As a small business owner, after attaining the point of profitability, the next aim, for having a hand, in every aspect of the business, especially, by keeping a close eye, on certain departments of your organisation, so, as to save money.
Easy it might sound, but keeping up with such a task, can be weary, as things you have no knowledge of, eats into your profit.
It might start, at the speed of a snail, but, gradually, it gathers momentum, snowballing into a conflagration and you might, eventually, find yourself at the receiving end, with your business, losing money.
The critical question to ask here is, why is your business losing money? You need to, establish the cause of this financial leakage and how to block them off.
Let us take a look at some of the reasons, why businesses to lose money and how to get over them:
Poor Communication Management
No doubt that effective communication, goes a long way, in bridging gaps in the relationship.
The relationship between the management and the team of employees, must, also, be effective to foster a better relationship.
Poor communication costs small businesses some level of financial implications.
Debra Hamilton identified that miscommunication, often, costs small businesses, an average of $420,000, annually.
What is the possible solution to poor communication?
A Stable communication process must be put in place, to ensure that, no communication gap exists, between the employer and the employee.
Active listening, writing precisely and embracing feedback, also, improves effective communication.
Poor Customer Service
No matter the size of your business, your customers are always, as important, as your products and services.
Bad business reviews, come from poor customer service and it leads to an eventual loss of revenue when your business gets poor ratings.
Studies have shown that 90% of potential customers, base their decisions to initiate a purchase from you, on online reviews and more than, 80% trust online reviews.
Your business can experience poor customer service, due to any of the following reasons:
- Customers meeting uncaring employees
- Customers not getting appreciated for their patronage
- Customers not getting the right answers, to their queries
How do you solve these? Engage and encourage happy customers, to share the experience online.
Get on your team, well-trained staff, who would offer your customers, the best of services.
You cannot expect to have clarity with your numbers, when your accounting system is, highly disorganised.
You would, rather, engage in guesswork, when it comes to accounting for the revenues and expenditures of your company.
Something, as simple as, not noting down the transactions you made on supply, could cause you negative cash flow, as your cash book would appear as if you had more money.
It is necessary that you keep good records of the transactions, as minor mistakes on your numbers, can adversely affect your business.
To avoid this, make sure that you carry out your account reconciliation.
Get to do some internal audit and employ the services of an Accountant.
Poor Online Presence
Everything has gone digital and your business should not be left out.
Many customers want to get products and services at their convenience, by login online, to find your business.
Having an online presence, goes a long way, in getting your numbers balanced, having a physical presence, alongside, getting online is, a great way, to reach your customers.
Not just getting yourself a website, but adding up some social media handles, to boost your online presence.
Make sure that, you are, also, engaged with your customers.
Understanding, why your small business is losing money, you can fish out the problems and fix them up, at an early stage, to prevent an eventual collapse of your business.