Open Source Content Management

Ruff Times

Being a small business in every sense of the word is really hard at the moment, and has been for sometime. It’s literally all about survival at the moment. At least that’s the case for me. As my main business is Manufacturing and whole sale I’m finding it increasingly difficult to generate business, while still maintain the quality and pricing that my existing clients are use to. My suppliers are upping there prices like crazy due to the radical increase in transport costs and general living costs. This means my profit margin is suffering. If I increase my prices to offset those costs even futher, we are in serious danger of losing our existing client base. We are trying desperately to stay true to our nature which is ‘Local is lekker’ but the temptation to import cheaper raw goods from the east is pushing hard at our door. I can for example source Zips from china at a fraction of the cost, and even ready spun Cotton is available. Of course I will have to check the quality of these products. This is not the route we wish to go, but options are dwindling if we want to survive!
Strangely, I have found that although our wholesale, sales are significantly down which is easily 80% of our income our retail market is actually up… Let me explain that our retail section is me and my Mom on craft Market and shows. I have made an attempt at a website for direct sales to the public but it’s well ‘Bad’ it looks pretty but doesn’t do the job . I don’t have the capital to invest in having a professional set up, although I also can’t afford not to do it!
What to do what to do…
I have also been playing with the idea of some how getting a rep who can travel the country and market our goods to small boutiques or putting together a sales CD of some kind. But I feel way out of my league. I’m a designer not a sales person. Our business has always been word of mouth but that’s just not going to cut it anymore if we want to survive.

This is something a lot of small business are finding themselves in.

There are a few options you could try. Raising your prices isn't such a bad idea. If its done right.

Hmm.. True it is always an option to raise the price, and it seems logical. BUT raising the price my push up your profit but in these particular times it will probably lose a few clients something I don’t want. Although I obviously lose a bit of my profit margin, I think that leaving my prices were they are will create more good will which is far more valuable in the long run. I just need to some how let my clients know that that is what we are doing.
Then to balance off the loss in profit I need to generate more sales..
At least that’s my plan as it stands today.

What you think.. good strategy or naive thinking?

Why not lower your price and increase your profits through volumes

Changing prices is a delicate balance. I'll write an article on it in the next week showing how to raise prices and still keep your customers. There will always be a small percentage that leaves, but the remainder will more then makeup for them.

I do not have my own business, but I work for a manufacturing company. We import all our raw material as it is cheaper and the quality is better than local. We are not in the textile industry so you will have to get samples from overseas suppliers before placing big orders. Everybody is desperate for business so I constantly negotiate for better prices with our clearing and forwarding agents. Transport from the ports are expensive and the costs are increasing at an alarming rate, but once again, they also need business so you negotiate.

Trying to keep your business "local is lekker" and "proudly south african" is not a clever move if your survival depends on it. Sorry, no offence, just a fact.

If you are having a tough time now, will you be able to handle higher volumes and sell it? Are you exporting your product? It might also be an option to look into if you are not.

Getting a good sales person to market your product will be a good first option. Taking your product to as many prospective buyers as possible, country wide is a very positive move.

Welcome to the forums Ronel. Glad to have you here.

You make some very valid points. To increase your profit margin is to increase your survivability.

Hi Ronel, thanks for the input

Besides our quality, the ‘local is lekker’ is one of our biggest selling points. It helps us stand out from our competitors as most chain stores are importing cotton garments from china now. There quality is not nearly as good as ours and there pricing is still higher. (Thankfully) In my research I actually found that it would be cheaper to purchase finished garments, instead of the spun cotton. The next problem is the quantity that I would have to purchase.. I could supply zips for all of Cape Town …lol so that’s not an option.
We were exporting to the UK which was very lucrative but unfortunately the couple that were agents for us, went the china route at the beginning of last year. Finding someone to market for us in Europe has proven to be really hard.
We are capable of producing quite high volumes when we run at full speed. It’s just a matter of good planning which we (I’m happy to say) are quite good at.

I have had some luck in negotiating price on some of the raw products, which I am very happy with. The only one that was unwilling to deal was actually my zip supplier but I have an appointment with another company on Monday next week so hopefully that will work out well.

I have to say thanks to you guys for your input it has kicked my butt into gear; I was in a bit of a rut. Your suggestions and views have gotten me going again. Thinking has become action and that is all thanks to this forum. Being a small business owner is hard as, well it’s just me! I hope more people join up and make use of this as I am finding it very helpful. Just the fact that I don’t fell so alone is fantastic.

keep it coming

Hi Marie-Louise

I am glad that you are finding the forum usefull.

Another approach which I have seen work well in similar / product related businesses would be to work on your product range.

You could for instance segment your product offering into a basic range, standard range and high end range.

As an example you could use exclusive finishing touches on your garments, such as abalone shell buttons / broaches - that would also appeal to your European market.

Then, apply a physchologial pricing approach to your high end range - push these prices up to what the market will bear. The high profitability on this high end range will subsidise the lower profit margin on your standard range.

Lower profit margins on a 'low end' range may help you achieve market penetration, with the possiblity to upsell to new found customers / retailers etc.

Whether or not this would work really comes down to the nature and infrastructure of your business - do you have the capacity to try something like this.

Dylan