I am such a geek. I am reading about gross profit and getting very excited.

Before you move on, consider this: a local business owner wants to know if he should double his prices. I’m interested in what others think because there is a very good argument that if he makes twice as much from half as many hours worked, he increases his profits and decreases his stress. On the other hand, times are tough. People are price shopping. We live in a small community with a limited amount of customers. And after all, sales are sales and we all want those.

Those that have done this doubling of price successfully swear by it. Why is it so scary?

According to Bo Burlington (and Norm Brodsky) in his book The Knack it is because we have a salesperson mentality. We believe that sales trump everything else. But what he explains so eloquently is that gross margin trumps everything.  Of course!  The amount of sales that it takes to create cash flow is most important. That ratio should be– as few as possible to maintain your margin. That is the only way to create viability.

So instead of thinking “How many sales can I get?”  We have to return to “Which sales are the right sales?” ” And only the sales that make your margin are the right sales. The sales that don’t make your margin will cause you to lose money, weaken your cash flow and eventually put you out of business.

While it is hard to say no to a sale it is a habit that we have to get back to practicing. The race to the bottom really is lined with dead bodies.

I’m reading the new Fast Company Magazine – an article about Hulu and I am disarmed by these lines in the first page;

“Imagine that The New York Times and The Wall Street Journal had gotten together and created Google News. Or that Sony Music and Warner Music Group had introduced iTunes. That’s Hulu, a daring attempt by would-be victims of the digital revolution, NBC Universal and News Corp., the parent company of Fox, to control their content — and their fates.”

Someone save me. Its been said out loud! What was wrong with Sony and WEA that they didn’t do this 10 years ago and handed their fate into the hands of the computer industry?  Even when I sat at the independent content provider intro to itunes in 1996 in Cupertino, I wondered why they allowed this to happen. I also was thrilled that someone- anyone – picked up the gauntlet and moved the industry out of inertia even if for a short time. Apple didn’t solve the music industry’s problems but they did pull us along with them. And now, Hulu with their benefactors at NBC and Fox are an example of facing change head on. Shame on the music industry. You still embarrass me, years after my exit. Way to go.

In this same copy of Fast Company, The Heath Brothers write an article on looking out of your box to solve problems.  It is the same thought as the Hulu article- thanks guys for saying it:

“The biggest barrier to the idea hunt, in fact, may be you. It may never occur to you to start searching because we all commonly keep our thinking penned up within our company or industry.”

This summer has been  a tension filled small business roller coaster. That is why this article “How to Kill Your Small Business” by Lisa Barone  on the Small Business Brief website caught my eye.  It is also why September has become Strategic Planning month. Not only am I focused on getting small business owners working on their long range plans, but I find that it is in the step by step implementation of those plans that the tension eases.  To get into your strategic plan, take a look at the Strategic Planning Workshops coming up in Grass Valley and Yuba City.