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How Inflation Changed the Industry and Quick Wins to Streamline Internal Workflows

Here at Blue Onion, we look at the fundamentals of a business in order to see where it might be able to improve. Is a company growing efficiently and are they taking all factors into consideration of their actual business? Are they focusing on margins?

Currently, a pressing concern for businesses is inflation. With consumers feeling the pinch in their wallets, spending habits are taking a hit. As prices surge, it becomes a battle to protect your margins.

Prioritizing Essentials is Becoming More Important

So, as consumers start tightening their belts and asking “Do I really need this product?” companies must go back to basics, back to products and actual margins, and get an understanding of what makes sense.

For instance, numerous brands tend to overload their product lines. They strive to offer every conceivable flavor or color for a single item, which may not always be practical. Ever analyzed which products truly drive your sales? Identify the 20% of products that contribute to 80% of your sales. The crucial aspect lies in grasping what your consumers genuinely desire and concentrating your efforts on what is truly profitable.

Drilling into the Finer Cost Details

At the same time, you also need to know what you can do to alleviate some of your costs. It starts with putting yourself in your customers’ shoes. Do you truly know what they want? Get creative with promotions that will actually relate to your consumers.

We always advise our customers to dive into their profit and loss statements starting from the top. This can spark ideas for boosting sales. Yet, fixating solely on top-line sales is a misstep. Ensure that any efforts to boost the top line also lead to a stronger bottom line.

Flexibility Across the Board

Look to your employees, as well. Can they do multiple jobs? Can you assist them in any way to be more productive? Flexibility right now is key, and that comes from your people. The fewer people you need to run your business, the more you save.

Businesses also should get an understanding of what their true return on ad spend is. Make sure you truly calculate the cost of generating your gross revenue. Do you know your true selling cost? Think about all the fulfillment costs, all of the selling costs, any of the discounts that went into it, and any free product that you had to give away. You might be shocked. From there you can really understand what you need to weed out.

* While we are a team of former accountants, we are not in the business of providing professional services. The information presented is for informational purposes only and is not intended to be a substitute for professional accounting, tax, or legal advice. We recommend that you consult with a qualified accountant, tax advisor, or lawyer who is familiar with the specific needs and nuances of your business.

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