7 Problems Preventing Your Business From Being Profitable

Rich or poor..your business still needs to generate Profit.

Without one, you can’t keep the doors open, and you can’t keep doing what you love.

Unfortunately, the majority of new businesses ultimately end up failing within the first few years. In large part, this is due to an inability to generate a sufficient profit, and it’s not a problem to scoff at -- even businesses built on solid ideas can suffer from a lack of profitability.

What may hinder a business from making profits. Here some reasons gotten from entrepreneur

1. Low prices

Setting prices is one of the first and most important decisions you’ll have to make for your business. How you set your prices could easily dictate your future success. Most entrepreneurs immediately caution themselves not to set prices too high; if your product costs more than your competitors', you could turn away your entire target market.

However, if you set prices too low, you’ll end up spending more in production than you can feasibly make back. Consider your margins carefully, and don’t be afraid to charge for quality. If you spend more time making your product better, people will be willing to pay for it.

2. Too much overhead

There are some things your business absolutely needs to survive. However, you may be overestimating your needs in some key areas. For example, do you really need that 3,000-square-foot office when you have only two employees you're running the business with? Do you really need to invest in that piece of machinery that adds only a marginal value to your finished product?

Think carefully about your overhead; if you spend too much there, you could create a hole too deep to dig out of.

3. A lack of market awareness

You may also be suffering from a lack of market awareness; if your product is at an ideal price for both you and your customers, you still might not generate a profit if no one knows it exists. Your greatest tools to overcome this obstacle are marketing and advertising; they cost a bit up-front, but are well worth the investment if you plan them properly.

4. Inconsistency

There’s a chance that you have a perfect way to make your business profitable -- but you’re executing too inconsistently for your business to reap the rewards. For example, your expenses may swing enormously from month to month, or your sales team might perform unpredictably based on individual variables.

Iron out these inconsistencies as soon as you can track them down. It may be tough to pinpoint exactly where your strategy is deviating, but it’s an important step if you want your profit to remain reliable.

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SOURCE: Entrepreneur