another option is to make informational product courses, where you can be completely hands-off the most part. It may take some time to create the course, but once it’s done you can continue to sell it without time invested on your end.
Doing this can also be scaled your input time very minimal moving forward. As a foundation to improving your skill sets, you might want to check out these top personal development books I recommend in this post.
2. Mixing Your Finances
Keeping your business and personal finances together may seem more convenient, but it can actually make life a whole lot harder. This is because you’ll find it difficult to differentiate between the two, which tend to lead to overspending on one or both sides.
While this can inconvenience your personal life, it can leave your business without the capital it needs to cover overheads. For this reason, you should open a new bank account solely for your company.
This is also very important when it comes to tax time. As a business owner you will have the advantage of claiming various tax write-offs for your business. Ease of tracking expenses is another advantage to keeping separate business accounts versus personal accounts.
If you’re new to being a business owner you may not be familiar with all the tax advantages of having a small business.
As I’m not a tax adviser or accountant I can’t give you specific advice are your business, but you may want to check out the book Lower Your Taxes Big Time, to learn more I’m the one your taxes as a business as a business owner.
Check out the current price on Amazon here.
You may also consider getting a cash back credit card for summer all of your business expenses.
As long as you’re paying off the credit card every month from your business profits, you won’t be charged any interest. This could be a great form of leverage to expand your business, as well as giving you the ability to earn cash back on your business purchases.
One of the cards I use is the Chase Freedom Unlimited credit card. At the time of writing this post they offer 1.5% cash back on any purchase and a 0% APR for 15 months! Using a card like this can be a great way to save money for your business and to earn cash back on things you would buy anyway.
Learn more about this cash back card here.
3. Large Unexpected Costs
Even with a solid expense plan, there will always be some expenses in business that you won’t have prepared for. These are generally completely unexpected and usually, have to be dealt with sooner rather than later.
Unfortunately, this can cause issues if you haven’t got the money spare to deal with the extra cost. To keep your company on track, you should put money aside each month to build up a business emergency fund.
You may also consider opening up a high interest savings account for your business. As you are setting aside money each month for unplanned expenses, you can start earning interest on that money.
A cool savings account program I found and use that pays great rates is a Capital One money market account. At the time of writing this interest they pay out significantly more than the regular bank account used to have.
Learn more about setting up a high interest savings account like this for your business here.
4. Lack of investment can slow down the increase of profits for your business
Considering the importance of money, most business owners strive to save as much as they can and keep costs low. While this can be beneficial in some cases, if you take things to far, and avoid important investments, you may find it difficult to grow.
Keeping that in mind, you should spend money when you need to, whether that’s on the latest technology, custom refrigeration solutions, or a team of employees. This allows you to take on more work and become profitable.
Investing in yourself is a key foundation to growing your business. Your business will only grow to the point that you do, and a lot of new business owners neglect this kind of investment.
As the old saying goes “wherever you go, there you are.” This basically means that if you start a new business, or try something else the grass isn’t always greener.
Whatever skills you come into your current business with, that’s what you are going to have new next business or venture. This is why it’s very important to focus on investing in yourself. You’ll want to invest in things like courses, training, events, and tools to scale your business.
As far as business Investments are concerned, I’d also recommend checking out my post on 9 online marketing Investments I wish I made sooner.
5. Poorly Planned Marketing
Marketing is another vital investment for small businesses everywhere. However, if you plan and execute your marketing poorly, it won’t reach your target market.
This means that those who should be buying from you won’t hear about your company, which will ultimately affect your sales. To ensure your marketing strategy works as planned, you should conduct some research and find out which tactics are most suited to your audience.
The three key foundations to your online marketing strategy should be to build your audience engage your audience and sell to your audience. it doesn’t matter what product or service your business promotes, following these three steps will bring in results.
You may also want to check out my posts on five step marketing plan to grow your business on social media. Click here to see the full post.
A company without profit will struggle to survive for very long. With that in mind, you should combat the issues listed above within your own small business.
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