When running your business, the probability of making losses can never be zero, not even when operating as a monopoly providing necessity goods. This, therefore, means that you need to always be prepared to deal with losses whenever they are incurred in your business.
A lot of people know how to deal with profits, which though may seem easy, is quite hard by itself. Here are some useful tips on what to focus your attention on should you be experiencing negative profits and you want to turn the fortunes around.
More often than not, your losses are as a result of a high operating cost. Any business that looks to grow always focuses on reducing its costs and maximizing its profit. All your costs need to be noted down from the first instance where you pay your supplier for your goods up to the point where the goods get delivered to the client. Whenever losses are being experienced, always go back to your operating cost and look at all the things that you can cut down on without adversely affecting your business.
One particular area to look at when scrutinizing your operating cost is bad debt, which is basically unpaid debts by your clients. This will mean you need to be more stringent when offering goods or services on credit. Be careful however not to scare away your most loyal clients by not offering credit.
Your products and basically your business, in general, need to be marketed in order to attract clients. Investing time in a good marketing campaign can guarantee you profits. Failure to market your products enough can lead to losses. You need to know where to draw the line between the two, especially if the marketing campaigns are ballooning your operating costs.
However, if you are using free marketing tools like posting on WhatsApp and Facebook pages, you will now need to focus on the impact of these campaigns. One rule of thumb to use is, if you post services in a WhatsApp group or Facebook page and do not get any response within 24 hrs, then you need to revisit your post and see what you might have done wrong. It is most likely that you posted on the wrong platform.
The customer is key, you will hear me say that a billion times. Clients are attracted and retained by a business if it offers quality, anything less than that and you can wave goodbye to them. If you are experiencing losses in your business, check whether you have been providing quality goods that appeal to the customers and their needs. Also, check what your competition is doing, you might be providing quality but they are doing better and you need to keep up.
A good business provides for its miscellaneous expenditure. This, however, does not mean that a close eye should not be kept on wastage. The budget on miscellaneous needs to be reimbursed into the business if it was not exhausted extensively. Wastage also in the form of damaged goods needs to be kept at minimum to avoid the business from running into losses.
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