The steely blade of the hunting knife at my throat made me swiftly take stock of the seriousness of the situation and my immediate options.
At the age of 26, I was selling goods that included hunting knives from an outdoor stall when a patron grabbed a knife and held it to my neck, demanding money. I quickly made a decision that might have saved my life.
Many business owners today are in a similar if less deadly situation. They face threats that could have serious consequences now and into the future. The shortage of labour, rising costs, inflation and supply-chain challenges are forcing owners and managers across the nation to make serious decisions to keep their businesses profitable.
In many cases, employees are unaware of the gravity of what their employers face to keep their businesses afloat in these disruptive times.
The need for profits in business are many, including:
- maintaining jobs and making payroll for employees;
- investment in inventory and assets;
- contributions to the community and non-profits;
- enable owner to retire since they don’t have some of the benefits of employees;
- fund future growth and diversity;
- pay taxes that pay for government spending.
Here are five things you can do now to get your business to profitability and keep it there:
Review your business model
Recently I had worked with a business owner who was preparing to sell the business in two years. While the overall operation was marginally profitable, there were divisions within the company that weren’t.
If you have areas of your business that are eroding your bottom line, there’s no better time to review your business model for those areas and fix them or fold them.
Analyze your costs
When times are good, many businesses pad their expenses with luxury items that are perks to the owners, clients and employees.
When profitability is impacted, unfortunately we don’t take the time to go through our expenses line by line and determine their need and value to the business.
The elimination of a couple thousand dollars in expenses a month can add tens of thousands of dollars to the bottom line at the end of the year.
Adjust your prices
When times were good, many companies adjusted their prices once every year or two. Now clients are telling me that due to unprecedented inflation and price changes from suppliers, they’re having to review their prices monthly.
“My customers will leave if I raise my prices,” is a common misconception many business operators hold.
Last year, one of our clients made the decision to raise their prices by 15 per cent across the board. They were scared their customers were going to complain and leave them.
Of the hundreds of customers they served in the following weeks, only one even mentioned the higher prices.
The reality is that most customers don’t notice price increases of less than 15 per cent and right now most people expect higher prices. If you haven’t raised your prices, you’re one of the few remaining companies to do so.
Fire some customers
Recently we worked with two businesses that looked at their lists to determine who their best customers were and the viability of serving them.
Both found out rather quickly that a couple of their key customers were actually costing them money. In one case, the business owner made the decision to fire the customer due to the demand and nature of the relationship. In the other case, the business decided to go back to the customer and negotiate better pricing in order to keep the business open.
There’s no best option except for the one that enables you to survive in the best possible manner.
Stop and think strategically
When our businesses are under threat, the stress can be enormous. Often the only thing we can focus on is coming up with a short-term solution that will make the pain go away.
Unfortunately, putting a small bandage on a large wound doesn’t facilitate healing. Complex problems require strategic thinking and often surgical procedures that take planning.
Setting time aside to stop and think strategically will can make a world of difference to your immediate and long-term stress – and the bottom line.
Don’t do this alone – engage your key staff and the rest of your team. They want you to thrive for their sake as well as yours.
Panic doesn’t usually work when we face serious, critical situations. A calm demeanour and problem-solving mindset can enable you to survive when facing immediate adversity.
Businesses need profits to survive. If your bottom line is threatened, take the time you need to get your team engaged and come up with solutions that enable you to be profitable and serve your customers, your employees and your communities for years to come.
© Troy Media
Troy Media is an editorial content provider to media outlets and its own hosted community news outlets across Canada.