Why your Small Business Isn’t Profitable- And What you Can Do To Fix It

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Written By Mike Gaudreau

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The survival of your business will largely depend on your level of profitability. When your profitability decreases, you may find that you experience even more problems down the line, and this is the last thing that you need. If you want to find out why your business is not as profitable as it could be then this guide is for you.


Your Prices are Too low

Your pricing strategy is vitally important if you want to define your company’s profitability overall. If you keep your costs low and use premium pricing, then you will have a much higher level of profitability. It’s simple logic. You do need to keep in mind that your profitability is directly related to your margin and your pricing.

If you want to make sure that your business is the best that it can be then you need to increase the value that you ship when providing services or products to your customers, and you also need your customers to recognize this additional value too. It’s also helpful to increase your margin so that you can invest part of this profit into your new product development.

Your Setup Profits are too High

Sure, you want to have strong profitability rates when you run your own business, but if the rates that you have set are just not achievable for you then this is a sign that something needs to change. Look at the industry average and also make sure that you are setting goals that are realistic as well as ones that can be achieved. If you need money for fuel or equipment to then do your research before buying. You can buy red diesel from fuelbox.co.uk if you want a cheap option.

You Spend too Much

There really are so many entrepreneurs who spend far too much during their start-up phase.  It’s understandable that you do have to spend money to make money, but there is a line at the end of the day, and you need to make sure that you are willing to cut back if you need to. Sure, you may want the best technology around for your business, but it might not benefit you as much as you think right now. If this is the case, then you should hold-off investing in it.

You’re in a Highly Competitive Market

Do you know how much your competitors are making? How many competitors do you have? If you are operating in a highly competitive market, then you may find it difficult to rely on various marketing or pricing strategies. You may think that the best way for you to beat out your competitors would be for you to decrease your prices but this is not the case at all.

In fact, if you do this then you may find that you end up harming your business and limiting the amount of profit you can make overall. This is the last thing that you need, so make the effort to try and offer different services instead. If you sell photo frames, offer a mounting service, or a personalized photo book with every order. This will increase competitiveness without decreasing prices.


[avatar user=”mike” size=”thumbnail” align=”” link=”file”]Mike Gaudreau is the owner of The Wealthy Boomers, a site devoted to helping seniors make money online. Mike resides in Montreal Canada.[/avatar]


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