3 Ultimate Reasons Why You Can’t Seem to Make Profits

Bad Business Model

Bad Business ModelYou established an enterprise related to an interest you’re most passionate about. Not that you ventured just with your heart; you did your research too. You studied the market thoroughly, analysed your competition from head to toe and picked the most suitable location. You made sure your business plan is ironclad to ensure you can achieve your projected ROI.

Months later, you start seeking for additional financing, as your working capital is nearly out. And you don’t know what hit you.

This happens to millions of entrepreneurs the world over—not just you. Even if you feel you’ve meticulously touched all the bases and managed to win loyal customers to keep your sales steady, you still end up losing money in the process. When you think you took the right path, it didn’t lead to profitability.

If you can’t get a logical answer why you keep on failing, The Income Tax Professionals Ltd is guessing the reason is one of these:

Your Pricing is Not Right

If you relied just on your gut feeling to set your pricing, then don’t wonder why your efforts didn’t pay dividends. It’s only normal to offer your products or services at an attractive price to lure customers, but you must be thoughtful about it.

Looking at your gross profit margin is the best way to create the right pricing model. Only by knowing your total revenue after your direct production costs you can see if you’re going to make money on every sale or not.

You Failed to See Financial Challenge Is Coming

Positive cash flow doesn’t always guarantee sustainable growth. High turnovers can sometimes lead you towards taking miscalculated risks. Overtrading and overstaffing are two of the common mistakes entrepreneurs commit.

Unless you hire someone that provides professional accounting service to look at your financial matters, it’s a challenge to make major decisions to further your growth.

You Have a Bad Business Model

Certain models have no chance of generating profits right from the start. This usually happens when it takes a while for you to get the returns after you pay for the production costs. If you have to wait for months before you get paid by your customers, there’s a big chance your working capital might not last long enough as you cover your monthly overheads.

The success of your business doesn’t rely on how prepared you are in the beginning, but on how focused you are every step of the way. You may have the wits, but you can’t push your enterprise forward without experienced professionals that can give you sound advice.