Business not making money in 2024 – Here are the reasons why

Reasons why your business is not making moneyIf your business is not making money, the first step is to take a close look at your financials to understand the root cause of the problem.

This involves examining your income, expenses, and profit margins to identify areas where you might be overspending or not generating enough revenue.

You may need to make some difficult decisions, such as cutting costs, adjusting your pricing strategy, or pivoting your business model altogether. It’s also important to reach out to a financial advisor or accountant for guidance on how to improve your financial situation.

In addition to addressing financial issues, it’s important to take a critical look at your business as a whole. Evaluate your product or service offering, your target audience, and your marketing strategy to identify any areas that could be improved.

You may need to conduct market research to gain a better understanding of your customers’ needs and preferences, and to identify new opportunities for growth.

It’s also important to stay up to date on industry trends and best practices, and to be willing to adapt your approach to stay competitive in the marketplace. Ultimately, the key to turning your business around is to stay proactive, flexible, and willing to make the necessary changes to improve your financial performance.

Reasons why your business is not making money

You’ve taken the all-important first step in acknowledging the issue at hand. But now, it’s time to take action and transform your business into a profitable venture. Fear not, as we’re here to assist you in both recognising the issue and taking the necessary steps towards growth and success.

Perhaps your business has hit a rough patch and is no longer generating revenue. Or maybe you’ve been struggling to turn a profit since the very beginning. Either way, don’t despair! You have the power to change your fortunes by engaging in introspection and implementing the right strategies.

So buckle up and get ready for the ride, as we guide you down the path of self-reflection and equip you with the tools you need to revitalise your business and start generating profits.

Here are 9 likely reasons your business is losing money:

1. No Product-Market Fit

Let’s dive right into the toughest pill to swallow – addressing the reason why many startups fail. Unfortunately, many entrepreneurs tackle exciting problems that fail to solve market needs. While it’s exciting to work on interesting problems, these solutions don’t always translate to profits. In fact, a staggering 35% of failed startups cite “no market need” as the reason for their downfall.

Take, for example, Snapchat’s original Spectacles. They introduced a high-end pair of video-recording sunglasses, assuming their platform users would be eager to document their lives from the convenience of their eyewear. Unfortunately, the product failed to gain traction because there wasn’t a market for it. Users had no problem taking out their phones to record their Snapchat messages, so they didn’t see the need to put on a pair of glasses to do the same thing. As a result, the product tanked, and so did Snapchat’s profits.

It’s essential to evaluate your product’s market to determine whether you have an audience for it. Ask yourself, why would potential customers want to purchase your goods or services? If you’re struggling to generate revenue, lack of an addressable market could be the reason. Remember, products must solve problems and not just cater to your entrepreneurial interests. If you can’t find a market for your product, there are a few options:

  • find an audience that needs your product and market to them,
  • pivot your product to solve your target market’s needs,
  • cut your losses and abandon the product

2. Tough Competition

Are you excited about a great idea for a business? That’s fantastic! However, keep in mind that where there’s money, there’s competition. It’s essential not to obsess over your competitors, but there may come a time when they deserve a bit more of your attention, particularly if they’re dominating the space, undercutting your prices, and stealing market share.

If your business is struggling to make money due to tough competition, it’s time to make a change. Here are a few options:

  • Pivot your product to address a different, less competitive market.
  • Identify and market a unique selling proposition (USP) that your competitors don’t have.
  • Upgrade your product to outperform your competitors.

There’s always a way to compete. However, it can be quite challenging, particularly if you’re up against a monolithic company such as Amazon, Walmart, or Apple. In such cases, think about what angle you can take to win customers. It’s unlikely to be on price or delivery speed, but what else could it be?

  • Hyper drilled-down niche
  • Local expertise
  • Lightning-fast customer service
  • White glove setup, installation, or servicing
  • Irresistible branding
  • Sustainable and ethical products and manufacturing
  • Company philanthropy

If none of these ideas work, you may have to pivot your business. Conduct market research and look for an unfulfilled need that nobody else has tapped yet. It’s easier said than done, but it can be nearly impossible to make money as a startup if your market is oversaturated.

3. Broken Business Model

Reconfiguring your business model can be the key to unlocking profitability. It can be a challenging process, but it’s often less time-consuming and costly than creating a new product or finding a new market.

The COVID-19 pandemic has been a prime example of how external factors can render a business model ineffective. Many gyms and yoga studios, for instance, suffered a loss of revenue due to social distancing measures and remote work requirements. Although their products and market-fit may have been sound, their previous business models were no longer effective.

One common strategy businesses employ to boost their user base is selling their products or services at a loss. However, if you start by offering loss-making products, you may find it difficult to increase prices and reduce expenses later on.

Here are some things you may do if a flawed business strategy is preventing your company from turning a profit:

  • consider getting a new perspective
  • analysing your competitors’ business models
  • exploring new strategies to revamp your current business model

4. Pricing Issues

The conundrum of pricing is a never-ending struggle for businesses. Charge too little, and you might not make enough to cover costs. Charge too much, and you might turn off potential customers. Every startup’s goal is to find the perfect balance, but it’s easier said than done. Some companies plan to operate at a loss at first, but they know they’ll become profitable as they scale. Unfortunately, not all businesses have that luxury.

A common mistake entrepreneurs make is basing their prices solely on competition or what they believe is fair. They neglect to factor in their expenses, desired salary, and what the market is willing to pay for their products.

If you’re struggling with pricing, you may need to reverse engineer your prices. Calculate your costs of goods sold (COGS), operating expenses, and desired salary. Your product’s price should at least cover your expenses, but you want to set it as high as possible to maximize your profits.

To justify a price increase, add more value to your products and services. Fast-food chains, for instance, add drinks to combo meals and charge extra, even though the soft drink costs them very little.

5. Poor Product

It’s a tough pill to swallow, but sometimes a product just isn’t up to par. Even if you’re attached to it, customers may find it unusable, unattractive, or simply too expensive. This can be a hard reality for entrepreneurs to face, but it’s important to look at the product objectively.

The good news is, there are ways to pivot if your product is holding you back:

  • Upgrade your product to deliver more value to customers.
  • Find a way to produce your product more cost-effectively so that you can lower prices.
  • Make changes to your product to better align with market demands.

Sometimes businesses become overly fixated on metrics like user numbers and market share, losing sight of the importance of product development. While it’s important to get your product to market quickly with a minimum viable product (MVP), you should always be looking for ways to improve your product to better meet your customers’ needs. If you can achieve the right product-market fit, focusing on making a better product can often yield better results than solely trying to attract more customers.

6. Weak Goal-Setting

Entrepreneurs who are motivated by the desire to work for themselves and enjoy freedom and flexibility may struggle to build a profitable business. While there’s nothing wrong with starting a business for these reasons, it’s important to recognize that they may not be sufficient to generate significant revenue.

To build a money-making business, it’s essential to approach planning and goal-setting with intentionality. For example, using a goal-setting framework such as OKRs (objectives and key results) can help entrepreneurs focus on the metrics that matter.

Creating effective strategies and tactics is another critical step towards achieving business goals. Strategies are high-level plans that outline how a goal will be accomplished, while tactics are the specific actions needed to execute a strategy.

One other factor that can hinder a business’s profitability is an entrepreneur’s perception of what constitutes success. While one entrepreneur might be content with earning £50K a year, another may view that amount as “not making money.” It’s important to be aware of these differences in perception and to focus on the reality of your situation, rather than chasing an unrealistic or never-ending goal

7. Lack of Bandwidth

Sometimes, entrepreneurs simply don’t have the resources to devote to their business, which can hinder their ability to make money.

Consider the example of a restaurant. For many restaurants, being open as often as possible is necessary to cover overhead costs like rent, utilities, and salaries. If they can’t stay open enough to make money consistently, they could be in trouble.

Do you feel like your lack of resources is holding your business back from making money? Here are some changes you could consider making:

  • Bring on a partner to help carry the load
  • Hire a part-time employee or freelancer to take care of specific tasks
  • Hire full-time employees to help grow your business
  • If it’s a side hustle, consider leaving your 9-to-5 and devoting more time to your business
  • Open more locations

Remember, your business needs time, investment, and guidance to succeed. If you want to make more money, you’ll likely need to invest more time as well. Alternatively, you could focus on increasing efficiency. By doing so, you can make more money in less time.

8. Wrong Timing

It’s a fact: timing is critical to a business’s success. Sometimes, your product, prices, business model, or market are on-point, but the timing isn’t right. As many businesses that launched during the pandemic can attest, timing is everything.

Founder of LinkedIn, Reid Hoffman, famously said, “If you’re not embarrassed by the first version of your product, you’ve launched too late.” It’s a delicate balance to strike: launch too early and risk making a poor first impression, or launch too late and miss out on the market opportunity. But there’s an optimal time to launch, and it’s up to you to find it.

Vreal, a virtual reality (VR) platform, is an example of a product ahead of its time. They aimed to create a virtual reality space for video game streamers and viewers to hang out in, but the available hardware and bandwidth capabilities weren’t able to support their solution quickly enough.

“Unfortunately, the VR market never developed as quickly as we all had hoped, and we were definitely ahead of our time,” the company explained. “As a result, Vreal is shutting down operations and our wonderful team members are moving on to other opportunities.”

Launching at the wrong time can be a setback for your business, but it doesn’t have to mean failure. You might need to wait out a storm, or you may need to pivot to better match the present (and future) circumstances.

9. Little-to-No Demand

Even with a perfect product-market fit and optimal pricing, your business may not succeed if there isn’t enough demand. Your target market may be too narrow, or your product may lack recurring purchasing value.

While niches can bring wealth, it’s essential to have the right products. Suppose your business caters to a small niche. In that case, your product must be high-end or a repeat purchase to ensure profitability. If you only have a single product, consider adding more products to upsell and cross-sell your audience.

Suppose you sell products such as refrigerators, which customers typically only purchase once for a long time. In that case, you must price your product high enough to compensate for low sales volume if your target market is small.

In addition to the above, the time it takes for your business to complete a turnover cycle may be a contributing factor. Suppose your business provides services, in that case, you may need to expedite operations to accommodate more clients and ultimately generate more revenue.

Read more: Free Help & Advice if your business is making a loss

Turn Your Business Around

If your business is not making money, it may be time to turn things around. However, it’s important to assess whether the struggle is worth the reward. Turning a business around can be a challenging and time-consuming process, and it may require significant investments of time, money, and effort. It’s important to evaluate your business’s potential for success and profitability, and to identify any underlying issues that may be contributing to the lack of revenue.

If the problems can be addressed and resolved, and there is potential for growth and profitability, it may be worth pursuing a turnaround. However, if the business model is fundamentally flawed or there is limited potential for growth, it may be better to cut your losses and explore other opportunities.

Read more: Actions to take if a business is losing money

Frequently asked questions

What do you call a business that is not profitable?

A business that is not profitable is often referred to as unprofitable or non-profitable. Another term for this type of business is a loss-making business.

Why is my business not doing well?

There could be several reasons why your business is not doing well, such as lack of demand, poor marketing, pricing issues, low-quality products, and ineffective management. It's important to identify the root cause and develop a plan to address it in order to turn your business around.

How does a business survive if they don't earn profit?

A business can survive without earning a profit for a short period by relying on loans, investments, or personal funds. However, in the long run, a business needs to earn a profit to sustain its operations and grow.


If your business is not making money, it’s important to take action to turn things around. The first step is to analyze your financials and identify where the problem areas are. Look at your revenue streams, expenses, and profit margins to pinpoint the areas that need improvement. From there, you can create a detailed plan for how to make your business profitable. This may include cutting costs, increasing prices, finding new customers, or developing new products or services.

It may also involve restructuring your business or seeking outside investment. It’s important to be realistic about the time and resources that will be needed to turn your business around, and to carefully consider whether the struggle is worth the potential reward. With a solid plan and a willingness to make changes, it is possible to take a struggling business and turn it into a profitable and successful enterprise.

Steve Jones Profile
Insolvency & Restructuring Expert at Business Insolvency Helpline

With over three decades of experience in the business and turnaround sector, Steve Jones is one of the founders of Business Insolvency Helpline. With specialist knowledge of Insolvency, Liquidations, Administration, Pre-packs, CVA, MVL, Restructuring Advice and Company investment.