As an auction business owner, it is difficult for you alone to control your revenue. There are so many outside forces affecting it, such as the economy, the type of merchandise consigned to you, the quality of that merchandise and the size of your crowd on auction day.
Even if you produce effective ads to draw in bidders, you are powerless over how successful your advertising partners are at managing their own businesses. If their readership is down, your ads will not be as effective as they should be no matter how well written they are.
Since such external factors can adversely influence your auction business, you have to capitalize on that which you can control – your day-to-day expenses.
Obviously you do not decide how much a dealership is going to charge you for a new truck, but you can decide to buy a used truck instead. You can also pick a cheaper building if the one you are looking at is too expensive.
A reasonable overhead, without sacrificing what you need to operate your auction business effectively, is just as important as the amount of revenue you take in. When and if your revenue drops due to unforeseen problems, you must be ready to make corresponding adjustments to your budget.
It goes without saying that the last place you want to make cuts is in staffing. Your employees will be counting on you for their jobs, especially if they have families to support. You should exhaust all other avenues first when it comes to reducing your costs. Personnel should be the last resort.
Many times when painful cuts have to be made, business owners slash their advertising budgets first. This is usually a mistake. When times are tough, that is when your advertising can prove to be your most valuable asset. You must keep your name out there. Some ad venues are less expensive that others, such as the Internet. Drop the more costly ones and double up on the less expensive ones. If you don’t maintain a proper presence, when things improve, your auction house will just be a distant memory.
Even if you are starting your auction business with more than enough money, you must have a plan in place to keep your overhead in line with your sales. Should your revenue drop, so must your expenses. You must always be prepared for those sudden climate shifts that can happen to any business.