Managing Margins
In the world of small business, the ability to implement a price increase or even maintain existing margins on repeat business has never been more difficult. Thanks to digital technology, buyers are able to manipulate the quoting process and get potential suppliers to bid against each other within a matter of seconds. While this is nothing new, it continues to be an ever expanding problem for small businesses. Quite simply, This implied price ceiling means there is even less cash or available employee time to keep up with customer requirements.
Digital technology continues to change and evolve at an accelerated pace. Customers have become accustomed to having digital visibility on the costing and production process for their product. They are expecting to see the details in a real time mode and when they are required to "fly blind", they are uncomfortable about offering future business opportunities without concessions. To hold onto the business, companies are expected to offer lower pricing as the first concession. Then this same small company with limited resources is asked to do things like; hold inventory in finished goods, provide technical support on issues the customer is having and provide on-going updates on product status through the production process. All this at no added cost to the customer.
Small companies in a stressed situation have little or no gross margin left to give and are forced to take drastic steps like reducing payroll and liquidating assets. When faced with these decisions, outside help is recommended. The Bucks County Economic Development Corporation has partners like the SEWN program that can provide this guidance in difficult times.
SEWN has helped companies in Bucks county with a vast range of margin improvement action steps. While it is never a simple solution, positive results often come from some low cost alternatives. The service is cost free to the company and SEWN’s experience with these margin improvement strategies can show positive examples to benchmark against. Sometimes, an objective outsider is able to provide the support and encouragement for a solution the company already knew about but couldn’t find a way to implement it. In a recent case, the solution to the problem was already in place. The SEWN help was provided through a long conversation about how the greatest risk, starting the company, was already taken. Almost all turnaround steps have a proven track record. They come with risk but even more important, they come with the knowledge that they can be successful. Sometimes, calling for help is the best margin improvement strategy of them all.
Call SEWN today: 215-458-7580