How low do you go?
Feb 20 2009
These are goods times for fast food outlets, as people prefer to stay at home and argue about who should phone in for the cheap and cheerful takeaway option.
This was bad news for many ladies on Valentine’s Day hoping to be wined and dined (conveniently clashing as it did with the Six Nations rugby and the FA Cup) . But as we turn our backs on restaurants and gastropubs with their bruschetta al pomodoro and steamed potted mussels, opting instead for bacon double cheeseburgers and large fries, other businesses are at a crossroads as purse strings are tightened.
Our latest poll on SmallBusiness.co.uk asked whether you are cutting prices. For many start-ups, this is a big decision as, if you get it wrong, it can signal a terminal squeeze on margins. A total of 37 per cent of you have taken the decision to make a cut in order to try and win new business, while nine per cent continue to weigh up the benefits of such a move.
Some 24 per cent realise that, in the long run, it’s a bad idea as trying to increase prices when the economy improves will require a unique amount of guile. That said, 19 per cent of you have decided to raise prices – a brave move but, if well judged, it could be exactly what is required to keep your business healthy.
The spread of responses shows how tricky a decision it is (of course, some sectors will find it easier than others). Price is often the obvious place to start when things get tough, but it’s often worth stepping back and seeing if the business can be managed better. Can contracts be renegotiated? Can payment terms be extended? Can certain services be outsourced? There are other ways to improve efficiency and keep the margins where they need to be.
After all, once you’ve cut your prices, there’s often no going back.
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