Every business owner must decide how to respond to supplier price increases and it's surprising how many get it wrong.
This video illustrates two common mistakes that can lead to a significant erosion in profit.
The first of these is the road to perdition. Many business owners probably know this yet it is surprisingly common.
The second can lead to death by a thousand cuts. The problem here however is that the business owner is usually unaware of this and believes that he/she has passed on the increase in full to their customers.
The video also shows a third alternative which ensures profit margins are maintained in a sustainable manner.
It all boils down to understanding your numbers. Contrary to popular belief the reason why many businesses fail to reach their full potential is not becuase of the quality of their products and services or their ability to sell them to customers. Instead, its because the owners don't invest time in understanding how to use their P&L and Balance Sheets to make good business decisions.
