I was at a seminar for the Elk Grove Business Leaders Forum awhile back, under the old management and they had these three business owners presenting. It was a great presentation.
But one owner’s story keeps popping into my mind, how would I handle their situation? They were a small operation and they got the call from Walmart to supply all of their stores with their product. They had to ramp up their production process and add people to meet the sudden increase in demand. Briefly all was right with their world.
Then the obvious happened as it does with any giant (Costco/Walmart/Amazon) they then put the pressure on the small business as all killers do. Squeezing them on price and product format, so profitability is squeezed out of existence. With the increase in costs the profit gone, do you meet the reduced price demands or scale back the operations?
I honestly don’t know what I would do in that situation? It seems obvious to take on the initial order to build up the demand for the product and get the exposure. But the stories have been there for years on how the giants turn on the producers for a better margin for themselves at the cost of the producers. So you would have to plan for the retrenching process as you were setting up the expansion.
What would you do under these circumstances?