10 Reasons Your Business is Losing Money

10 Reasons Your Business is Losing Money

Realizing that your business is losing money rather than making it can be a harrowing moment, especially if you don’t understand what you’re doing wrong—but finding the reason (or reasons) for your money loss is the essential first step in stanching the flow of cash from your coffers. Bookkeeping woes have long kept business owners awake at night, but that’s no reason to overlook opportunities for improvement and growth. Most of the time, the solutions are as straightforward as the problems themselves, although it may be difficult for us to see what those issues are at first.

While it may be tough to come to terms with reality when it’s looking you straight in the eye, the fact of the matter is that there are plenty of reasons why businesses lose money; your only job, as a business owner, is to find out which ones are relevant to you and start making meaningful changes. Read on below to learn about the ten reasons your business is losing money (and what you can do about it).

Bad Accounting

Whether you’re overlooking expenses, missing crucial rules, confused about taxes, or struggling to keep track of your books at all, uninformed accounting is a quick road to profit loss in business. If you’re slow to record transactions or don’t place enough value on accuracy, it could be costing your company big time.

If your money loss is caused by bad accounting, chances are you’re trying to tackle your finances by yourself rather than relying on professional accountants or bookkeepers to properly handle your finances for you. The simplest and most cost-effective solution is to hire a professional accounting firm to take over your books. The money you spend on an accountant will likely cost less than the money you’ve already lost!

Poorly-Informed Product Pricing

Products priced too high or low spell out trouble for small businesses. If you’re undervaluing your stock, you’re missing out on obvious chances to turn a profit; but did you know that charging too much could be hurting your pocketbook, too? Consumers and clients are less likely to buy products if they feel they’re a poor value. Evaluating your pricing should be one of your first lines of defence against disappearing profits.

Combined Bank Accounts

You know the old saying– don’t something or other where you eat. While the age-old adage wasn’t meant to apply to your personal and business banking accounts, we think the rule still stands. Your personal and business funds should be kept entirely separate. Money becomes muddled when accounts are mixed, which makes tracking your cash harder and overspending easier.

A Lack of Investments

You have to get the money to begin and grow your business from somewhere. If investors are giving you the stink eye or you’re getting turned down for loans and lines of credit, it’s going to impact profits. Clean up your financial track record, write up improved proposals, and make more contacts– you’ll have a better shot at scoring funding.

Overlooking the Web

Most of today’s consumers shop online. In fact, eCommerce sales accounted for a staggering ten percent of total U.S. retail sales in 2018’s third quarter. If you operate on a solely brick-and-mortar basis, you’re missing out on exposure to an entirely new audience– and that audience could be making you money.

A Flawed Business Model

If you failed to take the time to properly construct a thorough business model before opening day, you’re probably running into trouble now. Business models which are clear and concise offer better guiding principles than those that aren’t (or are nonexistent). Revisit your business model to try to determine the root causes of profit loss.


It could be your own, it could be your employees’, it could be your supply chain… the list goes on and on, but inefficiency within any part of your business will cause cracks to emerge overnight. If your business has consistently struggled with losing money, start addressing opportunities for improved efficiency ASAP. A costly inefficiency can be anything from poor employee performance to an unreliable point-of-sale provider.

Poor Marketing

Whether your marketing materials themselves are lacking or you’ve failed to understand who your target audience is, a poor marketing plan could spell out your company’s death. 63% of marketers indicate they struggle to generate traffic and leads, so there’s no need to feel insecure or alone in your struggles– but you’ll need a killer marketing plan to turn a profit.

Vendor Costs

Negotiating with vendors is a hassle, but consider the money that’s flying out the door when you refuse to take the time out of your day to negotiate. Settling for basic pricing shows vendors that you’re a prime target for rate increases and lazy service. You should hold your own with vendors and ensure you’re getting a great deal for your money.


Monetary mistakes and issues with funds become much more common in disorganized spaces—and catching them is much harder, too. If your business is disorganized (physically or structurally), it’s undoubtedly costing you somewhere along the line; it’s simply a matter of determining where and remedying the problem.

Never underestimate the power of an organized business. For example, figuring out a way to categorize, label, and store all your receipts will give you a better sense of where your money is spent and on what.

Stop Losing Money Now—Work with TPI

Sometimes, despite our best efforts, turning around a business that’s losing us money proves a difficult task. If you’ve found yourself in a position of frustration when it comes to altering how you do business, you may stand to benefit tremendously from investing in professional accounting services. Looking to take the plunge and partner up with a pro? Contact TPI Group today for intelligent, professional business accounting services that work.