Why Your Margins Are Shrinking—And It’s NOT Just Costs

Most CEOs get stuck chasing symptoms. Margins down? They blame rising costs.
Sales slowing? They assume it’s a marketing issue. Key employee quits? Must’ve been a bad hire.

This is how businesses stay stuck.

You fix what’s obvious—not what’s actually causing the drag. That’s why I use the Five Whys with clients. It forces you to drill down and uncover the real problem—the one silently draining profits, slowing growth, and keeping your team in constant reaction mode.

The Real Reason Margins Shrink

Let’s break down a real-world scenario.

You’re running a $20M business, and margins are tightening.
First thought?
“Costs are rising faster than revenue.”

Fair. But why?

• Why? We haven’t adjusted pricing to match rising costs.

• Why? We’re afraid of losing customers if we raise prices.

• Why? Competitors raised prices and kept growing—but their product has improved.

• Why? We haven’t invested in product innovation.

• Why? No one owns product strategy or pricing accountability.

Root issue? Not costs. It’s leadership, alignment, and execution.

You don’t fix that by cutting expenses. You fix it by changing how your business operates.

How to Apply This to Your Business

The Apex CEO Playbook simplifies where CEOs should focus. Four areas drive nearly every stuck point:

1. Alignment – Is your team rowing in the same direction?

2. Product – Is your offer competitive—or getting stale?

3. People – Do you have the right team in the right seats?

4. Margins – Are you pricing, tracking, and protecting profitability?

Now, let’s run each area through the Five Whys.

1. Alignment: Why Your Leadership Team Is Slowing You Down

Most CEOs assume everyone knows the plan.
Reality? They don’t.

Ask five execs where the company is going. If you get five different answers, you’ve got a misalignment problem.

Example:

• Why aren’t sales improving?
  → No clear pricing strategy.

• Why no clear pricing strategy?
  → Sales, marketing, and finance aren’t aligned.

• Why no alignment?
  → Leadership hasn’t set a firm direction.

Root issue: Leadership misalignment.
Fix that, and execution improves across the board.

2. Product: Why It’s Not Selling Like It Should

If customers aren’t buying, it’s rarely just a sales problem.
It’s usually the product.

Example:

• Why are competitors taking market share?
  → Their product is evolving. Ours isn’t.

• Why aren’t we evolving?
  → We’re chasing short-term sales over long-term improvement.

• Why the short-term focus?
  → Product teams aren’t being held accountable to a roadmap.

Result: Sales suffers because the offer’s outdated.

3. People: Why It’s Not Just a “Bad Hire”

CEOs love saying, “We need better people.”
But nine times out of ten, it’s not the person—it’s the structure.

Example:

• Why are deadlines being missed?
  → Projects are delayed.

• Why delayed?
  → No clear ownership.

• Why not?
  → No one’s accountable for outcomes.

Conclusion: You don’t need better people—you need clearer accountability.

4. Margins: Why Cost-Cutting Won’t Save You

Let’s go back to shrinking margins.

Most companies react the same way:

• Cut costs

• Freeze hiring

• Squeeze vendors

That might stop the bleeding—but it won’t heal the wound.

Ask deeper:

• Why haven’t we raised prices?

• Why aren’t we prioritizing high-margin products?

• Why aren’t we renegotiating supplier contracts?

You’ll usually find the problem isn’t financial—it’s strategic.

What You Can Do Today

Most businesses aren’t stuck because of one big problem.
They’re stuck because of a dozen small ones no one’s fixing.

Here’s how to use the Five Whys right now:

1. Pick a clear symptom (shrinking margins, high turnover, stagnant sales).

2. Ask Why? five times.

3. Dig until you hit a root cause—not a surface answer.

4. Look for gaps in leadership, accountability, or execution.

Stop chasing symptoms. Start fixing the system.

And if you’re still stuck? Let’s talk.