How to Make a Profit in Small Business

Most small businesses take at least a year to show a profit, as it normally takes that long to produce enough revenue to cover your start-up expenses, according to the Small Business Administration. However, your small business can make a profit if you are careful in your planning and your spending. New entrepreneurs, particularly, can be easily attracted to the thought of operating out of a luxury office space or purchasing advertising specialties, such as pens and magnets, to use as giveaways. When considering any expense, take some time to think about whether it will contribute to the profit and the success of your business.

Instructions

1. Keep your overhead low. Overhead includes anything that does not directly relate to earning money, such as office space and supplies. Working at home or sharing an office space will reduce your overhead costs.

2. Charge a reasonable rate for your product or service. Start-up entrepreneurs tend to under-price their services or products. Review your rates and prices to ensure you are earning what you need to make your business profitable.

3. Take advantage of low-cost and no-cost marketing opportunities. Ask customers to spread the word among their friends, write press releases, and network among your current contacts.

4. Use no-cost and low-cost resources such as the Small Business Administration and your local community college's small business counselor to get advice on starting and operating your business efficiently.

5. Keep a close eye on your expenditures. Before spending money on anything, determine whether it is necessary for the operation of your business and whether it fits in your current budget.

Tips & Warnings

• Set up a spreadsheet to track expenses and income, so you will know your financial status.

• Resist sales pitches for expensive items you do not need and which will reduce your profit.

Resources

• Market and Price