A sales drop is one of the more frightening developments a business owner can experience.
Often, a business owner knows exactly why he or she experienced a plunge in profits. It's winter and people simply aren't buying the bathing suits and beach balls you manufacture. Or perhaps you've had some personnel changes, so your business isn't operating at full speed.
Maybe the culture and trends have changed, and people simply aren't buying your products or services as much as they used to. Sometimes, no matter what you do, you can't stand in the way of changing tastes. Rug beaters were a hot manufacturing item until the vacuum cleaner came along. The typewriter industry was almost wiped out by computers.
Regardless of the reason, you might be able to turn around a sales drop if you try a few strategies.
1. Be proactive when fighting a sales drop.
You can't afford to assume declining revenues will level off and start rising again. Maybe it'll happen, but what if it doesn't? If you wait, you may come to the conclusion that it's too late to turn things around.
But if you act fast, you may come up with a solution before things become too dire.
Josh Quinn is a Columbus, Ohio entrepreneur who, along with his wife Niki, owns Tigertree, a boutique that sells clothes and accessories, and Cub Shrub, a store that sells clothes, accessories and gifts for kids.
After what he says had been an unprecedented amount of construction for a nearby hotel—as well as on the street his business is on—Quinn saw sales plummet significantly late last year, especially holiday sales. Making matters even more difficult was that there were also about a dozen mid-rise developments going on.
—Roman Rabinovich, vice president, Eventige Media Group
Quinn heard about the impending construction 18 months before it began, and immediately researched how similar projects tended to hurt local businesses.
He soon had what he felt was an accurate and bleak forecast. Quinn estimated he would probably lose 20 percent of his store's income.
In response, he decided to take what would be an extreme action for some business owners (or perhaps not, if you're committed to growing your company, anyway): He decided to open a second Cub Shrub store.
The construction projects closest to Quinn's first Cub Shrub store are expected to be ongoing until November, and Quinn felt that the third store's cash flow could keep the entire business afloat if it was successful. And so far, that's how it has worked out.
“It's in a neighborhood far enough away to be independently successful, but close enough that our existing customers could access it," Quinn says of his new store.
According to Quinn, the worst thing you can do when you experience a sales drop is to panic.
“Like every gambler always says, scared money never wins," he says.
2. Educate your customers on why your business is worth it.
Mazdak Mohammadi runs Blueberrycloud, a web design studio in Vancouver. It may not sound like he would see his sales drop. After all, plenty of companies and individuals need their websites designed.
Still, he says that his revenue is threatened. Why?
Due to several big brand companies offering consumers tools that allow them to build their own websites.
"Creating a website from scratch isn't all that hard any more," Mohammadi admits.
Six months after starting his business in the summer of 2014, Mohammadi realized just what a threat these companies were. He found himself wondering: “How do I put a hold on the market's shift to make me obsolete?"
Mohammadi realized that in some ways, he couldn't. Instead he has learned to accept that most startups are going to build websites in the cheapest way possible.
“Honestly, it makes sense when you're on a shoestring budget," he says.
So instead, Mohammadi has been pursuing business owners who have gotten past the startup stages. He says that the weakness of a lot of do-it-yourself design websites is that they have a template system, so everyone's website can easily start to look alike.
As such, “I must position my business as a web design company that promises that you will look damn good and damn different," Mohammadi says.
When you think about it, this is an argument that many specialty and smaller stores have made against the big national chains. Go to them for a cheaper price, if you must, but if you want superior expertise and more personalized service, c'mon over to us.
3. Listen to the customer, and then innovate.
Contrary to the saying, the customer isn't always right. Sometimes customers are too demanding or they're trying to get something for nothing or need to be educated about a product.
But when people aren't buying your product or service, especially if they once were, it's time to start listening. Then you need to figure out what your customers—the ones that are still around—do want.
“When customers stop buying a product from a company that is doing well, most of the time this is a symptom of a few possible options such as slow innovation, no innovation or availability of competitive substitutes for the product," says Roman Rabinovich, vice president of business development for Eventige Media Group, a New York City-based digital marketing and advertising agency.
Rabinovich says that if you think you are suffering from under-innovation or too many competitive alternatives, he recommends getting “an accurate assessment of the voice of the customer." (Your competitors are probably doing that, he adds.)
“Abandoning the mentality of thinking that you know, and actually getting to know, the customer is the first step in the process," he says.
After that, you can come up with a product or service that they do want, Rabinovich says. And ideally you'll keep innovating.
“A company never stops innovating with the intention to put itself out of business. Although this sounds counterintuitive—we don't actually want to go out of business—the goal is to become your own most fierce competitor," he says.
Linda Murray Bullard, a business strategist who runs LSMB Business Solutions, LLC, in Chattanooga, Tennessee, agrees that your customers will give you your best ideas—and that ultimately they may show you the way. At least for awhile.
"When products stop moving off the shelf, it's time to begin talking to the customers like never before," she says. “Even with the rug beater, if the manufacturers could have thought [of] how to automate the process by saving time or money, they would have given the vacuum cleaner industry a challenge," she says.
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