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Loss can be a major problem for businesses, though there are times when there is no avoiding it. Small businesses especially can be hurt by uncontrolled loss since they generally have fewer resources and a smaller overall revenue stream than larger businesses and corporations. Realizing a loss isn’t necessarily a reason to panic, but it should be monitored to make sure that your business doesn’t continue to lose money unnecessarily.

When dealing with loss it’s important to look at the overall situation so that you can determine whether the loss is a short-term loss that will be corrected naturally or if the loss is a sign of problems with your business that you need to correct as quickly as possible. To do this you first have to determine exactly where the loss is coming from, which will tell you whether or not you’re going to have to make major changes to prevent future losses.

Review recent expenses, especially one-time purchases that were made to expand your business or replace aging equipment. Calculate the cost of sales to determine how much of a profit you’re actually making on your products or services, making price adjustments or cutting costs if necessary. Check your accounts receivable to see if you still have any unrealized assets or other income that you haven’t yet received that will make up the difference. Once you’ve determined the cause of the loss you can begin developing a plan to recover from the loss and show a profit once again.

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