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Small businesses, pricing and inflation

Jenny is a small business owner who makes shoes. She sells them for 14 and the cost to make them was 10. For the past several years, there has been inflation. The cost to make them is now 14. She has been unable to increase prices. Her customer, a major global retailer, keeps telling her that there are many other businesses that can make the shoes for 14.

Jenny is not profitable anymore and thus has been unable to increase wages to Wendy, one of her workers. She has reduced costs as much as possible. What else could Jenny do?

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Why 79% of contractors don’t want to be full-time employees?

Would you offshore jobs?

Should we pay severance in the US?

Small businesses and inflation

Would you sell at a higher price in New York?

Increase prices 4% or fire one-half of the team?

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Would you sell at a higher price in New York?

Salaries in New York are double that in El Paso, Texas. 

Data from Robert Half, a recruiting firm, shows that a Digital Strategist makes $89,250 in the United States. In New York, however, they make 41% more than the national average, or $125,936. In El Paso, Texas, they make 28% less, or $64,260. Those employed in New York make twice as much as those in El Paso ($126K vs. $64K). 

Should we sell at a lower price in El Paso?

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The title of this post is Would you?. Please add your comments below, about what you would do. 

 

Join the other discussions:  Why 79% of contractors don’t want to be full-time employees?     Would you offshore jobs?

Should we pay severance in the US?     Small businesses and inflation

Would you sell at a higher price in New York?    Increase prices 4% or fire one-half of the team?

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Client prioritization

Jenny is a student who runs a high-end shoe business on the side. A friend of hers produces high-quality, made-to-order shoes, which Jenny then sells to wealthy shoppers in NYC for $1,000 each. The cost to make each pair of shoes is $300.

Jenny typically sells 10 pairs per month which she always has in stock.

Consumers in New York are spending a lot. Jenny must decide to whom to sell. There are 100 clients, and she only has 50 pairs of shoes. That includes:

  • 48 new clients who want the shoes. This is her only chance to get these clients.
  • 48 old clients who have been with her since the beginning. They will be offended if they don’t get it. One of them is a buyer she sees when she goes to watch her niece’s soccer games. She is always there.
  • 1 new client and 1 old client who are quite nice. They will understand if they don’t get it.

Whom should Jenny prioritize?

Join the other discussions:

Why 79% of contractors don’t want to be full-time employees?

Would you offshore jobs?

Should we pay severance in the US?

Small businesses and inflation

Would you sell at a higher price in New York?

Increase prices 4% or fire one-half of the team?

by 11 Comments

Increase prices 4% or fire one-half of the team?

The sales of your company are 100. Thousands, millions, billions, whatever you like. If it’s a small company, imagine $100,000. If it’s a global multinational, imagine $100 Billion. The firm has financial trouble, and they have asked you to increase profitability by 4%.

The Selling, General, and Administrative expenses, including payroll, rent, and other expenses, are about 16% of sales. It varies by company. At McDonald’s, it’s 23% and at Apple 6%. On average is 16%. Out of that, payroll is one-half or 8%.

To increase profitability by 4%, would you fire ½ of the entire team or increase prices by 4%? The financial impact is the same.

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Join the other discussions:

Why 79% of contractors don’t want to be full-time employees?

Would you offshore jobs?

Should we pay severance in the US?

Small businesses and inflation

Would you sell at a higher price in New York?

Increase prices 4% or fire one-half of the team?

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