6 Major reasons why you are not making Profits from your Business

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A reader of this Blog recently sent me a message which read thus; ‘I am not making profits from my business. Why am I not making profits from my business and why is my business not profitable? Please kindly help me out. Thanks!’ After reading this message from the  guy who is most certainly depressed and discouraged about carrying on his business, I took a deep breath and then, decided to answer the question openly here on my Blog and I believe that this guy is here reading this post too so as to get the right answers.

So many times without number ever since I became an expert/professional business consultant, I have come across several owners of small scale and medium scale enterprises that closed down their business because they could no longer ignite the leveraging spark vital for the profitability of their respective businesses anymore. Such businesses could no longer generate enough revenue to offset their expenses, settle their financial obligations comfortably and sustain their existence on the long run respectively.

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This thus explains the fact that achieving success in your business venture is not always about starting a profitable business idea rather; it is more of managing the business so as to make it profitable and lucrative for you. So many investors nowadays rush into starting a business because they have the capital or because they heard that it is profitable without taking their time to understand the nature of the business and plan towards setting it up successfully and running it smoothly for maximum profits and returns on investment. While most business ventures requires huge finances and large capital requirements to start up, many others will require the entrepreneur to possess a certain degree of experience and devote extra working hours and time so as to excel in the business and get meaningful returns from his investment.

After a proper business environment/initiative research and a painstaking brainstorming exercise, I have finally come up with 6 good factors that affect business profitability and how to address those reasons why people do not make so much money and profits from their businesses. They are as follows:

1. Starting the wrong business, starting at the wrong time:

The fact that a given business idea is too profitable for Mr. A does not mean that it will also be profitable for you. Even when it is expected to be lucrative for you, do you have the necessary passion, experience, skills, knowledge, expertise, social connections, business partnerships, capital base, time, finance requirements, reliable human resource, managerial capabilities, technical knowhow, business networks and the overall professional stint with which to propel the business profitably? If not then, it is a wrong business idea for you and also, a very wrong time for you to start the business. Failure to put these necessary ingredients in place before you start your business will expressly tantamount to a total failure. So beware.

2. Experience in the Business and Financing Capacity:

Without gaining a substantial knowledge, acquiring skills and bagging a good level of experience about some business which are too technical in nature, you may fail to make too much profit from the business if you venture into it. While some businesses requires you to have a technical experience and knowledge of when to cut production costs, downsize factory personnel or hoard stock to take advantage of an envisaged scarcity in the future, others will require you to finance the business for a very long period of time before they can start yielding good returns and profits. Now ask yourself whether you have the experience and financial wherewithal of piloting the affairs of your proposed business until it starts delivery tangible returns for you? If you can then, you are on your way to success.

3. Provision of Customer Care Services to your Clients:

The economists and marketers too say that the consumer is the ‘King’ since businesses can only generate revenue and make profits when clients and customers patronize their products and services. This is the sole reason why you have to pay serious attention to your business customers whenever they lay complaints or make suggestions. Peacefully resolve issues with the, keep in constant touch with them and always treat your clients right. Give them periodic incentives in order to tie their patronage down to your business alone and keep them into the foreseeable future. From time to time, appreciate them with free gifts, bonuses, discounts, price slashes and after-sales services so as to draw them closer to your business. They will even be happy to tell their friends about your business and refer them to buy from you. If you are the type that always frowns or becomes too hostile and unfriendly with your customers then, you will end up scaring them away, losing the market share and size for your products and services. So take a very good note of this point and keep it positive so as to make your business more profitable.

4. Your spending priority for expenses matters a lot in Business:

Business doom and failure is boldly spelt and assured for your business venture if you go about spending more than what you earn from your business. From your business budget, draw up a scale of preference for your business wants by ranking them in their order of priorities. Satisfy the most pressing business needs at any given point in time based on the amount of money you can afford by spending reasonably on them. Cut off irrelevant costs and unnecessary luxuries so as to make out money to spend more on those items that will increase your productivity, boost your sales revenue and maximize your business profits with time.

5. Formulate and Implement Effective Advertising, Publicity, Promotion and Marketing Strategies and Policies to boost market exposure and patronage for your Business:

Effective marketing has been described by many business analysts and experts as the heart of any given business. You need to advertise your business as often as you can so as to build, grow and expand you’re your consumer base, market size, market share, goodwill and patronage level too. Do well to incorporate estimated advertising costs in your periodic budgets. The cost of running adverts in online and offline print media is not too much. You can advertise your business through a series of channels including fliers, posters, business cards, banners, billboards, sponsorships, direct phone calls, bulk SMS, Text messaging, sales promotion, public relations and publicity campaigns, television adverts, radio broadcasts, newspaper and magazine adverts, to mention but just these few. The more exposure your business gets through effective advertising, the higher your business revenue potentials and the bigger your expected profit margins. Advertising is a very vital factor to consider as long as improving the profitability of your business is concerned.

6. Creativity, Innovation, Research, Development and Unique Selling Point (USP):

Business is a continuous process. Products and services have life cycles and to keep your business alive and healthy, you need to innovate and re-brand from time to time so as to stand out and become unique. An outstanding product or service is a unique selling point (USP) for any business. From your consumer market survey feedbacks, renew your business, enhance your products and make them more appealing so as to easily battle off the powerful market forces of your competitors and give your customers endless reasons why they should stick to your product and give it preference over other close substitutes also available in the market. The little secret I have for you here is that you will always make money from your business as long as the services and products you offer optimally satisfy the needs and problems of consumers.

 By faithfully implementing these helpful tips in your business, I hope you will start making profits from your business as soon as possible. Your story of meagre business returns will change for good and endless money will start flowing into your pockets from your profitable business venture.

Ask me your questions and also make your contributions using the comment box for quick attention and prompt assistance too.

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