Yannick’s page | How to make your small business profitable | Business
Question: I am the owner of a small business and I own a cooking shop. I do a great job there because people love my food, but my problem is that I can never see my way in. Whatever I do, I always have to spend, and I don’t see my way out. I don’t know what I’m doing wrong. I work hard, I have six kids, so my goal is to have a better life and see where I can make it. I know I’m doing something wrong, but I don’t know what it is. Can you help me with some advice?
– Owner of a cook shop
the work: When answering the question “What am I doing wrong?” First, I must acknowledge the things you do right and put them in proper context when it comes to building a worthwhile business. It has laid an impressive foundation for success by consistently delivering high quality offerings to attract a food-loving client base who are loyal to nurture and maintain.
These are essentials that I hope you will guard with jealousy. The missing element at this point is that you “never see the way”, which I suppose means you’re not making the desired profits.
Profit has a simple recipe, which is to earn and collect sales that exceed the expenses incurred by the business to achieve these sales.
Depending on the limited information that is shared, there are many things you could be doing wrong that are preventing you from making the profits you want. Here are five possible reasons why your earnings are delayed:
1. Incorrect pricingIt is possible for your listing to be pricing too low, resulting in reasonable sales volume but low sales value. If this is the case, the rising cost of food, transportation, and electricity will only exacerbate the problem and reduce profits further.
In this case, the solution would be to increase your prices to achieve the desired level of profit – taking into account what the market will bear – and to create a pricing policy that requires frequent review, especially in the current environment.
Across the country, you will notice that popular fast food restaurants frequently increase the cost of their meals, making it clear to the public that price changes are in line with increased expenses.
2. embezzlement: Unfortunately, theft is a common problem in your field, including either the theft of raw materials or cash from the register, etc. I know that cook shops are still handling a lot of money, which makes your business very vulnerable. Your accountant can help determine if you suffer losses and make recommendations to reduce the risk of theft.
Possible solutions to theft may include stronger monitoring, encouraging customers to pay with cards rather than cash, stricter cash management, frequent checks, and proper reconciliation of receipts and other financial records.
3. Bad Expense Management: You may not manage your expenses wisely and seriously as you should, and/or the company is overburdened with your personal expenses that are outside the scope of business input. The solution would be to create an appropriate budget and stick to it as best as possible. This budget should estimate your income and expenses at least for the rest of the year.
At the end of each month, you can compare your budgeted spending with your actual spending, your budgeted with actual earnings, etc. Holding yourself accountable to disciplined financial management is critical for you to know your way around.
4. Weak Purchasing Practices: If you want to grow your business profitably, good procurement management may be your secret sauce. It will allow you to maintain high quality and consistency and reduce wastage/damage during expansion, which can lead to increased profits.
One solution for weak procurement is to conduct online research, online training courses and even consult with a procurement expert in the field if possible to help you establish the appropriate procedures and even contacts with suppliers. You can explore Linkedin to find procurement professionals with experience in the food and hospitality industry.
5. Lack of diversity in sources of incomeAny quest to maximize profits at this point will require making full use of your assets now and a long-term plan to diversify your income sources and market segments in 2023 and beyond.
Simply put, are you making all the possible profits from what you have at your disposal right now? Are your working hours sufficient? Are you promoting the business enough? Can you do more to attract different, more profitable types of clients such as catering services aimed at event organizers and other small businesses? Does your building have room to expand dining?
The solution to weak income streams is to create a strategic plan for growth that prioritizes diversification.
What I have shared so far is a preliminary list of possible reasons for low profits. It is not comprehensive. Therefore, there may be other reasons, not identified here, that may be the source of your challenges.
I recommend sitting down with your accountant and going through your financial statements – especially the income statement – with a fine comb to pinpoint the source of your problems or else you risk applying the wrong solutions.
Good luck and love one!
Yannick Page is the Director of Market Entry USA, a Certified Entrepreneurship Coach, Creator and Executive Producer for Innovators And the let’s make peace TV series. email@example.com