Boosts Instead of Cutbacks

One of the major themes in the news these days is the soaring price of practically everything. Retirees, the disabled and many of the poor are screwed. The able-bodied and businesses sometimes have more options for coping with it.

Why? Because cutting back is limited.

The initial response to a financial crisis is almost always to cut costs. A business can eliminate frills, streamline processes, travel only when absolutely necessary, and so on. A household that used to buy favorite brands can switch to cheaper house brands.

A household that was barely getting by has already done away with non-essentials and has to choose which essentials to do without. In the UK, it’s described as choosing between heating or eating. In the USA, it’s often discussed in terms of rationing insulin or other medications.

That’s the rub. We can only cut costs to a certain extent before the cuts become harmful, even life threatening.

Businesses and people hearty enough to work as much as they want have more options because they can do something about the other side of their money problems. They can look for ways to bring in more money: add products or services, run new marketing campaigns, get a second job or start a little business on the side. Only their capacity for doing more limits how much additional money they can bring in.

The poor tend to already be working as many hours as they can get. The disabled can’t do any more than they already do. Retirees already did their part and are often not able to return to the workforce.

Let’s focus on one piece of the puzzle: your small business.

What If You’re Running a Business?

Big businesses have armies of people and tons of accumulated resources to throw at the problem of how to add more revenue. What if your business is small to medium sized? How do you figure out what to do? How do you even decide what to think about first?

You can rely on your own experience and cleverness, with help from any employees you have who are especially good at seeing problems from unusual perspectives. The upside of doing it this way is that it’s free of charge. The downside is that it’s hard to know whether the ideas you move forward with are going to work or fall flat. In times like these, it’s tougher to recover from a failed initiative than it would be in a more normal business environment, so that uncertainty can cost you sleepless nights.

Or you can get help.

The usual impulse for this is to engage a consultant who seems to have better experience and a good track record. That’s often still a matter of subjective judgement. Going forward with their ideas is just as much a leap of faith as going with whatever came out of your in-house brainstorming. I’m getting cold calls from people using this roiled economy to pitch business salvation, but without a background that assures they know what they’re doing. You’re probably getting such calls too.

There is another way to seek help.

You know how much I love data and analysis. There are people (I’m not the only one) who can put your financial data into some software, ask some questions, and crunch the numbers to show what the financial impact on your bottom line will be if you do this, that or the other.

What that gives you is more sureness and less anxiety about whether or not your choices are going to pan out.

A Quick Example

Last week, I spent some time doing this with someone I’ve known for several years. The business isn’t in trouble. On the contrary, it substantially outperforms the averages for its industry. We were curious to see whether we could add to its profit even though it is already a high performer. When a business is not a high performer, it’s easy to find improvements to make and the impact is dramatic. His business already operates very well.

In an hour (in Zoom) we came up with two tweaks he can make to boost profit by at least 5% in a couple of months. We were very conservative about our figures, so it will probably be more, and it will carry on year after year. We held it to two tweaks so it’s a bit of work that’s easy to handle. My normal one-time fee for a session like that? At most, 5.5% of his current year’s additional profit. We only looked at two aspects of his business. There are plenty of other areas where we could do more.

Remember, this was with a high performer where there aren’t a lot of obvious gaps to fill, and it’s still cost effective.

So if you feel unsure about what to do with your business to cope with this wild ride we’re all on, getting help to figure it out need not be financially out of reach and it need not be a leap of faith.

Look for an advisor, consultant or coach whose methods are data-based, and sleep better with the results.