Playing Defense in Business: Strategies to Protect Profitability and Minimize Risk

Football season is here, and while teams are strategizing on the field, business owners are doing the same in the current economic environment. For many businesses, growth feels sluggish, costs continue to climb, and leaders are wondering what steps they should take next.

In a recent episode of the Profitability Playbook podcast, Mike Maxson and Brandon Gray shared defensive strategies for businesses using a football-inspired framework.

Analyze the Data Before You Call the Play

When revenue declines, it may be tempting to start making cuts. But before you do, remember that revenue is an outcome metric. To improve it, investigate the drivers:

·       Lead flow: Start with the top of the funnel. If leads are down, look for the potential causes. Did your marketing strategy change? Are your competitors doing something new?

·       Conversions: Have there been staff changes on your sales team? Is the team closing at the same rate? What objections are they hearing, and how are they responding to those objections? For example, if prospects are hesitant to enter long-term contracts at this time, would they be interested in a shorter engagement? If the objection is price, is your team communicating value effectively?

·       Sales cycle: How long does it take for deals to close? Are seasonal trends or economic uncertainty affecting this?

Understanding the “why” behind the data can help you choose the right defensive play.

 

Adjust Your Offerings Without Sacrificing Profitability

Inflation, tariffs, and other factors are impacting many markets. If customers aren’t purchasing your complete solution, consider creating a scaled-back version at a lower price point. But here’s an important rule: don’t deliver the full-service experience at a lower price. Otherwise, you’ll erode profitability.

Monitor Your Gross Margin

Declines in gross margin (revenue minus non-direct labor direct costs) rarely happen overnight. If gross margin is down at your business, start by examining these areas:

·       Have direct costs increased? If so, have you adjusted your pricing?

·       Has your product or service mix shifted toward lower-margin offerings?

Sometimes lower-margin products gain traction. Strategically fine-tuning the price on those offerings can be easier than implementing an across-the-board price increase. Another option may be to explore ways to increase sales of those lower-margin products. If you do, monitor the ripple effects on overhead and working capital. More volume often means more strain on cash flow.

 

Audit Your Costs

In an inflationary environment, costs rise across the board. While you can’t cut your way to profitability, you can look for ways to trim expenses. Consider:

·       Vendor costs: Can you negotiate with suppliers or explore alternatives?

·       Facilities and equipment: Do you have unused vehicles or other items that are draining your insurance and maintenance budgets?

·       Software licenses: Are you paying for accounts no one is using?

These changes won’t transform your bottom line overnight, but they can add up—and every point matters.

Labor: Flex Before You Cut

Labor decisions are the hardest. Before making significant cuts, ask:

·       What’s the true minimum amount of labor needed to serve customers?

·       How much capital are you willing to risk to “buy time” and see if the market rebounds? Assess how close (or far) a recovery may be by monitoring leading indicators such as the number of proposals in the pipeline or seasonal trends.

·       Can you flex hours or shift some roles from salary to hourly?

Hope isn’t a strategy, but informed risk-taking can be. Set a clear limit on how much cash you’ll use while waiting for signs of recovery.

 

The Bottom Line: Defense Requires Discipline

Playing defense isn’t glamorous, but it is essential. During economic challenges, it’s more important than ever to analyze your data, understand your capital position, and make decisions with clarity, not assumptions.

Listen to the complete podcast episode for additional insight, real-world examples, and practical steps you can apply in your business.

The Profitability Playbook podcast is available on Spotify, Apple Podcasts, and wherever you listen to podcasts. Learn more about CRI Simple Numbers' financial consulting services at simplenumberscri.com.