HOW TO EVALUATE A DECLINING BUSINESS
By Margaret T. Wright

Sometimes, when business sales are declining, the most difficult challenge is to determine the cause of the decline. Here are a few suggested areas to probe for analyzing and evaluating areas of decline and "soft sales:'

Profitability

• What is the profitability change versus three years ago? Last year?
  
• Can the profit loss be isolated? Is it due to volume decline? Change in product volume mix? Increased costs?

Volume

• Is the sales decline due to consumer sales or market distribution losses?
  
• Is the volume decline in: Selected items? High margin items? Specific geographic areas?
  
• What percent of the volume is controlled by key accounts (top customers)? Is the decline with these accounts?
  
• What are the sales per point of distribution trends? Where are the sales per point of distribution sales declining? Is the decline in one product item or across the line?

Marketing

• Are the marketing programs different from three years ago? Last year? How are they different?
  
• Can any marketing problems be isolated? Pricing? Trade promotion? Advertising? Consumer promotion?
  
• What is the competition doing differently versus a year ago?

Consumer

• What are the consumer perceptions, likes and dislikes of my brand?
  
• Is the brand's softness due to consumer behavior and attitude changes?
  
• Is there any information from past research indicating a problem?
  
• Do I have a solid strategic understanding of how the consumer perceives my category and how the consumer purchases products/services in this category?

Margaret T. Wright is President of The Wright Marketing Blueprint, Inc.
(www.WrightMarketingBlueprint.com ) She helps clients build strong emotional connections between their brands and consumers.

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