Helen Sheplyakova
HireRush
Published in
4 min readMay 17, 2017

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Operating at a loss? Use these tips to get your small business back on feet and generate profit.

Operating at a net loss is a common thing for small business owners who’ve launched their project not too long ago. It’s totally expected that a start-up won’t bring as much profit as the entrepreneur would like to during the first couple months, or even years of its existence depending on the sphere of operation. But when the amount of profit your business produces doesn’t increase overtime and the money you invested in it isn’t compensated, it’s necessary to concentrate your efforts on generating more profit and making your business more financially successful.

Unfortunately, the well-known formula that explains how businesses should make money (the positive difference between sales and expenses) doesn’t do too much for the actual profit generation.

If you’re a confused entrepreneur aiming for a greater profit, use these tips to improve your business’s financial performance and receive substantial, stable income.

5 practical tips to stop your business from operating at a loss

1. Start monitoring your business finances more closely

A lot of beginning entrepreneurs psychologically don’t draw the difference between the amount of money their business makes and the amount of money they actually get to keep as a profit. They don’t really realize if they earn enough until they conduct a major financial inspection. Therefore, they need to start calculating their expenses quite attentively, maybe even professionally, not to overspend, as well as to price their products/services correctly. Reasonable pricing, along with the realistic profit prediction and expense calculation will help you understand how exactly your business does financially and what needs to be changed to improve the situation.

On top of that, you need to go through your expenses, especially business operation ones, and see if you use goods, services and materials you pay for. Check your business bank account statements every month and think if your business has actually benefited from that e-mail marketing program you’re subscribed to, if your office cleaning company offers the most affordable services in your local area or if it’s worth looking into hiring an independent cleaning contractor who charges a lot less, etc.

Sometimes reducing costs isn’t as painful and impossible as it might seem.

2. Use net loss operation as a tax credit

When you operate at a loss, which, as we’ve already established, will most likely happen during the early days of your business, you should totally ask your tax preparer to include that fact into the forms to get more money back during the tax return season.

3. Watch your resources

Business efficiency and profitability depend on the quality of resources you apply. Productivity gain is the thing entrepreneurs need to watch closely and evaluate occasionally to determine if their investments and expenses will pay off in the nearest future. Small companies can’t splurge on resources or waste money on the ones that don’t produce as much profit as possible.

The most financially-consuming resource is labor, which is why if you hire employees or cooperate with independent providers, you need to make sure that those professional meet the highest qualification standards (within the certain ‘price range’, of course), if they perform efficiently enough, as well as encourage them to improve their skills and take up different challenges.

Furthermore, when purchasing equipment, products and supplies for your inventory, you need to confirm their highest quality and consider the impact certain investment will make on your business’s development and financial situation.

4. Work on your customer files

Existing and prospective customers are the goldmine for small businesses, especially for those who provide diverse services (hairdressers, pet grooming salons, remodeling firms, etc.). Entrepreneurs have to make the most out of each customer, try to use its positive reviews and service satisfaction to their favor by asking loyal clients to submit referrals and recommend the business to people those customers know. Building friendly relationships with each customer and gently ‘reminding’ about the availability of your services every now and then should be every business owner’s goal.

Contact inactive clients you haven’t heard from in a long time to ask if they were satisfied with your services and if they would like to hire you again anytime soon. Encourage them to do so by offering some sort of a benefit: a discount code, a free add-on service, etc.

Expand your list of clients by conducting inexpensive marketing projects and exposing your business to prospective customers online via contractor referral websites and local business listing platforms.

5. Be disciplined during the busy times.

Don’t abandon financial monitoring and administrative duties during busy times. Make a conscious effort to address certain issues as they appear instead of shoving them into a dark corner and promising to figure things out later. Such behavior often leads to ‘unexpected’ crises, reputation or/and financial losses, which you can’t afford as a small business owner.

Lastly, make sure to save money during the busy times not to struggle during a standstill.

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Helen Sheplyakova
HireRush

Blogger, independent writer, home improvement, fashion and beauty, small business development, energy efficiency and money saving enthusiast.