Most if not all business owners have been faced with increased costs to do business over the last two years. Increased fuel costs, decreased consumer spending and an overall lack of consumer confidence often equals shrinking profit margin for businesses.
What happens economically when one simply raises prices when overall demand is low? What additional strategies can be considered to protect or maintain adequate profits?
In a businessweek article written by Monica Mehta, several strategies are suggested. The first suggestion is to consider introducing lower priced items as a substitute for products that require price increases. A second suggestion is to move production closer to customers. For some international companies, that may mean off-shoring some facilities. A third recommendation is to alter the product by substituting ingredients with lower cost alternatives. A final way that is mentioned is to offer uniqueness in your product by finding a specialty niche in your product market.
What other ways can small business owners can maintain profits when costs are increasing besides those listed?