Business is slow pretty much all the way around, and it is essential for your business’ survival that you make your budget as lean as possible. Pam Newman in Entrepreneur.com answers the question: How does a small business owner set aside enough money to actually make a profit?
The key is having a budget and ensuring that your pricing model enables
you to cover your direct and indirect costs, loan repayments as well as
distributions to the owner. Cash is King…work with vendors on
extending payment options as well as have processes in place to get
payment from clients in a more prompt manner (deposits, shorter time
span upon completion of product/service). Then the key is cutting
expenses and owner distributions so that you can start to build a cash
Don’t forget that your pricing model will affect your total revenue. Raise your prices too much and your total revenue can drop. But cutting prices below your profit margin will cut your revenue to zero. Calculate your expenses and use a spreadsheet to figure what price/volume combinations represent profitability. If you don’t have the skills to do this, it will be worth the cost to hire an accountant to do it for you.