Quote Originally Posted by Killer_B:
Darkhorse - by balancing wages/expenses vs. income. Its like how a business runs. I know all you lefties think everyone can run up huge deficits like your friends in the government, but that's not a reality as a business owner. Increase my payroll 30-40% and none of them will have a job and I'll just go back to what I was doing before I bought the business. Granted the gov will feed/house them, they'll be fine, of course someday the bill will come due.
You know the answer to your question...you know your business and what makes it work. If your inputs are minimal as you say, then you know the analysis required to make the decision.
What if another input suddenly changed to a level of importance, what do you do? If your vendor suddenly started charging more or your landlord doubled your rent or utility rates went up. What do you do?
Every single thing I said is 100% proper business analysis, it doesnt matter if you are 6 or IBM, the analysis is the same.
At a point, if you feel the business is turning more into a commodity type and margins are too low, well you decide if you can continue or if you let someone else with lower cost centers do this and you move into something with better margins that is not being properly serviced. The other possibility is you do an analysis on labor costs and see if your processes can be improved to LOWER labor costs.
Of course the old motto sticks out about sales cures all problems..so if your sales are not able to increase no matter what you do, I think you know the answer to your question. Why are you running a business so tight on margins with no revenue increasing potential and no possible way of increasing productivity/cutting costs?
If you have no ability to increase sales, reduce costs or increase prices then the devil is coming for you anyway..its not if but when. Electricity goes up, rents go up, input prices go up..everything seems to go up but your ability to increase sales and margins.
There is nothing wrong with being a niche player, but you know your analysis and you know what is next...maybe you reduce your workforce, lower your orders and try to maximize say 3-4 workers and see if the results are more productive for you...or you even go down to 1-2 and see what the results are.
If your cost of labor is say 25% and that bumps to 35% with a jump in the min wage, and you cannot absorb it or pass it along, I think the numbers are telling you that you either need to reduce sales and increase productivity that way OR that this business cannot support an increase in any input and be reasonable for existing.
You know exactly what I am saying...this isnt some concept you have never heard of before.
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