Batten down the hatches…

Batten down the hatches!

Weathering the storm is the norm right now.  Battening down the hatches is necessary to help ships keep water out and stay afloat in stormy waters.  In days long gone, the key elements “to batten” include the wooden grates over the hatches in the ships deck, the tarps thrown over the hatches, and furring strips nailed around the edges or ropes to hold the tarps in place.

Four key business elements that help batten down the hatches during troubled times include:

  1. Map out your marketing strategy – having this in place and effective implementation are critical always but especially during the storm.  Keeping your marketing active versus cost cutting approaches makes all the difference between businesses that survive and those that thrive.
  2. Diversify your customer base and service offerings – As a part of 1. above, diversity helps to keep your business off the revenue rollercoaster through tough times as well as any usual seasonal effects.
  3. Plan worst case…sound strategic planning includes what if worst case scenarios most of which won’t ever happen.  But if they did, you are more likely to have a contingency plan ready to go and even if you don’t have just the right plan, working through scenarios is good practice and helps to ensure you and your team can meet the challenge when the need arises.
  4. Set aside a rainy day fund – Every cent counts and even a small rainy day fund sets the right tone for your team from core values to daily cash flow management.

“If you would be wealthy, think of saving as well as getting.”
Benjamin Franklin

If you didn’t have these four key business elements in place before the Covid-19 pandemic hit, you might be feeling the pain.  If so, triage your business and get through as best you can.  When you get a moment and catch your breath, schedule a time for you and your team to take a look at the four key elements above so when the next storm comes, you can batten down the hatches!

The Cost Plus Mistake

Many small business owners have trouble figuring out their pricing.  A common method is Cost Plus which is where you add up your business costs and then add a little more for “profit.”  There are a few problems with this method of pricing.  For one, it does not allow for cost increases and too low a price might send the wrong message regarding quality or credibility.  Also, the little more added on for “profit,” is usually too little and profit margin ends up being small or even negative which makes it difficult to grow your business.

A better approach is to consider the value of your product and service to your customers and what they are willing to pay.  If you are not sure, checking out your competition can give you a heads up on what this might be.  Use this number as the high end of your price range and use Cost Plus as the low end.  By establishing the ends of the price range, you now know the minimum you need to charge (so if you want to give a discount, you can) but you also know where to set your price points in regards to the real value of your product and service, your quality message, and effective business growth.

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