The economic environment we are dealing with today presents a significant challenge for small business. Every business owner will need to develop a business strategy that will safely see them through the economic turmoil we are currently facing. Where the level of economic viability may be precariously thin every effort must be taken to ensure the long-term stability business. Many small business owners will often be at the top of their game in their own field but will perhaps be less familiar with crisis management when the numbers just don’t add up anymore. We will now contemplate the elements that should be considered instantly when business is slow and margins are reducing.
It is always absolutely critical to have a well considered pricing structure. Many of us will have an established way of thinking that when you need to make increased profit you have to produce more business and consequently must decrease the price. . Indeed, when you consider the reduced cost of undertaking slightly less work combined with the extra cash obtained by the increased price there can often be a considerable overall gain. It is crucial to cover your business costs and upping prices gives an instant way for covering any gap. There must always be adaptability in the way the pricing structure of the business is modified due to potential changes in volume of incoming revenue. A higher price will always be able to be charged when incorporating in value to the service or product and this must never be forgotten. Therefore, if if you do decide to put prices up it is essential to consider how you may incorporate more perceived value simultaneously to keep the demand levels buoyant.
All business owners must always become completely proficient at remaining on top of their costs. If we look at the figures it is clear that if we have a 10% profit margin, for any supplementary revenue, a total increase in revenue of ?100 will give an overall improvement in profitability of ?10. It is possible however to have an improvement in profit of ?100 by slashing ?100 of costs (as long as this cost-reduction doesn’t adversely affect your business). These figures show that it is much easier to increase profitability by keeping costs low than it is to improve profitability by upping volume. It is important to regularly review and potentially renegotiate price with suppliers. It will often be the case that there will also need to be some cutbacks in terms of staffing resourcing . It is important to carefully consider the fact this could indeed be not only momentarily costly in the short term but also potentially negative on morale levels. However, it is essential that finances of a business are reviewed in a robust and honest fashion. If severe cutbacks are necessary after a comprehensive review there is no point at all in ignoring the fact. Any changes that are made however need to be incorporated into a well thought out business plan so that the longer strategy for the business is robust.
Abracadabra Leaflet Distribution Ltd are the largest independent provider of leaflet distribution Hampshire including Basingstoke, Farnborough, Fleet and Hook. You can find more information on our blog at Leaflet Distribution Hampshire