Many businesses these days are dealing with a drop in sales, especially with the ongoing global pandemic. We all need to know how to react to a situation when our business income is not what we anticipated it was going to be. Simply not responding will never be a viable option in a scenario such as this. We need to assess our options and come up with a plan of action to turn things around.
Investigate Why?
Initially, we want to figure out why we have seen this massive drop off in revenue? This will enable us to plan how we are going to deal with the situation. There may be a new competitor on the market, and it could be a change in the economy or even bad press for you or your industry as a whole?
Evaluate Current Financial Position
The next step is to evaluate how much time you must turn the situation around. To effectively do this, you need to look at your cash reserves and look at the current sales; and this will give you an indication of when you would run out of funds if things don’t turn around. You don’t want it to get close to that, but it will at least give you an idea of how urgent the situation is. Remember, cash flow is king, and neglecting it could be terminal for any business.
Consider Premises
Are your current premises working for you? This is something that should be periodically looked at, even in good times. However, in these circumstances, you may want to consider downsizing if your lease allows a move. There are issues and costs involved in this, though, so ensure you evaluate the move carefully. It will take time and expense, and you will need storage solutions and moving professionals. But it still could be a lifeline that helps turn your finances around.
Offers, Discounts & Incentives
You need to try and turn things around if they are flagging. How can you temp lost customers back, and new ones to arrive? You may need to come up with some offers, discounts, and incentives. Simple discounting could be the answer; however, it is crucial to be mindful of profit margins and overheads of the business as a whole. If you are not making a profit on these offers, you are just storing up the financial problems for another day. Other offers may make more sense, loyalty schemes, subscriptions, and refer a friend program.
Difficult Decision
If everything else fails, then you will, at some point, need to confront the difficult decision of whether to lay off staff? It is never an easy decision when you are dealing with people’s livelihoods, but if you don’t act and the whole company goes down, then nobody will have a job. It is important to sit down with any staff you must let go and honestly discuss why this has happened and be sure they know what redundancy they will be receiving.
