Business Losing Money? Here Are 5 Possible Problems – and Solutions



Is Your Small Business Losing Money? Find Out Why

Maintaining a lucrative bottom line is what all small business owners aim for. You know that if you want your doors to stay open, you’ll have to have your hand on everything. You wear a million hats at any given time, you work harder than Popeye, and you know what departments to keep a close eye on so you can save money.

However, maintaining that profit line can be troublesome. Certain things can be eating your profits away without you even noticing it. Maybe it starts off slow but it can quickly turn into an avalanche of problems that lead to your business losing money.



Why Is Your Business Losing Money?

Finding the root cause of your financial woes can help you to quickly reduce the issue and turn it all around. Why is your business losing money? Here are five likely reasons:

Poor Accounting

If your accounting system is cluttered and disorganized, there is no way you can have a clear idea of what your financial numbers are. Instead, you are left wondering and guessing as to how much money is coming in and out of your small business.

Going off that last sentence, it can be difficult to have a clear idea of your business’s money situation if you log transactions after the fact or you overlook a transaction completely. Think of it like this, if you buy supplies for your company but you didn’t enter the transaction right away, your books will indicate that you have more money than is available. As a result, you could spend extra money and cause a negative cash flow.

You must record your transactions accurately and in a timely manner. Just a small numerical mess up could jeopardize everything you have worked so hard to build.

THE SOLUTION: On a regular basis, close and reconcile your books, host an internal audit and work closely with an accountant.

Poor Communication from Management

Debra Hamilton claimed in her article Top Ten Email Blunders that Cost Companies Money that small businesses with poor communication are mindlessly burning through cash. Hamilton wrote “miscommunication cost even smaller companies of 100 employees or less an average of $420,000 per year.”

THE SOLUTION: Implement a stable communication process between employee and employer . From the interview process, good communication should be practiced on a regular basis. Carefully and precisely writing things out (like procedures and protocols), listen actively, ask for feedback, celebrate achievements, all of this will improve your communications at every level.

Using an employee management software can make this communication process a breeze. With digital software, you can always be where your employees are as more than likely everyone has a mobile phone. Before choosing a management software service, consider your employees location, it’s ease of use, how relevant it is to your business size, and the cost. Once you find the right solution, you can create an ongoing dialogue that helps build a community within the company.



Poor Customer Service

A research study found that large and small businesses lose some $75 billion annually and that’s all because of poor customer service. Here are some of the problems that may be happening at your business, according to the data:

  • Your customers don’t feel appreciated.
  • They can’t easily find the right person that will provide them with the answers they seek.
  • Some customers face rude and unhelpful employees.
  • They are often passed around to other employees without definitive answers.
  • Or they are left on hold for a ridiculously long time.

It is important to note that if the customer experience is poor it will likely be reflected in online reviews that future customers will read. In fact, 90% of potential customers read online reviews before stepping foot into your store or shopping online. A study by MOZ found that, “84% of people tend to trust online reviews just as much as they trust personal recommendations.”

THE SOLUTION: Ask satisfied and happy customers to share their positive experiences online. And, obviously, hire and train your employees to always provide the very best customer service possible.

Poor (Or Little) Online Presence

It’s 2019 and nearly everything is digital. You are probably reading this on your mobile phone or desktop, just like everyone else. So reach your customers that same way. If your customers can’t find you online, you’re missing out on a ton of business.



What if you don’t sell anything online? Doesn’t matter, a website about your business can help customers learn who you are. Plus, they can learn your contact information and even your physical information.

However, don’t stop there. Create a strong social media presence so that you can interact with customers on a regular basis. Engage with customers, announce new and exciting things going on like specials or a new product. Ask your customers to leave reviews on your website, social media accounts or even review sites. Like we said in the last point, those online reviews are gold.

THE SOLUTION: Well, even though it may sound like a broken record: create an online presence! Make some noise. Build new or enhance your existing website and create a strong social media presence, these are so incredibly simple and easy ways to bring in customers, yet overlooked at times so start today.

High Turnover

Employee turnover is something all companies face, when an employee leaves the company and has to be replaced. However, turnover can cost you big time – in fact, studies have found that turnover can cost you twice an employee’s salary to find and hire a replacement.



THE SOLUTION: Find out which employees are leaving because if it’s your top performers, you can expect productivity and profit to take a hit. Ask yourself why employees are leaving and make the necessary changes to avoid more exits. If new hires are leaving during on-boarding, you know there is likely a problem with your recruitment and on-boarding process so that’s where changes need to be made and fast. Include exit interviews so you can get to the bottom of why your staff is walking out.

Once you understand why your small business is losing money, you can begin to find the right solutions and fix the issue before too much dough is lost.

Image: Depositphotos.com 2 Comments ▼


Megan Totka


Megan Totka Megan Totka is the Chief Editor for Chamber of Commerce. Chamber specializes in helping SMB's grow their business on the Web while facilitating the connectivity between local businesses and more than 7,000 Chambers of Commerce worldwide. Megan specializes in reporting the latest business news, helpful tips and reliable resources and provides advice through her column on the Chamber blog.

2 Reactions

  1. If a business doesn’t understand that their reputation is on the line with every hire, they shouldn’t be surprised when customers have bad experiences with employees. Every employee should be trained and empowered to handle customer questions/concerns.

  2. Aira Bongco

    It helps to have some financial sources. This will help you replenish the lost money.

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