5 Reasons Filipino Businesses Can’t Make a Profit

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. [restrict]

Monitoring your overhead costs is crucial in preventing excess cash flow. It might be inevitable but if you’re trying to project a good income, tracking your overhead cost every time you purchase inventory or hire more employees will help to prevent the company from being stretched too thinly in the future.

Filipinos are known to be really resourceful. Hence, there will surely be a way to cut the overhead cost which your small business needs at the moment to minimize losses. You could start from limiting your equipment and/or looking for a more practical workspace.

Maybe you could turn a 2-bedroom apartment into an office instead of renting a space in a commercial area. Also, it’s probably time to search for some freelance workers for your projects.

3. Your customers.

In order for your business to work, you should be attracting the right kind of people.

Making a customer persona is a great way of determining how to sell your products more effectively. It is also advisable to be creative with your promotions since that could potentially persuade them in buying your goods.

4. Your management.

If you haven’t heard of economic karma, here’s how it basically works: treating your employees right will motivate them to do their jobs better. Good employee treatment will always be a good start for the business to prosper because that could influence them to make sure your company is operating well.

  • How should you treat your employees?
  • Have a good employee-employer relationship.
  • Set up an inspiring workplace.
  • Sign them up for proper training.
  • Consider giving them a decent pay.
  • Reward them for a job well done.

5. Your online presence.

We are at the age where online shopping is a thing. Therefore, having a social media account/ page might be beneficial for you since that could promote your product further, and help you reach a wider audience that might turn into customers. A good example would be the skincare brand, The Skin Bureau. After just a year, it has gained 26,000 followers on Facebook alone, and has been profitable since because of the online transactions that they have been making.

If you really want to work on gaining profit, you should raise the marketing bar. And going online might be your best bet especially for small businesses who are trying to gain recognition.

Perhaps it’s about time to double check your business process. But as always, start from the internal factors then work your way out.

Actionable Takeaway:

It’s not easy to have a good grip on your cash flow especially if your business is operating already. However, you could increase your chance of achieving financial success by trying to improve your business every day. Spot the minor and major issues and plan out a better strategy.


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