Should you close shop or try to save a business that isn't profitable?

Although the pandemic and the restrictions that went with it have eased, your business continues to suffer from profits lost. Should you close shop or persist? Accountant May Reyes gives her take.

Should you close shop or try to save a business that isn't profitable? Source: Vicky Tran from Pexels

Highlights

• There are avenues you can look into to increase your income.
• Expenses, particularly inventory, should be closely monitored.
• The small business 15-year exemption is a grant given by the government to eligible small business owners.

'May PERAan' is SBS Filipino's podcast series which features financial experts seeking to answer the most common questions about money and finances.

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Dapat na bang isara o kaya pa bang isalba ang negosyong naapektuhan ang kita dahil sa pandemya?

SBS Filipino

05/04/202210:53

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"Cashflow is the lifeblood of a business. This is also one of the most common problems of business owners."

Accountant May Reyes shares how you can potentially solve this issue and save your enterprise.

May shares that you need to consider these in order to increase your cashflow, namely:

Income

"To increase your income, you need to generate more sales. How do you do that? You can advertise your business and innovate your products and services."

May says that there are many ways to advertise your business nowadays. Online options such as social media platforms are viable ways to do so.

"Make sure your products are innovative and Instagrammable."

Having a good relationship with customers will also help with sales.

"For example, Starbucks in Australia is not as popular as our local cafes. In the US, people are loyal to brands. In Australia, we're loyal to the ones serving us, so that is your edge with your customers. They will keep coming back if you have a good relationship with them.

Expenses

"Reduce your expenses so you can increase your cashflow."

May says that one way to do this is to request a delay in payment with suppliers. Some will agree to a payment within 30 days, while others may even agree to 60 days.

"The most important part of your expense is your inventory. Make sure you're on top of it. Have a good record of each and every product sold and used. When you dont monitor your inventory, you may keep on buying supplies without any sales or profit.

"Have the proper technology in place - a POS [point of sale] system that shows you exactly where you are with your inventory."

Grants

May shares that the government has grants to help support small business owners. 

"There's a grant called the small business 15year exemption.

"Let's say you are aged 55 and you bought a coffee shop for $50,000 15 years ago. You now want to sell it for $100,000. The $50,000 profit will be typically paid as tax to the government; but with the small business 15-year exemption grant, you don't need to pay for your capital gains."

What to consider before closing shop

"Do what you can to save the business first. Try your best to innovate your products and monitor your inventory. Also look at the grants given by the government."