Disclosure: Some of the links in this post may be "affiliate links." This means if you click on the link and purchase an item, I will receive a small affiliate commission, at no extra cost to you. Regardless, I only recommend products or services I use personally and believe will add value to my readers.
Sometimes, our metaphorical business buckets spring holes. When that happens, profits trickle away before we even notice there’s a problem. It’s not until we can see the bottom of the bucket that we even spot there’s an issue.
Okay, that’s enough about buckets. But, you get the idea. Springing a leak in your profits can be a significant cause for concern. What’s more, it’s an issue you may not notice until you’re in dire straits. That’s why it’s essential you act fast when you do spot the problem.
Bear in mind that, by the time you notice you’ve lost money, it’s likely you’ve lost a fair amount. That doesn’t mean the situation is past helping. But, it does mean that you shouldn’t hesitate to follow these three-pointers.
Look at the accounts
We know; it’s the worst part about running a business. No one likes the accounts. Just thinking about those endless lists of numbers is enough to send anyone to sleep. But, it’s crucial you find out where you’re losing money. And, you can’t do that without turning to the paperwork. If you can, print off monthly statements so that you can narrow things down. Then, look a little further in depth on any months with red flags. This will save you a lot of searching, and make that hole easier to spot. Things to look out for include significant fluctuations and months where expenses are high. It may be that you’re spending a lot on customer refunds, or due to breakages. It may even be that you’re spending too much on production in some months. Either way, you need to spot that hole before you stand any chance of getting on top of this.
The chances are that your investigations will show need to reconsider your operations. Perhaps you need to improve a product fault to decrease the number of refunds. Or, perhaps you need to turn to a company like Intersource Consulting who can help you manage your monthly expenses a little better. It may even be that you need to cut back on production throughout the month altogether. After all, it won’t do you any good to produce more than you can sell. Though you might see that money back over time, your monthly budget is sure to take a hit. Perhaps you need to develop a system of only having a set amount of products in your backlog. Either way, steps like these can help to stem the lost profit flow.
Get a financial band-aid
If things are bad enough, you may need a cash injection to see you through. Think of this as a financial band-aid. Admittedly, it’s not ideal taking money out to cover a hole in profits. But, if you believe in your recovery strategy, there’s no reason you can’t pay that money back. Besides, it’s certainly better to do this than declare yourself bankrupt. This buys you time and, once you know the issue, time is all you need.