What’s going on with your business?
If your company is one of the many that have hunkered down to weather the storm, then this article is about you.
Let’s talk about a two part strategy that may help you come out of the deep recession stronger that you went in.
Understand where you are making money.
If you are selling more than one product line or to more than one industry or geographic area or a combination of all three, then it behooves you to understand what is going on.
Break out your Profit and Loss Statement into fixed and variable cost and isolate those cost that won’t go away. Next develop a break-even analysis for each market. You now have a friendly statement that will lead you to decisions on where to focus and how to reallocate your resources. Eliminating unprofitable product lines can result in the reduction of more cost than sales You can only do this effectively with a properly structured financial statement.
Having more meaning Financials, you will have a better understanding of your cost and profitability than most of your competitor.
Some of your competitors won’t be around when we come through the storm. Some will but may be so crippled that they won’t be positioned to take advantage of the new day. Here is a way that you can gain the advantage. Right now identify those competitors and go after their customers. How?
• Turn your under utilized work force into a task force. Ask them to help you identify the weak competitors. Then do your homework and identify their customers.
• Identify their profitable offerings. If your competitors have loss leaders, let them keep that business and attack the profitable business.
• Give these potential customers attractive incentives to buy from you, maybe even below your total costs, BUT…Do not lower your price. You will be stuck with that pricing when the economy comes back. The incentives should be in the form of signing bonuses or other one time compensation that results in money in your customer’s pocket and in an investment in a long term relationship.