Question

Suppose you own a small business. You are facing a significant amount of loss. What are the best ways of increasing your revenue and reducing your cost in the short run. Assume you are in highly competitive market.

Answer 1

A small business is defined as a business which is characterized by either few employees, limited market share, low scale of production, low revenues and a small scale of investment. On the opposite, is a large organization which has more resources that can be put to work. On the other hand, the short run is a description of a period of operation whereby one factor input is fixed while the others are variable in nature.

Explanation:

In this case, it is a small business, facing significant amounts of loss; there are various ways of increasing revenue while reducing expenditure; given it is a competitive market situation. First, there is the option of multitasking the employees; whereby one will be capable of undertaking more than one type of work in the organization, thus lowering the amount of expenditure on wages. Moreover, modernizing of production, communication and marketing activities will bring down costs while increasing revenue; as the use of relevant technology has the effect of creating a greater deal of convenience. The use of efficient and timely strategies will also come in handy; this is whereby the plans implemented by the business will have a higher chance of succeeding; thus making operations successful in the long run. Cutting production costs, lean production and auditing operations are some of the other ways through which costs can be reduced while increasing revenues at the same time.