eBusiness Weekly
Perhaps you are not hitting your revenue predictions or you are having difficulty with cash flow. Secretly, you are concerned that business is slowing. However, these things alone may not be enough to indicate that your organisation is not buzzing along as usual. After all, other factors could be at play, such as increased expenses or inaccurate forecasting, and it is important to make business decisions based on more than just a feeling.
Symptoms of a slow business
So how do you tell if the business is slowing down in general or if there are internal tweaks that are affecting the bottom line? The answer: By eliminating variables as you troubleshoot from your bank account backward.
Here are some symptoms of a slow business that may be factors to consider:
Reduced revenue
This is the big one to check since it is close to your bank account. Compare your revenue numbers to previous periods: last month to this month, last quarter to this quarter, last year to this year, year-to-date to the corresponding period the previous year.
This not only helps confirm a known revenue drop but also when the revenue drop occurred. If revenue dipped outside of regular seasonality, or if it dipped more than you expected, you’ll be able to find the cause — whether it’s business slowing or something else.
Reduced profitability
On the other hand, if there is no revenue drop, you will want to look at profitability as a culprit to confirm whether business is slow. Did you hire new employees, invest in new tools or equipment, or take on additional overhead in some other area? If not, you will want to investigate the performance of your more profitable products against the ones that are less impactful to your PNL. It is possible that business is slowing for your “money makers” but staying the same or increasing for other offerings.
Dry pipeline
If revenue is down, the next step is to figure out why, and that begins by looking at sales. Check your sales team’s closing ration against other periods. Has the percentage of closed deals increased or decreased?
A decrease may indicate an issue with sales or marketing performance rather than a slow-down of business. However, if the closing ratios are healthy, you may simply have fewer deals in the pipeline — which is a potential symptom of slow business.
Before you make this conclusion, you will have to ensure your team’s sales activity matches or exceeds that of previous periods. If they are not prospecting or calling as much, this can also dry up the pipeline.
Reduced traffic
Now the question becomes whether traffic is enough to sustain your sales pipeline.
For online businesses and businesses with an online presence, decreased website traffic could indicate that business is slowing — if you see a decline you can’t contribute to marketing issues . You can check your website’s traffic data through Google Analytics or other analytics marketing software. Measuring foot traffic in brick-and-mortar establishments is a little harder, particularly if you don’t have previous benchmarks or where people are still not visiting stores as frequently as they used to be.
Business trends are negative
Another symptom to consider is the broader scope of your market:
- Is it being disrupted by innovations in technology or your competition?
- Is general interest in your offerings declining?
- Is there a wider economic downturn or crisis affecting consumer attitudes?
These are wide-spanning variables that can be hard to quantify, but you can start with online trends to gain some insights.
Your sales department can be experiencing slow business for a variety of reasons. Here are some examples of factors that need to be considered:
Holidays
Just as some businesses explode from black Friday (relatively new in Zimbabwe) to New Year’s as consumers purchase gifts and other holiday items, other businesses slow down, particularly in the B2B space as offices empty. Holidays can have a great effect on whether a business is slow, so it’s important to measure business performance during these times versus similar periods rather than linearly. It’s comparing apples to oranges if you compare the holiday season against your busier seasons.
Seasonality
The holiday season is one example of seasonality, though not all seasonality has to do with holidays. Some industries such as beverages (soft drinks, alcohol) tend to do better in summer months while others (retail) have their busy season during the holidays. For this reason, it’s not congruent to compare your slow season to your busier season, so make sure to measure business performance accordingly.
Weather
Peoples’ spending habits can change based on weather patterns as well. Sales for a roofing company in a dry climate, unless people are building, are almost constant, however, there will always be a spike in business if it rains since rain exposes leaks and other roof problems. During dry spells, repairing or replacing a roof doesn’t seem to be as the top of mind for other people. This can apply to several industries.
Economy
The economy and current events are probably the biggest factor on this list for affecting business. In economic downturns, consumers’ attitudes change. Those who lose jobs have less money to spend, and even those who retain work may change their consumer behaviour as their positions seem less secure. The average buyer may make fewer luxury purchases and try to extend their dollars the best they can. The impact of Covid-19 has seen spending being affected across mainline businesses while some saw a surge.
Disruption
With the advent of the internet and recent innovations in technology, many industries can easily be disrupted with emerging (and perhaps more efficient or convenient) competition entering the market. Just as the Uber model disrupted the taxi cab industry, other industries can slow due to disruption or competitor innovation. The new trend of remote working and hosting virtual meetings is the new norm, a disruption in its own right being witnessed the world over.
Let us focus on key solutions in the next article.
Robert Gonye is a business growth expert and influencer. He writes in his capacity. Comments and views: [email protected]
