Wednesday 3 October 2012
Small businesses seeking to maximise their profit margins can gain a competitive advantage in a number of ways, it has been suggested.
According to Business Link, all companies face competition, and success is often based on how well they respond to it.
"You should be aware of your competitors and always strive to develop a competitive advantage over them," the advisory service stated.
Businesses always have the option of raising or lowering their prices according to demand, allowing them to either increase profitability per sale or attract new customers.
Another way of gaining a competitive advantage is to improve their products and services, which could involve improving or modernising features or the manufacturing process.
Business Link urged companies to use creative channels of distribution - such as vertical integration or channels of distribution not normally associated with their product or service.
And it also called on companies to exploit supplier relationships where possible, to see if they are able to get a better deal.
"Market share is directly linked with profitability and many companies aim to increase their sales relative to their competitors," Business Link stated.
"You can measure your company's performance relative to a competitor by the proportion of the market that your company is able to capture."
Posted by Jenny Arthur