Know when to hold 'em
We’ve all been there: Studying our cards, reading our opponents, debating whether to go all in or quietly fold. In the business world, we’re dealt a new hand every day.

How well do you play it? Take “The Gambler” quiz and learn from an MNP professional. 

• Your cards: You’re the owner of a local computer store that specializes in laptops, and business has been better than ever. Your original strategy has been to own your niche, which you’ve excelled at to date. In the past few months, a few customers have been asking for products and services you don’t offer. You’re thinking about changing your strategy by expanding into these new areas. Should you:

1. Stay focused on your original strategy.

1. Expand and slowly move away from your original plans.

Your winning hand: A

Your success is based on the fact you specialize in one area, and offer great customer service. “Moving away from that may lead to some extra revenue initially, but in the long run, staying true to your strategy will bring a higher payoff,” says Mark Brown, MNP’s director of business consulting.

Mark adds that as a local storeowner, you likely don’t have the volume to compete with a large competitor, like a FutureShop or a Best Buy. The more diluted your focus becomes, the greater the risk that you’ll begin to lose your best customers – the same customers your business was built around in the first place.

• Your cards: You operate an antique store that specializes in Middle-Eastern antiquities. Your business has been doing well, but you think your profits could be higher and you’re considering raising your prices. At the same time, you have a small, yet loyal customer base and are worried an increase could push some of them away. Should you:

1. Raise your prices.

1. Keep your prices the same.

Your winning hand: A

If your store offered a commodity item (something your customers could find virtually anywhere), your prices would have to be more competitive as your customers would be inclined to switch suppliers, even if it meant just a small savings.

Because you offer a differentiated or unique good, you likely have some room to increase prices. This, in turn, will increase your profits. Even a moderate increase in price, such as 5%, could generate a significant increase in profits. For example, if your annual revenue is $1 million, a 5% increase would generate $50,000 more profit – provided all of your customers remained loyal to your business.

“Prices are easy to change up or down, and while some customers may balk, most will likely understand if the increase is justified by the quality and service they receive from your business,” says Mark. Even if you do lose a few of your more price-sensitive customers, your price increase will probably enhance your overall profit.

• Your cards: You run a restaurant and a number of your staff are interested in taking a new hospitality certificate program. They’ve asked you to cover the costs. Your restaurant has been doing well, and you’ve never seen a need to provide formal training outside of your business before. You’re also worried that once staff receive more training, they may use it to look for another job. Should you:

1. Offer to pay for the training.

1. Tell your staff if they’re interested in training outside the restaurant, they’ll have to cover the costs themselves.

Your winning hand: Invest in the training. Even if you already offer in-house training, you may learn some important things from an external source. For example, you may discover your business has been carrying out some duties the same way simply because that’s the way they’ve always been done. Formal training can help identify ways you could be more efficient. It can also help increase staff retention.

“Providing training opportunities sends a strong message to your team that they’re worth the investment, and that you really believe in their potential,” says Mark. 

Another advantage of formal training is the positive impact it can have on your future recruitment needs. Instead of trying to find a new person every time a position becomes vacant, you may find that with the right training, you can promote someone from within.

How did you score?

3 correct: Congratulations! You’re a master card shark.

2 correct: A solid effort. 

1 or fewer correct: Consider getting some advice from a pro.

In business, no one gets a winning hand every time. But by taking the time to study your cards – and read the signs around you – you can increase your odds of a winning game.

By Mark Brown, Director of Business Consulting. For more information, please contact your local MNP advisor or Mark at 1.866.500.0792.

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