The only way your small business will survive is if you consistently generate a profit. A profit typically means your business is financially well off.
Many new small businesses have trouble maintaining a positive net profit. There are pesky things that can eat into your income without you realizing it. The losses might start slowly, but your business could find itself missing a larger chunk than it can withstand.
It’s important to identify quickly why your small business is not making money. The faster you can discover where the losses are coming from, the faster you can reduce or stop the leak.
There are some common reasons for a small business losing money. Some are obvious. But, some of the reasons you’re losing money in business are difficult to see. To find out where your business is leaking money, investigate these five causes. Where do you need to make changes in your business?
To have any chance at success, you need to know your small business financial numbers. If you don’t, how can you know how much money is coming into and going out of your business?
When you run a business, there is no room for unorganized, inaccurate accounting.
If you are slow to log transactions, you won’t have a clear idea of how much money your business has. For example, if you buy a lot of supplies but don’t enter the transactions into your accounting books right away, your books will show that you have more money than you actually do. As a result, you might spend more, causing a negative cash flow for your small business.
