How To Reduce Losses In A Small Company?

Reduce Losses

Reduce losses must be considered throughout the life cycle of a company and not just in times of recession. To do this, you have to follow strategies as necessary as those aimed at generating profits.

Reducing losses does not mean reducing the quality of the production or service you provide. Instead, it optimizes costs and better use of your available resources while maintaining or even increasing productivity. Stay and read this article, and we will teach you several strategies that you can apply to achieve it.

Start Putting These Tips Into Practice And Minimize Your Business Losses

Keep in mind that optimizing this part of your business plan is another way to improve revenue. Companies with correct loss control and know how to apply it over time are much less likely to close. Here we go!

Analyze The Previous Exercise

The strategy should start with a good analysis of how things were in the previous year or even earlier years.

Subtracting the income minus the annual expenses gives you the result for the exercise. Analyze what your costs were: in what did you invest money, employees you hired, merchandise, fuel, product returns, guarantees processed, etc.

If you are looking to reduce losses, you will want complete control of all these variables. This way, you will detect which expenses were expendable and where you could have saved them. Your goal is to improve for the next exercise.

You can also analyze the seasonality of your products and services, the best-selling items, those that led to the most returns, or customer behavior. Knowing variables like these will help you make the inventory to get it right in the next exercise.

Don’t Leave Behind Any Accounting Expenses!

Always ask for your tickets and invoices for all the products and services you pay for your business. Don’t leave anything unnoticed in your expense record book.

You would be surprised by the number of freelancers and SMEs who pay extra taxes for forgetting to count expenses such as fuel, allowances, or repairs to their work vehicle. Keep it all up to date and optimize your taxes as much as you can! Get good advice on all the things you can deduct in the Treasury according to your activity.

For example, those who work with their office from home can deduct specific percentages from rent, electricity, water, Internet, and similar expenses.

Any expense you forget to deduct from the Treasury will affect your perceived and taxable benefits. Overpaying taxes for an incorrect estimate of your actual profits is another form of loss.

Avoid it!

Control The Stock Well

Any entrepreneur who wants to minimize losses should not take their eyes off inventory. Research the following points and apply these tips:

  • Determine which products are the most in-demand and buy more to take advantage of volume discounts.
  • Control the number of products with less demand to avoid remaining on the shelf indefinitely.
  • Analyze the seasonality of products according to customers’ behavior according to the time of year. Stay ahead of the market by preparing the right stock for each moment and date.
  • What articles are causing the most problems? The study which are those products that fail the most, cause dissatisfaction in customers, returns, and warranty procedures. Consider removing problem items to alleviate their losses (shipping costs for return or warranty, repairs, etc.)

Release The Stock That You Do Not Sell

If you have miscalibrated and you have been left with many products that have not sold well, do not leave them gathering dust in the window!

Better look for solutions. Many specialized outlet companies are interested in buying unsold stock from other stores. Google a little and contact a few.

They may be interested in acquiring your products, and it is an excellent way to recoup those losses. It usually works exceptionally well with textiles, designer items, sneakers. If you choose to create your outlet area, give it the right approach!

The customer should perceive value in purchasing the product instead of thinking that it has become obsolete because no one wanted it. Use the online channel to check out the unsold stock. Better create discount codes instead of putting the products thrown in prices.

Customers love the psychological pleasure of entering a discount code. Use your marketing strategy wisely in times of sales to recoup the investment of what you have not sold.


Consider collaborating with online stores that work in dropshipping mode (without stock) or implement an affiliate program.

They will be in charge of promoting your catalog to new clients.

Also, influencers (bloggers, well-known people on social networks) can help you.

All these options are almost free advertising, and they do not require investment on your part except for a small commission for the intermediary.

Reduce Losses By Understanding Your Customers

Get their opinion! Conduct surveys, use calls to action to get feedback after buying your product or service. Study and understand your clients by communicating with them. This way, you will learn to identify their needs, why they return things, or how they expect you to improve your service.

Study Returns

If items exceed the return average, try to find out why!

Is there an error in the description? , Does the image of the container or the web is not clear enough? Is there any fault with sizes?

When the return occurs due to your fault, generally you will have to bear the transport costs.

Large multinational corporations can afford aggressive return policies.

But when it comes to SMEs, the ideal is that they try to minimize returns as much as possible.

These can mean significant losses for the company. If a particular product is giving you a lot of trouble, consider removing it and swapping it out for another.

Improve Security Conditions For Your Company

Adapt the fireplace incorporating the appropriate equipment. Install smoke alarms, fire extinguishers, emergency exits, etc. Don’t neglect this point, because saving a venue from an incident can save you a great deal of money.

The destroyed establishment and material represent a significant loss that you could avoid with the right equipment and knowing how to react quickly.

Strengthen The Job Security Of Your Employees

Do not forget to comply with the Labor Safety Law by having collective and individual protective equipment.

Provide your employees with the necessary training courses on occupational safety.

Negligence at work causes physical injury to people and loss of material.

These incidents can be significantly minimized if workers have safety equipment and sufficient training to use them.

The repairs of machines that have been misused or compensation to workers who have suffered accidents involve a cost of thousands of euros.


If you work from a web page or have an online store, ensure that it is adequately shielded against cyberattacks and data theft.

Be especially concerned about hiring a web hosting ( hosting ) with a robust security protocol.

Your hosting has to offer you a service of periodic copies to restore your website if it is deleted under any circumstances.

Creating a website and content (sometimes a multi-year job) is an excellent investment of money and time. Don’t mess up all the work with cybersecurity carelessness!

Avoid Penalties

Comply with all labor safety regulations, always keep your accounting up to date and submit the forms to the Treasury within the deadline.

It would help if you always were prepared for a Labor or Tax Inspection. Avoid fines and penalties to your business because you cannot deduct them as expenses in addition to supplying unnecessary losses.

If you sell online, be very careful when writing the conditions of purchase! Do it clearly and in detail, and shield your ecommerce against any problem that may arise. We do not want to have any litigation with a client, but we must be aware of all cases.

The company is right in front of the consumer on many occasions, but if the circumstance were not clearly explained in the purchase conditions, it would be difficult to convince the courts.

Write everything that the law requires: delivery times, returns, guarantees, cookie policies, and essential data privacy policies.

Employees And Suppliers

If any of them malfunction, they are going to lose you money.

Better prepare a good selection process to choose the right candidate and offer incentives for the worker to perform their tasks well. Use process automation software to make HR work easier.

As for suppliers, take your time to choose quality ones. The delays of goods, improper packaging, or slow responses to incidents can cause you to lose a lot of money.

Any provider can commit a specific failure, and you have to know how to forgive. But when an attitude generates the problems, do not give second chances! Never risk sticking with a poorly performing supplier.

Implement these tips now and look at the balance of expenses and income at the end of the year. We are sure that you will be able to reduce the losses of your small business. Run your business wisely!

Also Read: Eight Steps For Those Who Want To Start An Online Business

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