Since
1992,
NSPG has been providing the tools that allow contractors to
increase profits and minimize business hassles. With our
simple-to-use-tools, you can make being a business owner
what you always wanted to it be -
successful, profitable and rewarding.
Hard
Choices
 "Two
Southern Arizona plumbing contractors filed for
bankruptcy protection this week as demand for their
services dwindled amid the recession". This is how
a story began in the
Arizona Daily Star this week. Over the last
year, your local paper has probably carried similar
stories. We are all trying to survive the longest,
steepest downturn since 1981. For most businesses
in most markets this means one thing - it's time to make
hard choices.
Running a business is all
about making choices, but for many managers, this is the
first time they have had to make choices that could
determine the survival of the business. At NSPG,
we are well aware of the situation around the country
because we work on a daily basis with companies to
review and adjust their pricing model and their price
books. We get to see, first hand, the effect that
the current market has on individual companies.
In fact, we are seeing
more of what is happening to many companies because the
tough times have inspired many to contact us to do their
financial reviews now, rather than wait for the
regularly scheduled time. Our most proactive
clients want to be able to respond to the crisis with
real information rather than just cutting blindly and
hoping for the best.
 Over
the years, we have always promoted the business
philosophy of high quality service over low price.
In normal economic times, this is the key to building a
self-sustaining profitable business. A recent
article in
Entrepreneur magazine highlighted this idea. When
your customers are confident about their financial
situation, the quality/price balance usually favors the
company that provides more bang for the buck.
People are willing to pay a bit more to get the level of
service and quality they deserve.
In many markets, these are
not normal economic times. In many areas of the
country, even the most successful companies are having
trouble holding the line on price and profitability.
Many companies are being forced to choose between
holding their profit level, and holding on to key
employees or even just keeping the doors open.
The first response to any
business slowdown is to cut expenses. This may
progress from eliminating perks and benefits for
employees and culminates in eliminating employees and
selling trucks and equipment. The idea is to get
small enough to survive.
In past downturns, the
best companies were able to ride out the worst of the
economy and benefit when the recovery came. They
could pick up quality used equipment and hire the best
employees from their struggling competition. For
many parts of the country, that ability to grow during a
downturn is not possible today.
|
The
Dilemma
1.Price
2.Service
3.Quality
Pick
two. |
Many strong companies are,
for the first time ever, cutting their profit rate just
to keep the company together. They have made the
judgment that no matter how much marketing they do, they
cannot bring in enough work to maintain the key
components of their business. So many companies
are competing for fewer jobs that it seems that everyone
is discounting to bare bones levels.
So, many of the most
successful companies that we work with are reviewing
their numbers with Numbers Cruncher looking for savings
anywhere they can be found. When we review their
numbers, the conversation always turns to cutting profit
to remain competitive and keep their employees.
For most successful
businesses, the idea that they would cut their profit
target or even eliminate profit by charging just the
level they need to breakeven is very hard to swallow.
They know that the profit they earn every year is what
keeps their business in business. Without regular
profits, company growth is impossible. It is very
difficult for a business to exist for long term if it is
not growing. But tough times require tough choices
- benefit cuts, trimming employees, and cutting profits
may be the only choice in today's market. Growth
will return as long as the company can survive.
 If
you find your business in a competitive market where you
simply must cut your prices to compete, do it.
But, do it the way successful businesses do.
Crunch your numbers at least monthly to be sure that
your lower prices are at least high enough to
breakeven. Setting your prices too low could put
you on a slow motion path to bankruptcy.
Once you have reset your
prices, you need to sell more efficiently so you can win
as many jobs as possible. If you use a flat rate
book, take advantage of the three price column format.
You can tailor your price columns to offer a low price
while maintaining the opportunity to sell at your
preferred profit level.
Offer your customers a
bare bones choice to compete on price, but continue to
offer higher quality/service choices. As you know,
not all of your customers consider price the primary
factor in their purchase decisions. So, take
advantage of your price books to offer a full range of
options, and let your customers decide which fulfills
their needs. This will give you the tools you need
to compete on price while maintaining the quality
options your customers need with the prospect of the
profit you need.
If you need help with your
numbers, give us a call. Our experience could save
you from making the wrong assumptions and setting your
prices too low for sustainability. If you need to
set up your price books to offer the ch
oices that match your own
market conditions, we can help.
National Standard Price Guide & Numbers Cruncher
 If
you use Numbers Cruncher or the Price Guide software and
would like to have us review your data, you can easily
send us your information with just a couple of
mouse clicks.
For the Price Guide users who want to have their
Flat Rate Books reviewed and/or printed by us, this is the easiest way
to get your data files to us. You can also use this
button to get your file to
us to take advantage of our data evaluation services.
A single
click on the Send File button will compress your data
file and send it to our secure support server. No
fighting your email attachment limits or trying to
figure out how FTP works. Just click and go.
Getting your
data to us for your custom printed books, and the
Premium Numbers Cruncher Review Service has never been
easier.
- - - - - - -
Give Mike Conroy a call to
discuss your business, your numbers, your performance
benchmarks, or your flat rate
books. Take advantage of his experience working
with hundreds of companies like yours to help you achieve your own business success.
Measure Monthly, Adjust Quarterly
& Achieve Your Annual Profit Goals
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