Managing your small business depends on the characteristics and methods of you as an entrepreneur. Reactive versus proactive small business management could spell the difference between failure and success.
Are you reactive or proactive when managing your business? In order to address this question, we need to discuss and differentiate reactive from proactive. Being reactive or proactive is not just a mind-frame, it is also a potential business strategy depending on what the situation calls for.
Reactive is when you react to situations affecting your business. For instance, say your competitor lowers the price of their goods. Your natural reaction is to cut down on prices too. This may seem like a viable solution at first, but reacting to situations the same way at all times may not the best solution for your business. As a matter of fact, applying similar solutions to recurring situations such as dealing with competition or slow sales could be fatal. For instance, if you keep lowering the price of your goods to cope with the competition, you might be forced to lay-off some employees in order to trim down cost of sales, causing your business to be undermanned in the process.
Proactive, on the other hand, means taking steps to maintain the business for the long-term. It demands that one should analyze the situation thoroughly and then identify alternatives that are best suited for the organization. For instance, if the competitor lowers the selling price, that doesn't mean you have to lower the price of your products too. Instead, you can opt to offer more features or perhaps better after-sales services. If you know the strengths and weaknesses of your organization, there is no need to react quickly to changes in market, competition, sales and other factors.