What if?

What if we were to increase our prices by 10%? How much business could we afford to lose before we actually had less profit than before?

What if we gave ourselves a marketing budget of £10,000? How many extra sales would we have to achieve to recoup the extra cost?

There are plenty of “What ifs” in business but how often do you sit back and calculate in detail the financial effects of certain decisions. Most small businesses are run on gut feelings and instinct, all very well with the experience that you have built up over a number of years running a business but yet another example of how the business is completely dependent on you.

What if the business is in trouble and you can't see how to get yourself out of it? At the end of the day there are only four ways financially to improve a loss situation. Make more sales, improve your margins, reduce your overheads or take less money for yourself. We'll assume for the purposes of this debate that you don't want to do the last one and you have probably considered the third one so that leaves the first two. Measuring our performance and perhaps benchmarking ourselves against others in the industry are just some of the ways of helping find out what you are doing wrong.

But what if you are doing everything right for the industry you are in but we are just in the wrong industry? Sometimes it takes an outsider to see what those that are too involved in the day to day running of the business are too close to see. A well-known pen manufacturer thought it was in the stationery business until someone pointed out that they were actually in the gift industry. Once they realised that, re-marketing themselves and increasing all their prices was easy.

At the end of the day there is no one that knows more about your business than you. You probably know more about your industry, employees and products than anyone else ever will, so you are the only person that can come up with the answers. But what if you had an outside adviser that was able to ask you the right questions?