“Money makes the world go round; however, happiness greases the axle. Without this lubricant, life will seize.”
― Paul Van Der Merwe
Even the most successful entrepreneur can experience a sales slump at one time or the other. Cash flow inevitably comes in waves, and managing it requires more than just financial intelligence. It requires internal grit and fortitude because the stress that comes when sales slow down is par for the course.
A sales slump can occur for many reasons; it could be an issue that is within your control to correct or one that is completely circumstantial. No matter the reason, it can cause mayhem on your nerves, be the result of increased blood pressure, lack of sleep, not to mention overall malaise as you try to figure out – “how will I get things back on track?”
There is a reason the expression above has some merit: whether we want to admit it or not, money has a value in our world. Even if we believe, as we should, that money should not be at the center of our lives, the truth is, it is. It is needed to clothe, feed, and shelter us. And while I 100% agree it can’t buy happiness, the lack of it can cause a host of issues to our overall health and well-being.
Money is the number one cause of stress, both in personal life and in business life. It feeds that fear of not having enough income to pay monthly expenses, especially when you add in the responsibility of supporting a family and the families of those who are working on your team.
In business, cash flow is the fuel by which a business runs, so, in terms of the health of a business, it’s vital. Therefore, we must approach it with careful consideration and be sure we have a game plan for when sales slow down; a game plan that tackles not only strategies for the company to survive but also ourselves as business owners.
First Step: Analysis
If you are a business owner, chances are you pay close attention to your sales and financial forecasts. You can see patterns and can tell when sales are heading towards a slower flow. If you’ve been in business for a while, you probably know to the month and time of year when things tend to slow down. This knowledge helps you realize that the slowing down is temporary and can help you pre-emptively prepare for the slump times in advance.
However, analyzing your production process and outcomes could also prove helpful to ensure something hasn’t shifted. Take the slow times to review and assess your internal processes, operations, deliverables, client, and customer feedback, etc. Not only is it good maintenance, but, should there possibly be anything that has changed within the way you serve or produce your product or service, you can catch it and correct it.
Part of your analysis should also include a review of the past year:
- Were there any unforeseen or emergency expenses that could have had a financial impact on your business?
- Did you make a large investment in a new tool, team member, or advisor?
- Was there a shift in your offerings?
- Did projects go as expected in areas where repeat business was available or did relationships go sour?
Each of these can affect outgoing cash flow and while some are investments, the ROI may take a while to show in the numbers.
Important Note: Pay attention to your pricing.
This is super important whether you are offering products or services. If you’ve had success up to this point by randomly picking prices out of thin air, your sudden slump could be related to a sustainability issue that could affect you long term.
Revisit your prices and think strategically by calculating your figures and basing them on actual numbers that include the cost of goods/service, taxes, production, etc. Be sure there is a profit margin so that you can aim for your financial sweet spot.
Second Step: Craft A Plan of Action
Nothing will help counteract your stress level more than devising a plan to address your cash flow in a sales slump. Having a strategic plan helps keep you feel grounded and makes you feel less helpless as you actively take measures to course correct.
Here are some ideas to consider when crafting your cash flow plan:
- Get Informed
There’s another expression to anchor yourself with, and that is “Knowledge is power”. You can’t go wrong with educating yourself on better production solutions, tactics, and marketing strategies that could help you overcome your sales slump and possibly get you to new growth areas. But – you have to know where your money is going.
The key is to be sure you implement the right solutions to match your current phase of business. Don’t go buying up courses or expensive mentorships and tools thinking they are going to swoop in and save the day. If anything, that strategy could land you further in a cash flow slump. When considering a new tool, strategy, or tactic, simply determine the most cost-effective measures, examine your current arsenal of resources, and see how you can implement in the leanest way possible.
- Reach Out To Your Network
While reaching out to people and connecting comes naturally to some, others may struggle with this due to personalty. However, there are different ways to reach out to your network:
- Social Media: find the platform that resonates with you naturally and start showing up there.
- Local Organizations such as the Chamber of Commerce, Rotary Club, Toastmasters, Jaycees, etc.: most local chapters conduct monthly meetups – don’t forget your business cards!
- Clients, Customers, Colleagues: your current network of people includes those you work with. Don’t feel awkward reaching out and asking for referrals – it’s part of the sales process and if done right, can help turn things in a positive direction.
- Get Help
Small business online loans and financial products can help you overcome financial obstacles. Now – this doesn’t mean you go in blindly and it’s critical to consider your cash flow situation: is the sales decline just a season or temporary slump or is the issue a bigger one? Knowing this will help you avoid taking on a debt you won’t be able to repay.Now – if you are looking to fund your cash flow to take your business to the next level, that’s a bit different. Again – if you know sales tend to go down in the summer but always come back up in the fall, using an online business loan to get you through that season could prove super helpful. There are many types of loan products, and you need to take care in considering your options. Pay attention to the loan terms and interest, and can you manage the repayment schedule.
Third Step: Take Advantage of the Pause
As you grow your business and notice the patterns in your cash flow, you’ll be better equipped to manage your season of possible sales slumps. The beauty is that it really is temporary. There is always light at the end of the tunnel. The trick is to be able to see the decline coming, adjust accordingly, and keep your eye on the horizon.
Some opportunities that come within a sales slump:
- Focused Attention: Chances are, when things are going well, you are so busy, and important quality checks are possibly overlooked. When things start to slow down, you can give your business a thorough spring cleaning, tighten back up your systems, processes, and recalibrating in areas you might not have seen.
- Trimming the Fat: Cash flow starts to decline. You are in the analysis mode of your financials. Chances are you will notice things you’ve spent money on that may not be 100% needed. There may be a competitor that is less expensive or offers more value for the same price. Becoming financially leaner is a clear benefit of a sales slump and could help you feel less of a pinch when it comes back around the next time.
- Realign and Refocus: A sales slump can actually give us something very valuable… time. Time to realign mentally, physically, and spiritually. Time to refocus our goals, objectives, and gives us an opportunity to pause and really evaluate where we are, where we are going, and ways to adjust and rework, if needed.
Every business, no matter the size, will, at one time or another, will experience a sales slump. The length may vary, but, no matter – when it comes, keep your eye on the bigger picture. It’s hard sometimes, but, if we can keep our minds calm, take necessary, progressive steps, we can weather the storm and come out of it stronger, smarter, and in better shape than before.