How to Increase Profitability in a Stagnant Market
By Carter Pennington

Increasing profitability is an easy concept: buy low, sell high, pay late and collect early.

do things that are not essential, not intrinsically necessary to run the business?

Easier said than done – with increasing competition, declining margins, inflating costs and shrinking consumption – the ability to increase profit in today’s economy is a challenge. In a stagnant market, increasing profit is an even greater challenge.

No company is perfectly efficient; no company operates like a pit crew in a racetrack. However, nearly all companies can improve. Any company can move toward high margin products, reduce waste and decrease cycle time. As daunting as this may seem, increasing profitability in stagnant or declining market is not impossible. To do so a company needs to adopt management tactics that can effectively address such an environment.

A company in a growing or robust industry can easily waste time, resources and brainpower and still perform satisfactorily. A company in a stagnant or declining industry must rely on maximum operational efficiency and high value work to be profitable. By the time a turnaround consultant is brought in, a company in a declining industry that has not addressed waste-elimination issues can be suffering from financial distress.

This is where restructuring advisors and turnaround consultants can provide leadership and spearhead change.
All too often, client companies are stuck in a mature market and employ management tactics that are specifically geared toward competing in a growth market.
The restructuring advisor needs to steer the client’s management team toward adopting strategies that can improve profitability, independent of market or industry conditions. Among the most effective strategies for
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