Why Isn’t My Business Profitable?
Are you struggling with low levels of profitability in your business model? What’s going wrong? Well, there could be a few issues that you may want to think about addressing.
It is, but…
You might find that your business is actually profitable, you’re just not gaining any benefit from this. The reason that’s usually the case is that money is being drained away in other areas. So, while sales numbers are technically high and the model is solid there are just a few leaks that need to be addressed which are dragging the whole lot down. It’s one of the reasons why it’s always a smart idea to invest in the services of an accountant. They’ll handle your books for you, assess your expense line and ensure that you are gaining the benefits of your profitability.
Of course, it’s possible that you can’t afford an accountant. This hire won’t fit into every business budget. If that’s the case, then do consider instead using digital accounting software. That way you’ll be able to check on spending yourself and discover areas where you might be wasting money.
The Wrong Team
If you are seeing a low level of sales or leads it’s possible that you do have the wrong team on the job. One of the fastest and easiest ways to turn off customers is to have a team that doesn’t seem energetic or passionate about providing the right service. This may be because you’ve chosen to save by hiring low skilled employees or, it could be that you haven’t invested in the adequate level of training. Training should be a constant in your business model to guarantee that your employees are always learning new skills. Do this and they will provide the solution customers want with the confidence that you need form them.
Of course, you might find that your issues with profitability are due to a model that is out of date and cemented in one place. A business model that isn’t flexible is the easiest way to get stuck with heavy bills that become unavoidable. The classic example of this would certainly be the business office. Do you need your physical office space? It’s a question worth asking because in most cases the answer is no. You can then switch to the on-demand model which makes you more competitive and may even allow you to provide a greater service to customers.
Lack of Demand
Before you set up a business or release a new product, you should always do some solid research to check levels of demand. It’s quite possible that there is little to no demand for the product you’re trying to release. This doesn’t necessarily mean that you have to scrap your entire strategy, it may just be a matter of really focusing the wording in your marketing initiatives to convey the real benefits of your product or service offering. Ultimately it may just require properly educating your target audience regarding what problems your product can solve instead of just explaining what it is and how it works. This might help you to determine whether your product or service is actually helping people win or if you are trying to force people to buy something they don’t actually need.
We hope this helps you understand some of the reasons why your business might not be quite as profitable as you hoped and how you might be able to make some changes relatively easily.