Wednesday, July 16, 2008

Surviving the Times

Everyday we are faced with signs of the economic times we are in. Gas prices continue to rise, the rising rate of foreclosures, the stock market, and the daily news reflect the times we are in. As a small business owner it can be very stressful. Not only do I have to keep my home budget in place but also my business.

This subject has been on my mind and I have been evaluating options. The other day I was looking at buying some oils for making soap and one supplier had a message listed that prices for some oils are changing by the hour. How crazy is that? Some of the forums I belong to are filled with messages about the increasing costs of supplies. Even Walmart's prices are going up. Many vendors have posted announcements of forthcoming price increases. All of it can become very overwhelming. This morning I read one of my favorite blogs, Soap Queen, and the topic was pricing.

That is a very real issue and one that any business owner must address. During these times I hate to increase prices. Everyone is already struggling and the products I carry are mostly non-essential buys, so now I increase the price making it even harder??? However, if I don't increase my prices to coincide with the economy, my profit margin declines and I struggle. So I have been looking for reasonable options that would allow me to maintain my prices without decreasing my profit margin.

As a small business owner, there aren't many areas to cut. I am the only employee so can't cut there. However, I do try to watch expenses. So some recommendations that I am using for myself and suggest you to consider are as follows:

1) In soap making some substitutions can be made and still result in a quality bar. For example, some say you can use Pomace Olive Oil vs Extra Virgin Olive Oil and the Pomace is less expensive. Pomace Olive Oil can speed up the trace process so be prepared for that.

2) Rice Bran Oil can be used in place of Olive Oil. Rice Bran Oil contains similar properties of Olive Oil but is less expensive.

3) Soybean Oil is another oil to look at. Some say that soybean oil can cause those dreaded orange spots so if you go with soybean I would recommend using hydrogenated soy as it improves the stability of the oil. This could be used as a filler to help keep costs down. When used alone, it creates a hard white bar.

With any of these, you will need to experiment and find what you like and what works for you. There are other options to help with costs as well. You can consolidate orders. Instead of making little orders, stock up and buy in bulk. You will get better prices on larger quantities and you can also save on shipping. If you can't take on larger quantities, get with other soapers and buy your supplies together.

Also use slower times effectively. Since this is not holiday season and times are tough many business are slower. Use this time to experiment and test new recipes and formulas that you did not have time to do before. Work on your packaging design, create new products. Plan for the holiday season. Line up craft shows you want to do. Plan for the volume of products you will need (again helping you to plan out your orders). Market your business. Many companies are already distributing their catalogs for the holiday season. Get your info out there too. Take this time to follow up with your existing customers, this will also give you a chance to market and tell them about any new items or changes. Clean the soap room. Get organized. Hit the list of things to do that never got done. Use this time effectively because as the season progresses you won't have time to do it later.

Most importantly, don't sit by and do nothing. Be proactive in your business. Stay informed and get creative. You can use these tips at home too. Buy generic items, buy in bulk, and combine resources. Keep a positive mental attitude. We can all make it through these times, even if it does not feel like it at the moment.

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