All businesses go through cycles of expansion and contraction. With the closing of nearly 2,400 major national retail stores in 2023, we’re seeing a move away from brick-and-mortar to more convenient online shopping. Overall, retail sales increased 0.7% in July (when compared to June), which is better than expected as consumer spending is holding up.
These changes create challenges for some retailers, but it’s also an opportunity to expand e-commerce. In other words, sometimes a business contraction can set the stage for business opportunity and creativity.
If your business is facing margin decline, here are 6 things that we suggest you do right now to address it and plan for opportunity!
Identify the cause of the decline.
The first step is to figure out why your revenue is declining. Is it due to a change in the market? A new competitor entering the market? A problem with your product or service? An internal problem that you know you need to address but haven’t? Once you know the cause, you can start to develop a plan to address it.
Often, Lesemann CPAs can quickly pinpoint the problem by evaluating your financials. If your books are messy, now is the time to get them in order. Maybe something was coded incorrectly. Maybe you have a product or service that isn’t profitable, but it’s hiding in a broader category that we need to break down. We’ll get curious and find the source of the decline and then come up with a plan to fix it.
Review your pricing—purchasing and selling.
Make sure your prices are competitive and in line with the value you offer your customers. You may also want to consider offering discounts or promotions to attract new customers and boost sales. You’ll also want to take a close look at your suppliers and ensure you’re getting the best pricing and not being taken for a ride!
Improve your marketing and sales efforts.
Are you reaching your target audience? Are you using the right channels to market your products or services? Are your sales reps effective at closing deals? Make sure your marketing and sales efforts are aligned with your goals and that you’re getting the most out of your investment.
How do you do this? Metrics. You need to be able to measure the success of your marketing and sales. For example, if you’re running Google or Meta ads, you should be getting at least four times the return on your ad spend. Or maybe you need to re-train or provide mentorship for sales reps that are in your bottom third. Whatever the case is, you’ll need to take a hard, honest look and make meaningful changes, accordingly.
Optimize your customer experience.
Make sure your customers are happy with the products or services you offer and the way you interact with them. A positive customer experience can go a long way in driving repeat business and referrals.
One good place to look is your Google reviews. Are they overwhelmingly positive? Do reviewers repeatedly point out areas for improvement? Recently, I was looking at some doctor’s office reviews and many of the less-than-stellar reviews mentioned having trouble canceling their appointments and a payment they had to make before their first visit. Both are easily solvable issues
Refine your business model.
If the above points hold true, then your current business model is probably no longer working. It may be time to make some changes. You may need to diversify your revenue streams, enter new markets, or develop new products or services.
Get help from Lesemann CPAs.
Really, this should be #1. As financial and tax experts with an objective eye and a flair for marketing and operations, we can provide insight and a plan so that your business has the best chance of succeeding.
It’s important to remember that a decline in margin is not always a sign of doom. It can be an opportunity to learn and grow your business. By taking the right steps, you can turn things around and get your business back on track.
Contact us to get started.
