There are always coming and going trends. Some companies rely on these trends. How can such company react to a shrinking market because the product just isn’t in high demand anymore and isn’t expected to in the foreseeable future.
Is there any way for a company to shrink in a healthy way just like it once grew?
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In some cases, you diversify. Most products require labor, a supply chain and/or vendors that can be adapted to different types of products.
You can also shift to a different business model where your services/goods go from being commodities to luxury items. If you’re making Model T’s in 1915, you’re rolling them off an assembly line for the common (well, slightly richer than common) man. If you’re making Model T’s in 2020, you’re making couture items for the wealthy.
However, a better way to describe a shrinking business is a ‘failing’ business. You will almost inevitably have liabilities that make it impossible to decline gracefully and you’ll discover that everyone connected to your company – employers, suppliers, vendors – will want to desert a sinking ship. Unless you open up new revenue streams, it’s normally better to simply close down when faced with a permanent decline in your business.
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