6 Reasons why you’re not making the amount of profit you want

February 14th, 2019     Improve Your Business, More profit

Is your business making the size of profit you need to have the life you want? If not do you know why it isn’t?

Here are six of the top reasons we’ve found why businesses aren’t making the amount of profit that their owners want:

1. Poor pricing – Your price can be the most significant determinant of your profitability, by changing your price there is a direct impact on profit, without any change to cost. A lot of businesses focus on getting more sales leads and winning more customers. However if your pricing is wrong (or by giving too much discount to attract new customers) it can have a very negative impact on profit, or another example may be providing ‘champagne’ services or products at ‘beer’ prices.

2. Not enough sales volume – You won’t make the profit you want if you don’t have enough of the right customers, which comes down to potentially poor marketing and sales.

3. Investing in things that don’t work – Investing capital in things that don’t work, this can be other people, bought in services or equipment. Sometimes this can go on for long periods of time if you don’t measure the effectiveness of what you do.

4. Not working efficiently – Low profitability can come from inefficient processes /working practices leading to poor productivity, resulting in low profits.

5. Costs are too high – This can be direct costs or overheads, from occupying the wrong premises to having the wrong electricity tariff.

6. Lack of control – You may see signs of low profitability through a declining bank account, but by then it may be too late. Not knowing what’s going on means you can’t control all of the above and make the changes to get you back to better profits.

We work with business owners to build the businesses they need to have the life they want and that includes helping improve profitability, so if this is a concern of yours, get in touch with me on 01803 296678 or email andrew.price@andrewprice.co.uk