Let’s Sell Our Way Out of the Recession!

When 100,000 mortgages turned up bad in September 2008, U.S. Treasury Secretary Henry Paulson warned of the impending crisis on Wall Street. Liberal politicians quipped that the real bombs were about to drop on Main Street.

They were right. Some small and medium-sized business owners took heed. They and their managers found fresh ways to present, price, sell and service the very core of what they did best – and pared the rest. They paid special attention to pricing, noting variable costs, overhead costs and break-even price points.

Meet Mark. He was like a lot of other small business owners on Main Street. He reviewed his mix of commercial and residential carpet and flooring he had been doing for years. Residential prices were already low, and he figured residential demand would fall. He figured his years-earned reputation among commercial buyers was solid, that he could cut prices, take a larger piece of the shrinking pie, survive, and maybe drive a few competitors out.

Six months later, overall revenue held steady, with commercial picking up and residential falling as predicted. Clients were happy. But Mark was shocked to find his net profit had fallen below 0 percent.

Some say the gross profit percentage – by product and by line of service – is the most strategic number on the P&L, and even more important than net profit. Can you think why?

Are you on the loose – or on the noose?

Robert Anderson, founder of Small Business Advocacy Center, is a writer, small business turnaround expert and business coach, with success restoring value to businesses throughout North America. SBAC can be reached at info@SBACenter.org or 970-231-2772.

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