10 Reasons Why Your Business Is Losing Money

10 Reasons Why Your Business Is Losing Money

It can be difficult to realize that your business is losing more money than it is making. If you don’t know the problem, you need to find the root cause. This is the first step toward halting cash flow from your bank accounts. Business owners have been troubled by bookkeeping issues for years. However, this doesn’t mean there aren’t opportunities to improve and grow. The solutions are almost always as simple as the problems, even if it can be difficult to identify the issues at first.

Although it can be difficult to accept the reality of a business losing money, it is possible to identify the most relevant ones to your company and make meaningful changes. Continue reading to find out the ten reasons your business is losing cash and what you can do about them.

Bad Accounting

Uninformed accounting can lead to a loss of profit in your business. It could cost your company a lot if you don’t keep accurate records or are slow to make transactions.

Bad accounting can lead to money losses. You may be trying to manage your finances yourself rather than hiring professional bookkeepers or accountants to do the job. Hiring an accounting firm is the best and most cost-effective way to handle your books. An accountant will probably cost you less than what you have already lost.

Uninformed Product Pricing

Small businesses can be in trouble if they charge too much for products. You’re losing out on potential profits if you undervalue your stock. But did you know that charging too high could hurt your bottom line? Clients and consumers are less likely to purchase products if they perceive them as low value. Your first line of defense against losing profits is to evaluate your pricing.

Combined Bank accounts

The old saying “Don’t eat anything but what you eat” is well-known. Although the adage doesn’t apply to personal and business bank accounts, we believe it still applies. It is important to keep your personal and business money separate. Money can become jumbled if accounts are mixed. This makes it difficult to track your cash and makes it easier to overspend.

There are no investments.

To start and grow your business, you need to raise money. It will impact your profits if investors give you the stink eye or you get turned down for loans or lines of credit. You’ll be more likely to get funding if you have a clean financial record, better proposals, and more contacts.


Today’s majority of consumers shop online. eCommerce sales made up ten percent of all U.S. retail sales during the third quarter of 2018. You’re not reaching a new audience if you only operate brick-and-mortar. This could make you more money.

Flawed Business Model

You’re likely to run into problems if you don’t take the time necessary to create a business plan before your opening day. Clear and concise business models offer better guiding principles that those that aren’t clear or nonexistent. To find the root cause of profit loss, review your business model.


It could be you, your employees, or your supply chain. Inefficiency in any area of your business can cause cracks to appear overnight. Start looking for ways to improve efficiency if your business consistently loses money. A costly inefficiency can range from poor employee performance to unreliable point of sale providers.

Poor Marketing

Poor marketing plans can spell doom for your company, whether your marketing materials are inadequate or you don’t know your target audience. 63% of marketers report difficulty generating traffic and leads.

Vendor Costs

Although it can be frustrating to negotiate with vendors, consider how much money you’ll lose if you don’t take the time to do so. Vendors will see that you are a prime target for rate hikes and lax service if you settle for the basic price. Negotiating with vendors is important and ensuring you get a great price.


Disorganized environments are more likely to make financial mistakes or have problems with funds. It’s also much more difficult to catch them. Disorganized businesses (structurally or physically) will undoubtedly lead to financial losses. It’s just a matter of finding the problem and fixing it.

Never underestimate the power and potential of an organized business. You will be able to see where your money has been spent and how it was spent by organizing a way for you to label, categorize and store your receipts.

Stop losing money now–work with Tax and Law Research Inc.

Sometimes it’s difficult to turn around a business losing money, even with our best efforts. You may find yourself frustrated by the process of changing your business model. Professional accounting services could be a great investment. Are you ready to make the leap and work with a professional? For professional, intelligent business accounting services that work, contact Tax and Law Research Inc. today.