Reversing business decline
A sustained drop in turnover and/or profitability is a warning sign that things need to change. Every business has its peaks and troughs in performance and, if you’ve run your company for a few years, you will have a well-developed sense of when the busier and quieter times of the year are.
But what if the peak does not match last year’s peak? Or if the peak doesn’t come at all? Or that the trough is significantly deeper than expected?
Clarkson Hyde work with company directors not only as accountants and tax experts but as business experts. In this article, we’ll look at the advice we’ve dispensed to clients whose businesses have been performing below expectations for six months or more.
First, minimise expenditures
The first thing that you should do is closely examine how much your business is spending each month. You might be able to switch suppliers on essential contractors. You may be able to find a cheaper freelancer or renegotiate your existing freelancer’s rates if you outsource some of your business functions.
It is imperative that you don’t sacrifice any quality when you make these changes. The quality of your output is directly linked to the quality of what comes into your business. If your customers are paying the same prices but notice a drop in your standards, this may have serious long-term repercussions for maintaining valuable accounts and protecting brand quality.
Make every marketing pound count
When you promote your business’ services you should closely monitor how successful each campaign is. You might, for example, be spending money advertising to audiences not interested in what you’re selling.
It may be that, for every £10 you spend on marketing, the vast majority of your returns comes from £2 or £3 of those pounds. The remaining £7 or £8 may produce little or no return. If that’s the case, you’re spending £7-8 chasing hard-to-attract customers when you could be spending much more of your money on a responsive platform.
We also recommend that you start by promoting to people who have already bought from you in the past – it’s much cheaper to sell to existing customers than find new ones.
Maximise sales opportunities
Take some time to consider the different ways that your product or service can be used. Could aspects of your product or service be re-spun to serve clients in another market? You might do IT outsourcing but your knowledge of the industry means that your expertise on cybersecurity could be sold as well.
Set new goals
If your turnover and profits have been falling or under expectations for a little while, then there is no point in aiming for targets that you had previously set. Missing targets consistently will only demotivate your workforce. Instead, look at what is realistic and set your sights on something that is tangible and achievable in the short term.
Hire the right people
Some employees are more committed than others. You should hire people who want to be in your industry and whose career goals are closely aligned to your business’s performance targets. Don’t settle for people who will just clock in and clock out again.
A good way to determine who is a good fit for your business is to ask them what they want to achieve during their time with your company. If they want to climb the management ladder, this is someone you can work with on business development. If they want to learn a certain skill, the new knowledge they gain after being trained properly could be used to develop new products and services to offer new and existing customers.
Use us for our business expertise
It is a cliché but success is never a straight line on a graph. It may be the case that your business has grown an average of 10-20% year on year for the last few years and suddenly, out of nowhere, sales drop by 10-15% and you’re not sure why. Most businesses go through this – being established for 10-20 years or more is no immunity.
Call us today on 020 8652 2450 or email firstname.lastname@example.org and we’ll put you in touch with a member of the team.