08 Jan Oh Snap! Business is Declining! What To Do?
Uh oh, business is on the decline. Perhaps you have lost an important client, perhaps one of your product lines is losing sales because of changing market trends or perhaps, sadly, you might have messed something up. It is a difficult place to be in, however, it is more important than ever to have accurate numbers and to be able to make changes that will support your business now during this difficult time.
What happens next you might ask yourself? Well, it’s time to ask yourself the difficult questions. Let’s start with cutting cost. If you are in a position where you have lost a significant amount of business, or you are on a decline trend, then it is time to reevaluate all parts of the business and see where you can cut back on cost.
The first thing to look at are your business’ biggest costs. Typically, those would be the rent and the payroll. If rent and payroll are two of your biggest costs, then start to evaluate where you can make the biggest impact.
It is difficult to cut back on employees, you had a responsibility to these people, but it is your biggest cost. Look at your staffing and determine who is delivering the greatest value. It is best to start with the value that the employees are providing and the job descriptions that they are filling. When you look at the work they are doing, ask yourself if it is appropriate for their skill set. It might be a possibility that you have great employees whose job responsibilities need to shift in a different way as the business changes. If this is the case, then keep the valued employee who works hard! Employees who work hard and share your values are one of life’s finest gifts! It is worth the effort to shift their responsibilities as we all know that talented people build companies. Don’t forget that job descriptions and responsibilities change with frequency. Just because an employee started out doing one thing, does not mean they do not have the talent or drive to try something new or different that they may be better suited to.
The other large opportunity cost for most businesses is to change their location or rent agreement. It’s time to review the contract that you signed and be fully aware of options to execute an early out. Is there a cheaper location or office space that would still facilitate the business? Are you locked into a long-term lease? If there is unused space, perhaps there is a way you can facilitate a subletting agreement with another company looking for space.
Once you have looked at these two main costs it is time to look at ancillary expenses. Cut the muck out of what you have been doing, go no frills, get down to bare basics. Look at subscriptions and memberships as a possible area to cut back. Another good place to cut back is looking at how office supplies are fulfilled. Do you have a sharp system for filling office supply and equipment requests? Do you have a powerful way to manage inventory so that you can keep less on the shelf?
Last, take a look at your sales and marketing expenses. When business is down this is not the time to cut back on sales and marketing, however tempting that may be. Instead, consider the possibility of recalibrating your sales and marketing plan. Look at where business is down and business is growing and make sure to reinvest your dollars in the areas that you can see have the most potential for growth. Perhaps it is time for a fresh look at marketing and you need to get a second opinion. Whatever you do, cut things that do not work and invest in the things that will propel your business forward. My rule of thumb for evaluating a company’s sales and marketing expenses is to look at where the new clients are being generated from and to talk to these new clients as to why they chose your firm over the competitors. There is so much value that can be generated from talking to your best customers! They will give the answers needed to pick up, brush yourself off, and go out and find new customers. Happy customers are your best source of finding the information you need to get more happy, satisfied customers.
