If actual performance is lower than expected, what might a business consider doing?

When actual performance falls short of expectations, one of the most practical steps a business can take is to find ways to lower expenses. Reducing costs can help improve the bottom line and provide more financial flexibility to the organization. This is crucial, especially if revenues are not meeting projections, as it allows the business to maintain operations without incurring significant losses.

Lowering expenses can be approached in various ways, such as streamlining processes, renegotiating contracts with suppliers, reducing overhead costs, or implementing more efficient technologies. By focusing on cost-saving measures, the business can respond more effectively to unfavorable economic conditions and stabilize its financial status.

In contrast, increasing salaries does not align with the goal of addressing underperformance, as it typically raises expenses and may exacerbate financial issues. Lowering product quality would likely harm the business’s reputation and customer satisfaction, further diminishing performance. Expanding product lines requires investment and resources, which may not be feasible when financial performance is already lacking. Thus, finding ways to lower expenses stands out as the most logical course of action in response to poor performance.