Strategic Pricing: 9 Ways To Improve Profit Margin

True Strategic Pricing isn’t about simply charging more money In fact, that’s a very risky long term value creation lever. The market eventually figures out what you’re doing.

Pricing leaders know that you need to be as good at creating value as your are at claiming it.

For a sustainable margin lift, look at these case studies exploring how to reshape the value you offer customers – and cost of delivering that value – to create a competitive advantage.

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Avoid Bankruptcy With a Successful Turnaround Strategy

The two most important issues in a turnaround strategy are to avoid bankruptcy and generate cash flow. In a recession, bankruptcy is almost inevitable because of the financial constraints faced by both small and large companies. Small and medium sized enterprises can also suffer from such a loss, but larger corporations are more likely to do so as their debts are usually higher. In addition, because of the greater impact on government agencies and banks, the burden of creditors is spread over a larger sector.

A turnaround plan can avoid bankruptcy and generate cash flow if the management structure of the company is sound. It requires its managers to have a sound business plan that includes working capital planning, capital budgeting, and a proper restructuring plan that covers all the different operations and transactions.

Even a newly-formed business with no experience of running a business can probably achieve its maximum profitability by following a number of the processes. If it has found a solid customer base, it can even earn a good profit.

On the other hand, a company facing financial distress can avoid bankruptcy simply by having a plan to avoid it. The best way to avoid bankruptcy is to consolidate all its debts into one. This would require, among other things, using the services of a professional credit counselor, which would give him/her a sound picture of the current financial state of the company.

A reorganization plan should also have a consolidated goal of reducing the financial distress. A company that has done something wrong may want to change the solution to the problem rather than trying to fix what was wrong in the first place.

For example, some businesses can easily make up for the fiscal downfall of another with the right combination of finance and product. They have the ability to profit from the gap between their financial condition and the competitor’s. If the rival cannot do so, it is time to turn things around and find a better source of income.

A company also has to consider the role of its executives when it is about to handle the financial distress or at least be able to manage it properly so that it will not hinder the company’s ability to generate cash flow. Executives need to have strong management skills that can steer the company through its financial troubles. They need to be trained on how to identify a potential problem with the existing structure of the business, and how to implement restructuring plans to make the company less dependent on a particular market.

A good CEO can be a great asset to a company, especially during a recession, if he/she can manage the company well and deal with the creditors at the same time. On the other hand, the performance of the management team will dictate the success of the turnaround plan.

If the creditors will not accept the restructuring plan, it would then be time to seek legal advice. This advice should be looked upon as an option only if the economic problems are becoming too severe for the company to handle.

A number of financial institutions such as banks and lenders are not willing to entertain any sort of restructuring for the simple reason that they are not in a position to lend money to a company that is in financial distress. It is quite likely that the restructuring of a company through legal procedure could actually be its undoing.

They want to be sure that the company will get bankruptcy protection even if they are forced to take legal proceedings. A bad decision on legal matters can lead to long-term financial distress, even if the company decides to operate legally with the assistance of a restructuring company.

What matters most at the end of the day is the bottom line. The financial health of a company must be a top priority because this is the only way it can grow and survive.