You have a value proposition.  It may be the one you started with or it may have evolved.  But change keeps coming at us faster and faster.  Right now the biggest change coming is the looming economic slowdown.  Is what you’re selling now as valuable to your customers as it was last year?  Last month?  Are your prices holding up?  One change being forced on many small businesses involves pricing.  Much of many physical products being sold today comes either wholly or partly from China and tariffs are increasing the costs of many of these products.  As this trend continues the big players – the Amazons, Walmart, Apple and on and on are better able to absorb the increasing costs with little or no increase in prices – so far.  This may not be so easy for small businesses.

If you do have to raise your prices is what you sell still as valuable to your customers?  Do you assume that if sales are holding up that they will continue to if you have to raise prices?  If you do have to raise prices is there something you can do to keep your value?  Do you offer a different service to go with your product – like free delivery five minutes ago?  Do you look at a different product mix?  Do you maybe add something new to your offerings or eliminate something with lower margins or take that too much time to perform?  How flexible can your pricing be?  Airlines adjust prices almost by the minute.  Do you have slow times when you might be able to offer a little lower price?  Do you look at your social media presence to see if there are more ways that you can connect with your customers?

How long has it been since you really had a Dutch uncle look at your prices and the costs that go into them?  Cost control, even for small businesses, is something that should always be watched closely.  Do you know what your competitors are doing?  Do you know why people are buying from your competitors?  Are there potential customers out there that you have never even thought about?  Pricing can be a winning or a losing strategy.  It might be worth taking a look now.

 

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Drip…Drip…Drip
October 8th, 2019

Have you ever been anywhere where there is a faucet with a slow leak and every now and then you hear the drip, then a little while later another drip, then another?  At first you hardly notice it.  Then you hear it again and start to wonder where it is.  Then you find it and say “OK, I’ll deal with that later.”  But it keeps on dripping and now you’re starting to get irritated.  The economy is starting a slow drip.

In the last week several more causes for the drip have shown up.  The manufacturing gauge is the lowest it’s been since 2016.  It has now contracted for two straight months.  Weakness in the manufacturing sector spreads to other parts of the economy because companies start lay to lay off workers and stop buying as much from suppliers – an example of a ripple effect.  Small business hiring plans have dropped.  The ISM Non-Manufacturing Index (the services sector) has also fallen to its lowest level since 2016.  The U.S. services-employment index is the lowest in five years, and then hanging out there like a great dark cloud is the trade war.  The trade war is already having negative effects on the economy in many industries, but one of the less visible effects is the creation of continuing uncertainty about what’s going to happen.  Companies that might be thinking about making investments or expanding are holding back until they see how the trade war will resolve.

On the positive side, jobs continue to increase although growth has slowed considerably, and the unemployment ratio is the lowest in 50 years.  Mortgage rates are low and the housing market is strong.  And the American consumer is still spending – a very positive sign for the economy because consumer spending accounts for approximately 70% of the economy.

But that faucet is still dripping.

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The basement?  What about the garage?  The stories of some rather well-known companies speak to the lore of the garage startup – Apple and Amazon come to mind.    But the basement?  I don’t know if Ewing Marion Kauffman had a garage, but he did have a basement.  He served in the Navy in World War II, and after leaving the Navy he became a pharmaceutical salesman.  In 1950 he formed Marion Laboratories with a $5,000 investment.  In his basement.

In 1989, Marion laboratories merged with Merrell Dow Pharmaceuticals to form Marion Merrell Dow.  In the year prior to the merger Marion Laboratories had revenues of $930 million.  The Kauffman Foundation was born.

From the basement to the C-Suite.  The entrepreneurial spirit that drove Ewing Marion Kauffman to the C-Suite created a major American foundation dedicated to entrepreneurship and education.  There is no limit to what the entrepreneurial spirit can do.

Who needs a garage?

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