MBA1826 How to Deal With a Sudden Loss of Revenue

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At Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at Capella. Eduardo.

I want to start today's lesson by just recognizing the fact that if all of a sudden you have a loss of revenue for whatever reason in your business, whatever the cause is, that situation absolutely stinks. Okay? It's gonna hurt. It's gonna really be a gut punch. These are gonna be the toughest days of your life as an entrepreneur. I know for sure. I can look back on those days and it's cringe worthy. It's hard, it's hard to. Because you're stressed, you're tired, and you're in this kind of emergency fight or flight reflex mode where you're just like, I gotta solve this problem. Things are hypertense and challenging. And I want to start with that because you have to recognize that's normal. This is not supposed to be fun, okay? This is tough. Having said that, it's actually good to actually imagine this happening to you before it happens. To actually go through the emotions, sort of like a rehearsal. Why am I saying go through all this and go through all that emotional anguish? Well, what you want to do as much as possible in these situations is to be calm, to have an even keel, to be able to problem solve because the pressure is going to be immense. You're going to feel the sense of like, I got to solve everything immediately. What we really need to do is to start solving it step by step, one hour at a time, one day at a time. And being stressed, being angry, being frustrated is not going to help the situation. On top of that, if you have a team, your team members are going to look to you, to leadership. And if they see you in the state, it's not going to inspire them, right? It's not going to make them feel like, hey, we can do this. You need to lead by example. So just keep that in mind. Even if you're not in this situation right now, rehearse it in your head. Because one day we are all Going to face some sort of bump in the road. So how do you solve this problem? How do you attack this issue of loss of revenue all of a sudden? So the first thing I like to do in these situations is I like to define the problem as much as possible. I know this sounds very simple, but it allows me to be able to have a plan of attack that is sensible and practical. So, for example, let's say you lost a bunch of revenue because Google changed your algorithm, and now your SEO is not as strong as it used to be. So you're losing traffic and you're losing sales. So you need to really write down what is the problem. The problem is our SEO is just not as good as it used to be. Our traffic just got cut in half. Write down anything that comes to mind. That is the problem. Try to be as practical and try to be as emotionally uninvolved as possible to kind of see this as a third party, as, like, a consultant. This is the problem. Define it. So in this case, most people try to fix the problem as soon as possible. Can I fix this problem? Can I do this? Can I reverse this? Is there any way I can, you know, change my ranking in Google? Well, yes, we will get to that, but the real problem here is, is that you're not getting the revenue that you're expecting. And your costs are the same. And you need to cover your costs, right, for your business to run properly. So you need to ask yourself another question. I lost revenue because of X. This is the problem that I, that I defined. Can I earn revenue with Y? What is Y? Is there any other way I can earn revenue outside of the way I just did or used to with SEO? And now that revenue source is broken? Really, what you're asking yourself is, what can I do with what I have? This is a very powerful question. I learned this from Jim Rohn. Great, great personal development speaker. What can I do with what I have? Right? Just really think about that. So if I was in this situation, I would say, okay, I have existing customers. My new customers just got cut in half because my traffic got cut in half. So let me leverage what I. I have, my relationship with my existing customers. Let me run a promotion with them to get them to spend more money to cover my losses of revenue that I'm not getting from new customers. What this does is that it creates a stopgap. It allows you to breathe and say, okay, things are going to be all right. I have a kind of temporary solution, an injection of cash while we figure out how to, you know, solve this traffic problem. A lot of people get hung up on the problem. They're like, we gotta fix this, we gotta do this. This is a catastrophe. Instead of saying, hey, let me just step aside for a second. What can I do now with what I have without fixing anything, with what I already have to get more revenue to solve this situation and not really solve the problem? Next, I go to my costs, I go to my P and L, my profit and loss sheet, and I say, is there anything superfluous here, anything that I can cut out that we're not using? Any kind of training, any kind of service that not critical to me running the business? Can we pause this cost until we get out of this rut? Two, I call my biggest vendors or my biggest cost or services. This could be, you know, your Amazon Web Services bill. This could be your email marketing service. Whatever it is, I email them, I call them immediately and I say, hey, this is what happened. I just straight up say, hey, I've been running my business for X amount of years. I have a loss of revenue all of a sudden because Google changed their algorithm. I have lost a traffic. We're solving the problem. But for the next month or two or three, you can ask, can we have a deferred payment? Can we have some sort of discount? Can we have some grievance, something to help you out in this situation? Most companies will say yes because they want to keep you as a customer and you've been with them for years and they want you to stick with them so you don't switch out. And guess what? They know if they say yes, you'll be even more loyal for years. So this is an easy thing to do to again, give you more breathing room to say, all right, I don't have to worry about these costs for the next few months while I solve this revenue problem. Third, let's solve the revenue problem. Let's solve the problem that caused us to lose revenue all of a sudden. Whatever it is, take a look. If we're going to go with our example, the SEO, hire a freelance SEO developer. I know that this is going to cost you a bit of money, but we just cut our costs a little bit, but it's going to actually help you solve the problem faster. Get somebody who's an expert at solving your specific problem and say, hey, this happened to me. What is the fastest, most long term, reliable way for me to solve this problem? They're going to go in, they're going to take a look. They say, you know, What? This is what you got to do. This is how long it's going to take to justify or to kind of fix itself. And it might only take four or five hours of consulting, you know, $500 or so, and somebody jumped in, gun for hire, solved your problem. You're sleeping like a baby the next night. This is something that I learned the hard way. And this is a hard reality for a lot of entrepreneurs to know or to recognize. If something happened, even if it's out of your control, most likely the loss of revenue is due to a mistake or something that you did in your business. And we all make mistakes. We're all hustling, we're all trying. We can't be experts at everything. But rarely can you solve a problem that you caused better than an expert. Okay, you caused the problem, you might be able to kind of band aid the situation, but to solve it properly, you probably caused the problem because you don't know your way around this area. So invest in getting somebody to really fix it for you. This is like somebody trying to DIY some plumbing at home and they kind of duct taped it and then eventually the pipe burst. At this point, you're the wrong person to try to fix this. You tried to kind of make it work with some duct tape. Get a professional plumber and get it fixed and get it done right, they're going to be faster, more efficient, and the solution will be more long term.

At Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at Capella. Edu.

To wrap up today's lesson, a loss of revenue all of a sudden is a blow. But the silver lining is, is that when this happens, it kind of exposes something you needed to fix in your business. Kind of exposes some weak points and is a chance for you to really improve and come back stronger. Because often when you fix that problem that caused that loss of revenue and you rebound, you actually will find yourself stronger than you were before that problem happened. This is my experience. I'll give you another example. When I was running my clothing line, Zenima Designs, there was a batch of dress shirts, about 100 dress shirts that got sold to my customers. And for some reason, that material, the cloth that was used for those dress shirts, just was a bad batch. Some reason we got this bad batch that was exactly the same orders as before, but it was just a Bad manufacturing flaw of this actual batch of cloth. So when our customers would put this dress shirt through the washing machine or even dry cleaning, it would have this yellow tinge that would happen. And it was weird. It was like it never happened with any of our clothes. We have high quality clothing, but this batch was just something wrong with it. And 2, 3, 4, 5, 10 customers started complaining and it started to get public. It started to go on social, early days of social. And I had to basically do a recall. I told all our customers that purchased this shirt. I said, hey, totally sorry about this. This is a manufacturing error on our part. Please discard the shirt. We're gonna send you a new shirt. And included in that shirt was a voucher for a free shirt with their next order. Immediately when people started complaining and started getting verbal, I saw a drop in revenue. I was like, oh, no, my business is gonna tank. I can't believe this. One batch of shirts. Guess what? I went to my tailor and my supplier and said, hey, what's going on with this batch? Can't believe this happened. They said, oh, no problem. We're sorry. You know, sometimes that happens. Sometimes. Again, they caused the problem. They're not going to fix it. The first thing I did is I changed my supplier. I got a new supplier with higher quality control because they're not going to solve the problem. They're probably going to cause a problem again. I spent a little money, gave these shirts for free. I got different blog writers, different influencers in this space. Talk about what I did to rectify the situation in terms of compensating our customers, giving them a little extra love with an extra shirt. And that publicity I got for the way we reacted to this problem actually caused us to have one of our strongest months after one of our weakest. Because of the backlash. This happens. This is part of business. Guess what? This is business. You're moving fast. You're changing, you're working, you're hustling. You're going to make some mistakes. And often these mistakes are small. They're not noticeable. They don't affect our business. But sometimes they do. And this is what we're talking about today. And this is what we covered on how to tackle this situation. Thanks so much for listening to today's episode. If you love what you hear, leave us an Apple podcast rating and review. We'd love to hear what you think when you leave us a review. Enter our weekly random draw we call Free Ride Friday. Every Friday, we give away a lifetime membership to one of our programs. It's our way to say thanks for showing us love on Apple podcasts. Just listen on a Friday to see if you won. It's that simple. We're going to do it tomorrow. It's Friday tomorrow. So listen in tomorrow to see who won free on Friday. That's it for me today, guys. But before I go, I want to leave you with this. I always say this as an entrepreneur. You are in the problem solving business. This is your value. This is why you're valuable in the marketplace, because you solve problems for your customers, but also for your own business. So when a problem comes, like a loss of revenue, this is where you shine. This is where you bring it home. This is like, you know, the NBA Finals for you, your spotlight moment where you get to show people what you're made of. Thanks so much for listening and I'll check you in tomorrow's episode. I'll see you then. Take care.

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