14 Ways To Deal With Dwindling Profits Before It's Too Late

June 4, 2019

Post written by Expert Panel, Forbes Coaches Council. Top business and career coaches from Forbes Coaches Council offer firsthand insights on leadership.
Jun 3, 2019, 08:15am

When a business owner sees their profits suddenly dry up, it can be a time of intense panic and worry. There may be no immediate explanation for why the profits seem to be decreasing, but it’s important to remain proactive to keep the situation from spinning out of control.
Whether it’s increasing focus on sales or pinpointing other streams of income, there are measures you can take to stop the bleeding and turn your profits around in a hurry. For the top recovery strategies, we asked members of Forbes Coaches Council to provide their suggestions for the first thing businesses should do after experiencing a sudden drop in profit. Here’s what they had to say:

Members discuss a few ways you can tackle dwindling profits, before it is too late. Photos courtesy of the individual members

1. Find Out Why And Learn From It
The truth is, nothing in business happens out of nowhere. It just means you weren't aware of the problem when it became one. The key is not to be reactive, because that approach seldom yields the results you want. Look back at customer behaviors and notice when the drop began and find out why. The data you gather from what you see as a loss now can prevent more sizable losses in the future. - Michelle Tegola, iTribe Social

2. Get Ruthless About Your Costs
Go into triage mode and strip away all non-mission-essential costs. As a business owner, you must decide which "limbs" must be cut off in order to ensure that the "body" of your business survives. Do you really need that fancy furniture lease? That weekly flower delivery to the foyer? Those SaaS subscriptions?
- Irene McConnell, Arielle Executive

3. Slow Down And Think
Use the S.T.O.P acronym. S: Literally, stop and pause for a moment. Impulsivity is not your friend right now. T: Take a deep breath or two. Maybe take a walk around the block to clear your head. O: Observe what's going on in your head, body and emotions. Just observe, don't judge. Consult with others. Take stock of your options. Take time to think. P: Proceed with a plan based on calm and reason.
- Gary Bradt, Bradt Leadership, Inc.

4. Don't Panic
Most businesses are cyclical in some way. If that's the case for you, step back and look at previous dips and the causes for them. Have you seen this before and then recovered? What made the difference? Look for ways to improve if you can, and then go with the flow, knowing that this too will pass and the numbers will go up again.
- Janet Fouts, Tatu Digital Media

5. Identify The Leak
Profits come from having the right sales volume at the right price for your capacity and then making the right investments (not overspending). If profits are down, are sales down and can you bring them up? Is your average sales price down? If so, can you raise it? Excess capacity? Should you sell more to fill it? If sales, price and capacity are OK, then bring spending in line.
- Jennifer Wilson, ConvergenceCoaching, LLC

6. Check Back In With Your Core Purpose
Have you wandered from your commitment and mission? Make sure that you are clear on your commitment and the purpose of your company. Check to see if you’re still clear on your target client and buyer. Evaluate these against your daily, monthly and annual objectives. Maybe your mission and strategy have changed or need to change—it’s time to take a look.
- Aaron Levy, Raise The Bar

7. Ask For Help
Time and time again I'll work with business owners who are afraid to ask for business, share a tough time with their business circle or even refuse to get help. Ego defense is not the way to go. Sometimes talking through the problem, doing a post mortem and understanding what went wrong can help you figure out what went right. Also, know that asking for help shows you are savvy!
- Maresa Friedman, Executive Cat Herder

8. Analyze The Numbers
It is important to identify the root cause of the loss in profit by analyzing the numbers before creating a strategy. If the loss was due to an investment made, it is important to track the ROI. If, however, the loss was due to unnecessary expenses, lower sales or poor profit margins, then create an effective strategy to spend less, sell more and increase margins.
- Susan K. Wehrley, BIZremedies

9. Focus On Sales
When profits dip, a total sales focus is essential. All other behaviors, actions and priorities must be put on hold. The focus on expanding existing customer accounts and the creation of new accounts must become the priority of the entire organization. It is only through sales that a company will come through the malaise of a dip in profits.
- Ken Gosnell, CEO Experience

10. Look Beyond The Numbers
When the market forces and the numbers aren't enough to explain why a business might be suffering a sudden change in profitability, I want to dig deeper and find out what might be going on with the business owner or their leadership team. If individuals are experiencing emotional turmoil, it can be reflected back to them in their professional environment. Explore if there is an emotional root.
- Carolina Caro, Carolina Caro

11. Build Multiple Streams Of Income
Prior to 2008, my law practice was primarily real estate. I was making a lot of money, but then the housing bubble burst and my business took a nosedive. I learned from that experience that you should always build multiple streams of income in your business. Plan out your different revenue streams and make sure they are independent of each other so if one area of business goes down you have others.
- Tameika Devine, The Possibilities Institute

12. Use The Business Model Canvas
When profits take a sudden nosedive, it's easy to panic and uses a scattergun approach to try and fix the situation. Instead, this is a great time to put your core business under the spotlight. Map out the whole value chain using the "business model canvas." Then for each category (e.g. partnerships, proposition, channels, revenue, costs, etc.) look for ways to innovate and optimize.
- Gabriella Goddard, Brainsparker Leadership Academy

13. Build A Compelling Vision
When things go bad, it is so easy to fall into a "survival mode." The downside of the "survival mode" though is that it limits our thinking significantly. Try building a highly compelling vision for your recovery instead—where do you ideally want to be a few months from now? Instead of thinking about how to recover from a drop in profit, how might you turn negative into highly positive profits?
- Marina Cvetkovic, The Peak Alliance

14. Shorten Up Your Time Frames
It can be tempting to look too far out after a shock to the business system and to catastrophize. The way to recover is one moment, one transaction, one relationship, one day at a time. Gain momentum from small wins until stability and normalcy return. Strong businesses will take a retroactive look to learn from sudden nosedives and apply those learnings for the future.
- Evan Roth, Roth Consultancy International, LLC.

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