You’ve been running a business for 3 years but are not profit making. What’s wrong?
So you decided to take the leap, maybe even leave your 9 to 5 job and start your own business. It wasn’t easy for sure.
In fact, it was exhausting. But you were told that the reward is good. But, it doesn’t seem like it’s working that way. What could be the problem why until now, your revenue is still disappointing?
It’s simple, really. Businesses are created to make profit. It is a reward that doesn’t just increase the financial value of a company, but also determines its viability to operate for the long run.
What’s not simple, however, is how to enhance the profit margin. It’s a major challenge for many small business owners as running on a loss can cause not just turmoil in their companies but also closure.
Many small businesses in the Philippines are faced with the trouble of business survival particularly due to failure of profit maximisation and enhancement.
So, what prevents businesses from being profitable in the first place? Here are a few reasons why many businesses in the Philippines aren’t profit-making.
1. Your pricing strategy.
Filipinos tend to hoard products if they think that it’s worth their money aka ‘sulit’. That’s why public markets and the likes of Divisoria are very popular because they offer goods at cheap prices.
While lowering your price could increase your sales and give you an edge over your competitors, setting it too low might force you to compromise your profit margin, as well. On the other hand, having prices that are too high will cause you to lose your customers.
When the YouTuber KathleenLights released her Morphe palette, a lot of online resellers in the Philippines offered it for different prices. Some were ranging from Php1700 to Php3000 because they were all going for the profit. Make Up Depot PH decided to stick to a safe price which is Php1550, and they had more shoppers contacting them.
So, for those reasons, you have to consider pricing decisions and these should be made with considerations including labor, materials and your desired profit.
2. Your overhead cost.
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