i.e. page | How to make your small business profitable Business

Q: I am a small business owner and I have a kitchen shop. I do great business there because people love my food, but my problem is that I can never see my way. I always have to spend back everything I make, and I can’t seem to find my way out. I don’t know what am I doing wrong. I work very hard, and I have six kids, so my goal is to live 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?

– kitchen shop owner

Good work: ‘What am I doing wrong?’ In answering the question, let me first acknowledge the things you are doing right and put them in proper context when it comes to building a worthwhile business. You have set an amazing foundation for success by consistently providing high quality offerings to attract and retain customers who love food and are loyal to their preservation.

These are the basics I hope will protect you from jealousy. The missing ingredient at this point is that you ‘never see the way’, which makes me think you’re not realizing the desired benefits.

A simple recipe for profit is to earn and collect sales that exceed the expenses incurred by the business to make those sales.

Based on the limited information shared, there are a number of things you could be doing wrong that would prevent you from getting the desired benefits. Here are five possible reasons why your profits are shrinking:

1. wrong pricingIt’s possible that you’re pricing your menu too low, resulting in a reasonable sales volume but a low selling price. If so, rising costs of food, transportation and electricity will only exacerbate the problem and further reduce profits.

In this case, the solution would be to increase your prices to achieve the desired profit level – taking into account what the market will tolerate – and to create a pricing policy that demands frequent review, Especially in the current environment.

Across the country you will see that popular fast-food restaurants often increase the cost of their meals, with an explanation to the public that changes in prices are linked to increased expenses.

2. theft: Unfortunately, theft is a common problem in your industry, involving either the theft of raw materials or cash from the register, etc. I know kitchen shops still handle a lot of cash, which will make your business highly insecure. Your accountant can help determine if you are incurring a loss and make recommendations to reduce the risk of theft.

Potential solutions to theft would include robust surveillance, encouraging customers to make cash not card payments, strict cash management, frequent audits, fair reconciliation of receivables and other financial records.

3. poor expense management: You may not be managing your expenses as prudently and aggressively as you should be, and/or that the Company is burdened by your personal expenses that are outside the scope of business input. The solution would be to create a suitable budget and stick to it as much as possible. That budget should contain an estimate of your income and expenses for at least the rest of the year.

At the end of each month you can compare your budgeted expenditure with your actual expenditure, and your budgeted profit with actual etc. Holding yourself accountable for disciplined financial management is key to seeing your way around you.

4. weak buying practicesGood purchasing management can be your secret sauce if you want to grow your business profitably. This will allow you to maintain high quality, consistency and largely reduce waste/spoilage, which can boost profits.

One solution to poor buying would be to research online, take e-courses and even, if possible, consult a buying expert in the field to help you build proper procedures and even relationships with suppliers. Can you You can explore LinkedIn to find buying experts with experience in food and hospitality.

5. Lack of diversity in income streamsAny quest to maximize profits at this stage will require a long-term plan to make full use of your assets now and to diversify income streams and market segments in 2023 and beyond.

Simply put, is it possible to make all the profit from what you have now? Are you open enough? Are you promoting the business adequately? Can you do more to attract different and even more attractive customer types such as catering services targeted at event organizers and other small businesses? Is there space on your premises to expand the food?

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 perfect. Therefore, there may be other reasons, which have not been identified here, which could be the source of your challenges.

I recommend that you sit down with your accountant and look at your financial statements – especially the income statement – with a fine-toothed comb to pinpoint the source of your problems otherwise you risk applying the wrong solution.

Good luck and love!

– Yannick Page is Program Lead for Market Entry USA, a Certified Instructor in Entrepreneurship, and Producer and Executive Producer innovator And let’s make peace TV Series. yaneeek.page@gmail.com

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