Pardon my venting on the recent political news out of Illinois, where it was recently voted to raise our income tax level by 66%, however I find some correlation here to the present state of business for many of us. Let me explain…
In the business world, there are basically three ways of increasing the revenue stream. The first one, which is akin to raising taxes, would be for us to raise our prices – with our clients having no say in the process. Of course the reality is they do have a say in this – they can easily choose to switch vendors in most cases. So in the current economic climate, raising of prices is not an easy fix and I suspect for the next 12 to 18 months this will be the case.
Option two would be to increase sales by either finding new clients or adding services that would also attract new business or increased revenue from existing business. This is not always a quick solution, but definitely one that we need to always work at. In the current climate most businesses that are growing are either aggressively pushing themselves or looking to creative ways to market themselves while the competition is standing flat-footed.
And the third option would be to either acquire or merge with another business to create a combined entity with overall increased revenue. While this process takes some time to develop, ultimately the result is a quick increase in sales which can be pretty dramatic. There are definitely opportunities available today, as those companies that are just barely hanging on are prime candidates for this type of strategy.
Each of these options are viable strategies. The key for each though, is a well thought out plan with the ultimate goal of increasing revenue, which is really the key here. Even in downturn economies, costs continue to rise. Energy is one area that seems immune to stagnation, and healthcare for our employees is another area that always seems to increase no matter what. A 10-15% increase in health insurance? Consider yourself lucky! Employee wages have not seen much of an increase over the last two years (unless it seems that you work for the State of Illinois!), however I would suggest that most employers are planning for some type of raise within the coming year.
The point is, most businesses that are ongoing and looking to the future need to budget for increased expenses. We can all get by for a year, or even a couple of years – but at some point we make the decision to grow again instead of pulling back. And that is what requires a plan – figure out which strategy is best for you, and then start in! Get everyone on board, set your goals, stay focused on the plan and get rolling.
Unless of course, you are the State of Illinois – then it really is not too important to have any type of plan, just the right number of votes to raise taxes!