Market fluctuations are a part of any industry, and prudent leaders understand the critical need for proactive measures to weather income downturns. During a storm of financial uncertainty, certain strategies can be effective when facing a projected revenue decrease.
Whether it’s the result of external economic factors, industry changes or unexpected crises, industry leaders should heed these strategies to combat decreasing revenue. Below, 20 Forbes Business Council members share tips, tricks and strategies for any leader looking to not only shorten the duration of an income downturn, but also emerge stronger on the other side.
1. Avoid Making Short-Term Decisions
Cutting expenses is a critical step in managing your burn rate, but avoid making short-term focused decisions that could significantly hamper your revenue ramp-up in the future when things improve. It is important to get through the tough times, but it’s even more important to have a strong ability to ramp back up in the future! – Suraj Gupta, Rogue Insight Capital Ltd.
2. Have An Active Plan In Place
In preparation for tough times, we must minimize nonessential expenses, elongate payables, shorten receivables and proactively fortify relationships with clients, suppliers, banks, partners and so on. This plan requires preemptive measures and calls to have an honest dialogue with each and every party we value. The more active the plan, the greater the chance of weathering the storm. – Tej Brahmbhatt, Watchtower Capital
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3. Keep Your Team Goal-Focused
Keep the team focused on the goals that were set as an organization. Downturns have a way of creating self-fulfilling prophecies of doom and gloom. Keep the team feeling good about doing all they can to reach their goals. Accentuate the positive and celebrate the success the teams achieve. We had a saying in the military: “Idle hands create havoc and pain.” Keep people focused and busy. – Joe Crandall, Greencastle Associates Consulting
4. Look To Your Network For Support
When projecting a downturn, the usual answer is to cut all unnecessary costs. While that is important, it would be the last thing I do in the process. First, I would take all possible steps to extend your working capital cycle. Lean on all your partners to give you the longest runway. This should give you the ability to cut expenses that don’t add value and help you be prepared when the market turns. – Eran Mizrahi, ingredient brothers
5. Prioritize Customer Retention And Satisfaction
One effective step for leaders during a forecasted revenue decrease is to prioritize customer retention and satisfaction. By focusing on existing customers and ensuring their needs are met, leaders can minimize churn and maintain a stable revenue base. This may involve providing exceptional customer service, personalized offerings and loyalty incentives. – Adam Ramsey, Suboxonet
6. Review Current Expenses
During income downturns, experienced business leaders must rigorously review and trim expenses and identify cost-cutting opportunities like outsourcing and automation. Renegotiate supplier or partner contracts for better terms to navigate revenue declines while maintaining service quality. – Pavel Stepanov, Virtudesk
7. Conduct A Stress Test
When facing a predicted revenue drop, a financial stress test is crucial. This identifies weak spots and optimization areas, helping leaders make data-driven decisions to trim costs and focus on critical KPIs. The aim is to lessen the downturn’s impact and position the business for a quicker recovery, enabling agile responses to changing financial conditions. – Anuraag Sunder, Aon
8. Identify Ways To Reduce Costs
One effective step leaders can take to survive an income downturn is to identify cost-reduction opportunities and adjust accordingly. Reducing costs without sacrificing quality could include renegotiating contracts, consolidating suppliers or implementing energy-saving measures. Staying agile and being ready to take action when needed is vital when weathering an income downturn in your company. – Matthew Davis, GDI Insurance Agency, Inc.
9. Tighten Operational Efficiencies
In the face of dwindling revenues, it’s vital to foster resilience by tightening operational efficiencies. A pivotal move is to streamline processes to eliminate waste and focus on core competencies. By doing this, companies can maintain quality while reducing costs, essentially “doing more with less” and steering the ship steadily through rough waters. – Sevana Petrosian, SEV
10. Be Quick And Decisive
I think the most important thing to do is make decisions quickly. Whether it’s cutting costs through partnerships, subscriptions or teams, it all takes time to do it. The faster you move, the better it is for everyone involved and the survival of the company. In tough times, quick, confident and decisive action is essential to enabling everyone to focus on the challenge ahead. – Arthur Bretschneider, Seniorly, Inc.
11. Implement A Cost-Management Strategy
One effective step leaders can take to survive an income downturn is to carefully analyze and adjust their operational expenses. Identify areas where cost reductions can be made without compromising essential functions. Implementing this cost management strategy aims to reduce the impact of revenue decline and avoid employee pay cuts and morale issues. – Neha Naik, RecruitGyan
12. Enhance The Value Of Your Offering
Focus on enhancing the perceived value of your products or services. This might involve incorporating additional features, offering complimentary services or improving the customer service experience to encourage sustained patronage despite economic hardship. – Ran Ronen, Equally AI
13. Create Multiple Forecasts And Plans
Create multiple forecasts and develop contingency plans for each of the scenarios you’ve forecasted. Then develop action plans for each contingency plan. These can include cost-cutting measures, reevaluation of capital expenditures, cash flow management, etc. – Stephen Nalley, Black Briar Advisors
14. Have A Retaliation Approach
Instead of taking a defensive approach, choose to retaliate. Try finding new revenue streams, look for opportunities to pivot your business model or diversify your product or service offerings to cater to changing market demand. – Raj Maddula, Global Squirrels
15. Thoroughly Review Expenses
When facing a decrease, survival for many businesses will depend on the expenses. A great exercise, to be done periodically regardless of the forecast, is to do a thorough review of the expenses and look for products and services no longer needed or used but still being paid for. Additionally, look for areas where cuts or more efficient solutions can be implemented without affecting employees or customers. – Jason Foodman, Leaf.page
16. Prioritize Cash Flow Management
When anticipating a revenue drop, leaders should prioritize cash flow management. This involves analyzing fixed and variable costs, identifying areas for cost reduction and reallocating resources to high-return activities. Concurrently, ramp up client engagement to understand their needs and adjust offerings accordingly. Proactive measures and adaptive strategies can mitigate the downturn’s impact. – Andrei Neacsu, HyperSense Software Inc.
17. Utilize Low-Cost Media
Leveraging low-cost brand positioning through media articles, networking, podcasts and other inbound-driven revenue-generating abilities is wise to consider. Relationships matter and the intangible wealth from strong vendor relationships has a tangible impact during these times when negotiated terms for extension or discounted prepay lengthen operational efficiency. – Paul L. Gunn, Jr., KUOG Corporation
18. Provide Less Expensive Offerings
One effective step leaders can take when anticipating a decrease in revenue is to pivot their focus toward providing services or products that require fewer initial expenses for the company. By shifting the business model toward offerings with lower overhead costs, such as digital products, subscription services or online consulting, leaders can adapt to the changing financial landscape more efficiently. – Mark Snell, Polestar Plumbing, Heating & Air Conditioning
19. Be Proactive
Leaders should always try to run lean operations. This means always having enough cash, keeping costs minimal and prioritizing operational efficiency. So, if a leader running a lean operation faces a decrease in revenue, they will be able to survive without making any fundamental changes to their business. – Abdulmuhsen Fakih, Systemize It
20. Diversify Income Sources
Diversify income sources by exploring new markets, products or services to offset the revenue decline. Adapt quickly to changing circumstances and leverage existing assets to find alternative income streams, ensuring financial stability during downturns. – Trey Ferro, Spot Pet Insurance
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