How should businesses react when cost of production increases.

[TOZZIBLINKZ]

Larger scale businesses are more likely to survive and pull through in times when the cost of production of goods and services are increased but on the other hand small scale businesses may not be able to survive when the cost of production of goods and services are increased . That is why in most times when cost of production increases many small scale businesses tend to go bankrupt liquidated or even shut down for some period of time until when cost of production is reduced or decreased . Despite this there is absolutely a possibility that small scale businesses can absolutely survive even in times when cost of production is increased and one of the things that totally determines their survival in times like this totally depends on how they react and respond .

A small scale business organisation is supposed to react positively and considerably in times of increased cost of production, and the most positive way to act is to channel all available revenue and financial funds to the production of only goods and services which consumer advice are able and capable of becoming a necessity products . Small-scale business is she going to give out credit sales in times when cost of production is increased because that would so much liquidate the business .

 

[Augusta]

Like what is happening in my country today the cost of production have gone so high that everyone doing business that is affected by the increase has responded accordingly.

The truth is that if there's an increase in the price of production then we should always expect an increase in the prices of products too. There's no two ways about this. You get the proportions of what comes your way and you must reciprocate.

The thing now is that it is always the buyers or consumers that suffers these effects of these problem. The producers do add all these increase to their price of products and package it to sell to the final consumer's. There's no two ways about it because you can't just do otherwise

This is why the government should always try to cushion the effect of things like this for the masses , it doesn't go down well with the citizens.

 

[eldavis]

It depends on the line of business you are in though. I work with a company company that deals on making picture frames, which means even with the increase in purchasing materials for production, notting can be done, the quality of our services cannot be reduced in any way, neither can we focus on something else and even the quantity cannot be reduced, the only thing that can be done would be to increase price.

 

[Shaf]

If the cost of production increases, it's rational to expect the prices of goods to also increase proportion. That is what is happening in this time of inflation and supply chain issues.

Though small businesses may feel the impact more, the larger ones are also not spared. It could just be that bigger businesses have alternative ways of sourcing for more capital to use and stay afloat till things get back to normal.

A small business can also try to look for alternative ways to get more money to cope with the increased cost of production, which is where it's important that the business has its accounts kept up to date. Most lenders and banks would like to see this before giving out money, even with collateral used.

The business can also try to source for cheaper materials, or reduce the amount of product per package. This should be communicated to customers to avoid misinformation though.

 

[Mastergp]

In a business we have small scale and large scale business such as their own capital use in starting up such business. It is therefore not easy to handle a business either small or large scale each are band to fall if not maintain but it takes times for a large scale business to fall or collapse most time large scale business can automatically reduce to small scale business like wise small scale business, it all depend on those managing the business.

But at most times the cost of production may get higher in prices and this usually affects those that practice small scale business as a price of goods keeps increasing there interest may increase as well that is why most business places that practice small scale business always half empty with goods, because the expenses to travel and buy this products as well as the prices to buy them and bring this product back to their work place is very high and at most times when these products are bought in higher prices.

 

[CALVINDOL]

There is indeed no best way to react when cost of production increases than to channel all available capital to the production and manufacturing of only goods and services capable and able to be patronized by members of the public . Increased cost of production is absolutely a trying times for most businesses and if care is not taken majority of businesses terms to go bankrupt during times of increased cost of production . But in order to survive you have to be able to know which product or which goods and services that your customers and clients are more likely to purchase and if you are able to know this product in particular you must channel or available resources and revenue to only the production of these goods and services more likely to be bought and patronized by members of the public so that at least you could still be making reasonable amount of productivity and revenue. Most businesses are unable to identify which products to focus on that is why they go bankrupt .