Our CEO, W. Michael Hsu came across this advice on a popular accounting software site the other day. It’s probably one of the worst financial advice he’s ever seen. See what the advice is and why you absolutely don’t want to follow it.
Topic: The Worst Financial Advice on The Internet
Michael found out an article on a popular accounting software site. In this article, a business mentoring expert advises her clients, “to decrease prices by 10 to 15 percent in order to collect faster.” So, in today’s article, Michael is going to tell you why it doesn’t work and what you should really do to improve your cash flow.
The issue of decreasing the price
Most small companies operate only 15% to 20% of net profit. By decreasing price, 15% to 20% means to wipe out your entire net profit margin. This strategy doesn’t really work along with a small business.
An alternative way to increase net profit
In another Money Talk episode: How Raising Prices Helps Businesses, we share how to use 1% can help a business grow. Click the link to see how to use 1% change and yield 19% impact on your net profit.
Download Free Tool
You can also download our free tool Power of One template. It’s a set template that helps millions entrepreneur figure out where they can make changes in their business by simply 1%. You don’t believe it? Download the template and see for yourself! Again, Instead of decreasing price by 15% to 20% and wipe out all profit, we’d suggest you use the template to identify where you can make small changes and make a huge impact on your business.