The Best Business Answer is Sometimes "It Depends"
The best initial response to a business question is, “It depends”. This is due to the fact that business is multi-dimensional and interrelated. Many factors should be considered before making a final decision. However, in business this is not often the case. Instead snap decisions are made with limited information, which leads to unwanted outcomes.
For example, here are some commonly asked questions:
- Is this profit margin acceptable?
- Should we hire additional people?
The proper way to answer these question are “depends” and then to consider the implications financially, operationally and strategically.
- If the profit margin covers expenses and allows money for reinvestment then yes, it is an adequate margin.
- If there is enough cash flow to hire the additional employees and the demand is strong and expected to remain that way then yes it is a good idea to hire additional people.
Unfortunately decisions are often made without such considerations; product/services are sold at profit margins that do not consider all expenses (including time investment) or if there is enough net profit for reinvestment. Hiring decisions are based on a belief that sales will continue at the same rate independent of past history or expected trends in the marketplace.
Lori Williams has is a business strategist and the author of several books under Business Simply Put. The can be purchased on the website at www.BusinessSimplyPut.com or through Amazon on kindle ebooks.
Categories: Growth Strategies
Tags: lori williams business simply put small business small business advice strategic planning profit margins
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