Even the most successful businesses experience periods of lower-than-average sales, and sometimes an industry-wide sales slump causes business owners to panic. Entrepreneurs may be tempted to overreact and change a process that has worked for them in the past. While there are times when you may need to adapt to survive, here are three keys to success when sales are slumping that require little intervention.
Don’t start discounting.
When sales are down, business owners tend to focus on one thing: increasing sales immediately. They look for ways to bring customers into the store now, instead of considering the long-term ramifications. Your competition may be offering different deals each day, and you’re considering doing the same thing. However, if your brand doesn’t typically discount, lean times are not the time to start. It will be more difficult to keep building sales once they begin improving because customers will expect a coupon every time and could stop coming into your business without a discount, lowering your profit margin on every sale.
Don’t change your core business.
When sales are slow, it’s tempting to add new products or services to jazz up business. If your company has been successful in the past there is no need to change it during an industry slump. If you’re changing or adding something that you wouldn’t change or add during booming times, don’t do it during slow times. Trust that your business is sustainable, especially if you’ve persevered through lean periods in the past.
For example, the fast-casual restaurant industry has seen lower sales recently than previous years, leading many brands to edit their menus or add delivery without doing the necessary market research to see if those changes fit the long-term vision of their brand. When sales normalize, you don’t want to be left with a product you don’t believe in, and during the slow times, the additional complexity of a new product only opens more room for mistakes during a period where customer service is key. If you’re considering jumping on board with something that will end up being a fad, you’ll waste a lot of money launching a product that could soon be defunct, confuse your guests and complicate the operations for your management team.
Know how to tighten your belt.
Businesses that have a sustainable P&L should be able to identify ways to cut costs and make it through lean times. For example, Penn Station’s food and paper costs are much lower than the industry average, which gives franchisees a buffer if sales decrease. Everyone wants to grow sales, but if they’re declining or staying flat, your profit and loss statement must be clean without unnecessary waste. Make sure you know where you can make cuts in your business without it impacting the quality of your product and service. If you’re fighting an industry-wide slump and competition has increased for customers, it is more important than ever to ensure you’re providing the kind of experience that will make them spend their money with you.
While it’s tempting to scale back things like your marketing budget, don’t forget that you still need to drive customers through your door. Look at every item line by line to find pieces that don’t keep your business running or enhance the customer experience. For example, maybe you can bring something like window cleaning in the house instead of hiring a cleaning crew every week. Challenge yourself to see if every line item is truly necessary.
Longevity is key to success in business, and maintaining a sustainable business model will help you persevere even when sales are slow. Consistently average sales are much better than going through extremely high highs and extremely low lows. Focus on providing an excellent product and great customer service and avoid knee-jerk reactions to succeed through the tough times.
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