Small businesses usually are the first to feel the effects of a recessionary economy and generally the last to recover. Two major reasons for these difficulties are managerial inexperience and inadequate financing or financial management.

Small business managers frequently have problems in planning and controlling profits, including revenue generation and cost reduction activities. These important financial methods are especially critical during a recessionary period. The financial problems of small businesses are further compounded if the firms keep poor accounting records and are inexperienced in the management of money.

Required:

Profit planning is critical for the planning and controlling of profits of a small business.

Identify key features that should be considered when developing a profit plan.

Answer:

the following factors are to be considered for the profit plan,

Cost

you must have insight of these items because these are items that pertains to the cost that you gather based on the information system that you have and you would use it to gather data regarding the cost that would be incurred for an effective risk management strategy and supply chain management and these would be your basis on how you would launch your products and services related to the products in order to attract and retain your customers and also if you decide to do those thing it could be a basis for your marketing plans and effective risk management strategy that you want to do.

supply chain management would help you have the standard cost that you must consider in order to conduct business plan related to your products and those marketing ideas which refers to direct labor which pertains to the money that you will pay to your workers, direct materials which pertains to the cost of the materials that you must purchase for your business and marketing campaign, overhead which is about the expenses the you must incur to put up your business and marketing add. cost needs to be one of your first considerations when running and assuring your business would succeed and the making marketing plans.

Perceived Value

Customers are willing to pay what they think something is worth and don't really care about the price based on the information system for your customer list and previous product sold for your company. It would be up to you to see and produce the insights for your effective risk management strategy-based supply chain management on what would be the best option to attract customers and serve them the best product and quality of service from your company that best fit for your effective risk management strategy that you can provide to increase your customers and also marketing ad that would push your product above their perceived value, that they would just simply buy it instantly. If the perceived value is much higher than your price, they'll happily pay a price that gives you a huge margin. While perceived value is mostly in the customer's mind, you can influence the perception by increasing your levels of service or positioning yourself as a higher-end brand by having a good marketing campaign.

Competition

you must always assure that you are above the competition from your product research that is related to effective risk management strategy and supply chain management which is the only way of doing that is by studying and using your information system to gather data related to your effective risk management strategy in relation to your competitors and latest market trend and knows who are your real competitors that would really post a treat to your products and also when putting a marketing campaign in your product you must take into consideration the competition you are into because it is another key factor in marketing activities and running your business at the best potential of it. Open and free markets are very price-sensitive, while monopolies have virtually unlimited power to raise their prices.

The more you can differentiate yourself, the more power you'll have to set monopoly-like prices because it will make your product more appealing and enticing to the consumers so that you could have more attention from them. Even with commodities, such as gas and groceries, you can still find differentiators such as being on the right side of the road during the evening commute.

Loss Leaders

You don't need to earn a profit on every item you have in your company. A proper business plan based on your information system would help you see and make a strategy that would best fit in assessing the status of your product and company based on your effective risk management strategy and supply chain management that you would provide those things together with your staffs to study and also make a marketing activity but to assure that the customer will definitely recognized your products and you will make a marketing campaign that would put your products for your new venture to earn future income that must be able to cover up all the expenses that you would incur and would give you an income that could also cover up the losses that you would incur when there are items that you failed to sold.

supply chain management would advise you some items that can be listed at a loss to because there would also be moments that your product would not sell and you must be prepare for that and make necessary plans and strategize to counter it and as part of your marketing campaign in order to drive customers to your store in the hope that you would be able to make up for the loss when they purchase additional, higher-margin items.

Economies of Scale

Early-stage products have the problem on how they would promote their products and that process is related to effective risk management strategy in relation to supply chain management because in order to gain popularity for your products and not having the enough marketing power to attract customers and the target market. You would always be consulted by the company owners regarding these matters and your information system would help you provide the information that you need. You have two options in this situation. The first is to keep a marketing campaign where the prices are above costs knowing that your higher prices may make it harder to pick up market share for your new venture and then reduce prices as you scale production. The second is to set your price based on your projected break-even point and take a loss on early sales in a more aggressive push to gain market share.

Bundling

you outsource services must help you retain and increase the popularity of your products, and take care of some problems in your company. You must always come up with ways to have your effective risk management strategy and supply chain management related to your products to grow on a constant and sustainable manner and one of it is bundled pricing that is one can help increase your average sale and overall profits for your products when customers might otherwise be inclined to only purchase one item at a time. Your information system would show you based on your product record what are the best product combination. This is one the strategies to eliminate slow moving item where you would put these items for sale for a price of one.

Psychological Pricing

Sometimes, the price isn't about the actual cost but how consumers view it and you must consider how the consumer would view and accept your product for your effective risk management strategy according to their preference and perspective would be based on the marketing strategy and activity that you would conduct. This data can be gathered and analyze by the used of the information system that you have for your new venture. This is why car dealerships do make marketing campaigns like to negotiate based on monthly payments rather than the full sale price. The key is that pricing is just as much in the presentation as it is in the actual numbers.

Goal

The biggest question to answer is what end goal do you want to achieve, which is one of the few questions you must answer when putting a business strategy for your company and in your product because this what would drive you to take care of your products and the marketing strategy that you think would help you achieve your goal based on your information system that you have and all the product records and data about your company for your new venture that you can used as reference. Are you trying to build market share, put competitors out of business, maximize profits, raise quick cash to survive another month or position yourself as the low-cost alternative? Your end goal will guide what pricing strategy you pursue and how aggressively you follow it.