Every San Diego business has different challenges and opportunities, and just because you’ve built your San Diego company to $50 million dollars in revenue doesn’t ensure the next stage of growth is assured. Let alone survival. One example would be a company who is doing business with “Big Box” retailers (such as Lowes, Apple, Walmart, etc.). We were working with a company to evaluate systems and develop strategies to grow sales and profitability. Interviews and input were consistent throughout the organization: “we need to increase our sales price”. Simple enough on the surface, as most businesses who have experienced an increase in the cost of goods would naturally wish to pass that on to their customers.
When you are dealing with the “big boxes” it’s a whole different story. I completed a thorough analysis of Home Depot recently, and over the past 18 years the delta between gross sales and cost of goods sold continues to increase. Home Depot is shoving all of their costs downstream to their vendors, reducing their own cost of goods while increasing the price they are able to charge (resulting in increased profitability). A big box like home depot isn’t going to simply allow one of it’s suppliers to increase the cost of their product. You have to get much better at controlling your own costs, and reducing your own cost of goods or you won’t survive. Apple is notoriously the same way. There is absolutely a profitable business model as a supplier to a major retailer, but there is also significant risk. You have to have your business systems wired up tight, and have a thorough understanding of your own business and every point at which you can intervene to reduce cost or increase efficiencies.