There are many reasons why a business is not turning a profit, but the most important thing is that the business owner is aware of it and takes action sooner rather than later. Here are some basic reasons why a business may not be turning a profit.


  • Bad Accounting

    – if you fail to track your income and expenses in a timely manner, then you could well end up seriously in the red. It is vital that small businesses have accurate and up to date bookkeeping in place. Without this, it could all be too late by the time you realise that there is a serious problem with either revenue or expenses. Where expenses are concerned it’s really critical that you have a handle on these. To turn a profit you may be able to eliminate unnecessary spending. It’s not rocket science – turning a profit is all about making more sales whilst keeping your costs and overheads low.


  • Mixing Personal and Business Funds

– to accomplished business owners this will be a given. But if you are just starting out, ensure that you have a separate bank account and credit card account for your business. Resist the temptation to mix the two as this will make it harder to track how your enterprise is really going.


  • Pricing Strategy

    – correct pricing is something which is often a sticking point with business owners. If you price your product or service according to your competitors, you may very well end up with a profit problem. When you first started on the road to establishing your enterprise, pricing should have been the number one consideration and pivotal to your whole business plan.

    • So how do you price effectively? To ensure you make a profit, you should look at pricing in reverse. Include in your calculations your expenses (including product costs), your remuneration i.e. salary and any applicable taxes. Once you establish these costs then you can work out if there will be a profit once all these items are accounted for.

    • Sometimes, you may need to tweak your pricing. If you have a great product and customers are willing to pay more, then you could look at increasing prices even minimally and see the effect on the bottom line. Similarly you could reduce your cost of goods by sourcing a cheaper supplier or negotiating better rates.


  • Lack of Investment

    – this can be a problem in the startup phase as well as the growth phase. If you don’t have the funds to sink into marketing or vital capital assets, then it restricts your ability to make more sales and generate a profit. So what can you do here? Assuming you have a solid business plan including the numbers behind it, you will have to seek out funding either from banks, business lenders or family.


  • Minimal or No Online Presence

    – these days it’s vital that you have a website and social media accounts. Ideally you want to leverage whatever good will you have in your customer base to promote your service or product. Ensure you have a google business account and invite your customers to leave a 5 star rating and comment. If you really want to make a difference, then consistent branding across all online platforms is a must. Your Facebook page can be a place to showcase your service/products and help you stand out as an expert in the field Ensure you post regularly to keep customers engaged.


  • Products or Service Mix Not Viable

    Not what any business person likes to hear but you may need to re-invent yourself. If you are in a fast paced technology sector, you will need to come up with innovation, if you are providing homewares then make sure you have the latest product offerings. Remember if you keep on doing the same thing, you are likely to get the same results. So if the demand for your product or service is waning, then re-invent your offering(s). It could be something complementary or something completely different which will still appeal to the customers you have gained and who trust you.


During Covid-19 many businesses had to rethink their products, customers and delivery, read here how one small business and one large pet retailer did just that.

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