Every business faces "The Big Squeeze." It is a phrase I use to describe a condition that affects virtually every business.
The net income of a business is continually challenged. Maintaining and increasing revenue is critical to long-term success. You will always have customers who want to pay less, or unfortunately some customers who may leave for a variety of reasons such as a move, a new job, a purchased business, a new relationship, or competition. The revenue challenge is further compounded by the fact that costs will always increase. Employees may want higher pay, vendors increase prices, and the cost of paper, coffee, rent, etc. increase - it is just unavoidable.
This results in "The Big Squeeze" which is often more like a large power vice.
With constant challenges causing revenue erosion and ever increasing costs, business owners have two choices: Continue to be pressured by constantly grappling with these challenges daily, or get energized by focusing on growth, values and innovation to minimize the revenue erosion.
Here are my tips for escaping the vice:
- Grow revenue. Growing revenue is an easy answer, but in tough times, it's not so easy. There's not a point in the year I take a break from increasing revenue. Whether it's looking for a strategic acquisition, adding new prospects to the pipeline, serving clients, or improving business processes, we keep one foot on the gas pedal at all times.
- Add value. Your customers need to see, feel and understand the value of your service or product. With stiff competition and increasing choices for the consumer, communication of your value proposition is more important than ever.
- Build loyal relationships. There is a difference between satisfaction and loyalty. A satisfied customer is just okay, a loyal customer is long-term.
- Innovate. Make sure you are listening to the marketplace and monitoring trends in the industry. Stay ahead of the curve by offering services and products your customers want and need.
- Track costs vs. budget. Closely monitor and budget expenses and then track against industry and market standards.
- Stay positive. "The Big Squeeze" is not a surprise, it's something every business deals with on a daily basis. It's how you handle the challenges that sets you apart from competition. How will you be smarter, better and more positive when meeting those challenges?
"Coming together is a beginning; keeping together is progress; working together is success." Henry Ford