We are getting closer to the end of the year, which means it will be time to see how much profit you have made this year. While I know you are hoping for a really large number, some of you will be shocked to see a small profit margin or no profit at all. How is that possible, especially since you have been bringing in money and working so hard all year long??
Thankfully, my goal is to make sure you see a profit at the end of the year. And if you aren’t, we must create a strategy to ensure that next year is the year where your profits increase tremendously. So, here are a few reasons why you might not currently be seeing a profit in your business.
1. Tons of Debt
Debts are almost inevitable in business, especially when you are just starting out. However, it is this debt that will prevent you from seeing the profits you truly want at the end of the year.
While some debt like lease payments are okay, business credit card debt is not. In fact, it is usually credit card debt that wipes businesses out, thanks to the higher interest rates.
If you are trying to see more profits in your business, the first thing you must do is stop incurring new debt. Reducing expenses and increasing your monthly debt payments will then be the obvious choice for getting rid of the bad debt in your business. Your profits won’t increase immensely immediately, but you will start to see them increase in small increments until they finally reach the amount you want.
2. Recurring Expenses are Too High
I recommend reviewing your recurring expenses every quarter, so you can check to see if you are still using those services and to see if you can get a reduced rate on some of them. It may take a little time to research and negotiate lower rates, but that time can help save you money each month and increase your profits.
As a business owner, you have numerous recurring expenses to cover every month. These expenses include internet, phone, insurance, and so much more. It is common for the rates of these items to increase every year and you most likely will miss the email mentioning the new rates.
3. Choosing to Purchase Larger Ticket Items at the End of the Year
As you approach year-end, you will most likely see you have a little extra money in the bank. Or you start to think of ways you can lower your taxes by purchasing items like new computers. I don’t recommend doing this, because it is the number one way you will instantly reduce your profits.
Instead, I recommend planning ahead for all larger purchases and setting the money aside for those items, like you do for your taxes each year. The only time I would recommend making a purchase is when it will truly reduce your overall tax liability, but those times are rare.
4. Not Being Flexible or Open to New Possibilities
If your business is currently thriving in some ways, but not seeing the profits you want, it may be because you are not being flexible enough or open to new possibilities. There are potentially dozens of new things you can incorporate into your business if you take the time to create them and are open to a few changes.
Yes, it will be difficult to change the way you do things in your business. And yes, it will be difficult to consider new services or products. But think of how much more money you could make each year and how much higher your profits can be when you step outside your comfort zone a little!
These are four of the many reasons why you are not currently seeing a profit at the end of the year in your business. I would like you to keep these reasons in mind, so you can change your mindset a little and do what is necessary to have your profit margins higher next year.
If you are struggling with your books and are not seeing the profits you would like, contact me today. I can help you plan for the future, so your profits are much higher, and your business continues to thrive.