Something is breaking in business right now, and it’s not obvious if you’re mesmerized by surface-level metrics.
And for myself, this is only something I could connect the dots on after working in marketing for over a decade for different types of businesses.
So let’s take it from the top.
On paper, companies are still running strong lead generation campaigns.
Content is constantly being published. Videos and social posts are getting liked and shared. New eyeballs are seeing the brand every day/week/month. Return on ad spend (ROAS) is supposedly positive.
This is all peachy.
But beneath all this activity, there’s a subtle corrosive force that’s affecting everything: the cost of doing business is quietly rising and it’s creating a chain reaction that many (small) businesses are simply not prepared for.
This isn’t an isolated incident. This is one small domino toppling over multiple dominos until it reaches a domino the size of the Empire State at the end.
In this article, I’m going to be breaking down what I think these dominos are and how they are quietly stacking up against small businesses.
At the end, I’ll be give some suggestions from where I sit on how I think owner-operators can liberate themselves and their businesses from this maddening cycle.
Domino #0: Micro Inefficiencies
This is something every business naturally has because perfection is not only a moving target, but it’s a pipe dream.
“Shoot for the moon and you’ll land amongst the stars” is a cliché for a reason, but in many (smaller) companies, there’s not even anyone aiming at the moon.
This leads to:
- No lifecycle thinking
- Lack of CRM cleanliness and auditing
- Slow response times in customer service
- No customer nurturing for upsells/cross sells
- Weak, inconsistent, or non-existent follow-up
- Generic one-to-many messaging ignoring persona segmentation
- Etc.
Each one of these seems minor. But when stacked together, they steal value on the backend before anything else on this list kicks in.
Domino #1: Collapse of Organic Visibility
For many years, businesses could rely on organic search (AKA “Google”) as a reliable and bountiful traffic source.
In the 2010s, I helped many businesses crack top spots on search engines using SEO voodoo, looking like a genius in the process.
Unfortunately (or more likely fortunately), that party is over.
Traditional blue-link “skyscraper SEO” is no longer a reliable source of steady growth (it never really was in the first place, but that’s an entirely different discussion).
Algorithm changes, increased LLM usage, AI overviews, and the potential shift toward AI-first search experiences (AKA Google AI Mode) have reduced how much free demand businesses can capture.
This has absolutely crushed traffic across numerous verticals, some more than others.
This leads to the next domino.
Domino #2: Paid Ads Warfare
When organic lead flow shrinks, businesses compensate with paid acquisition methods.
This creates predictable consequences:
- More advertisers flood the same platforms
- More competition for the same eyeballs
- Higher costs to reach the same people
And the result itself is also predictable:
- Higher customer acquisition costs (CAC)
- Lower differentiation between services and goods in the minds of the consumer
- Longer time to convert from lead to customer
Paid media isn’t broken, there’s just A LOT of noise more than ever before. Putting all your eggs into this basket is like playing Russian Roulette.
Domino #3: Brand Dilution & Interchangeability
Brand loyalty ain’t what it used to be.
And it definitely ain’t what it used to be when everyone is screaming for attention at all times everywhere.
As a result:
- Messages sound the same
- Offers feel interchangeable
- Loyalty weakens
This creates a secondary effect:
- Customers churn faster
- They buy fewer times
- They tolerate less friction
This creates a shrinkage in lifetime value (LTV). Again, not enough to sink a business, but enough to erode at the foundations just a lil bit.
Domino #4: Rising CAC, Meet Falling LTV
This is the part in the story where things start to become “doubleplusungood” and the warning lights on the car dash start blinking.
Businesses pay more to acquire customers who stay for less time.
That forces them to:
- Spend more to replace churn
- Rely even more heavily on paid acquisition
- Accept thinner margins as “normal”
This is not a marketing issue. This is a unit economics problem.
When CAC rises and LTV falls at the same time, growth stops. Period. You can’t acquire customers at a higher cost than the what you receive from them paying for goods and services.
Domino #5: Macroeconomic Pressure Erases Forgiveness
The post-pandemic years have been a doozy for businesses, especially smaller businesses who have less margin to absorb mistakes and missteps.
External forces have tightened the vice grip on owner-operators and their businesses for the past couple of years in the following way:
- Inflation – More money required to run operations. Businesses input more to output less.
- Tariffs – A wholesale increase in the costs of goods and services worldwide. This is especially true of raw materials that businesses need to produce their own goods and services.
- Elevated interest rates – It costs more to borrowing money. This decreases the amount of monetary investment, delays it, or makes the owner say “let’s revisit this next year”.
- Cash flow seizure – In an environment with less money circulating around freely and heightened economic fear (no, not the R-word), people will be more hesitant to spend on goods and services, especially those considered “discretionary”. This reduces overall revenue for businesses.
As a result, the cost of doing business and delivering the same level of service goes up, revenue goes down, profits also go down, and the business is more exposed to external forces overall.
Margin that would have covered experiments, mistakes, or business missteps in the past has eroded or is no longer there.
Domino #6: Margin Compression Squeezes Internal Operations
Operations is the machinery of business. When there is less margin for ops to work its magic, the business will eventually come grinding to a halt.
This has the following effect:
- Hiring slowdown or freeze – Less workers to contribute to revenue. Less workers hired in key positions to help boost long-term revenue
- Less hands, more work – Increase of internal pressure on workers in the company. Stacks multiple duties into their job description, some of which may be outside their range of expertise.
- Accelerating burnout – Burnout is real. When less people are required to do more work, frustration and distraction increases over time. This leads to low morale and high(er) turnover over time.
- Lack of access to tools – When a business can’t afford to spend on anything beyond maintenance, they can’t buy tools to make them more productive. This keeps them stuck in the quicksand of survival.
Domino #7: Growth Becomes Dangerous
To compensate for lack of growth, businesses double down on acquisition.
More ads. More content. More spend.
But the funnel is already leaking in multiple points. So instead of growth, loss accelerates.
And if a business isn’t growing (even slightly), it’s dying.
The Empire State-Sized Domino: Funnels With Bullet Holes
This is where everything converges and hits the wall.
Up until now, each pressure on its own feels manageable. Annoying, yes. Stressful, sure. But still within the realm of “we can fix this.”
The problem is that none of these forces exist in isolation.
When you combine:
- High CAC
- Lower LTV/customer
- Increasing operational strain
- No real retention systems
- No reactivation and upsell logic
- Shallow or nonexistent middle and bottom-of-funnel depth
You don’t get a linear problem. You get a compounding one.
What used to be survivable has now become existential.
Businesses don’t fail because demand disappears.
They fail because they can’t extract enough value from the demand they already paid for.
Possible Solutions
This isn’t all doom and gloom.
On the contrary, this can be mitigated to a large degree. But it does take effort.
It requires shifting from acquisition-first thinking to extraction efficiency, system design, and lifecycle leverage.
Here’s some of my thoughts on how to do that.
1. Treat existing demand as the most valuable asset in the business
Most small businesses that have existed for a reasonable length of time are moderately good to excellent at generating traffic. If they weren’t, they probably would have closed down years ago.
However, the problem isn’t new demand, it’s tapping on leads and customers that have already been generated at some point in the past.
The easiest customer to sell to is one that already knows, likes, and trusts you because it dramatically shortens the sales cycle.
These people already:
- Know who you are (awareness problem solved)
- Recognized a problem (know they need your service or product)
- Raised their hand at least once (have expressed interest in your solutions previously)
Ignoring these people while spending aggressively on new acquisition is economically irrational in 2026 and beyond.
The first order of business is to mine existing demand before paying for new demand.
This alone can stabilize unit economics.
Amazon grew to be one of the most profitable companies in the world because it has incredible retention and reconversion campaigns in addition to its relentless focus on customer satisfaction.
2. Build real middle-of-funnel depth
Most funnels today are binary:
- Buy now
- Disappear
That worked when attention was cheap and acquisition was easy (AKA pre-pandemic).
It fails when decisions take longer, trust is thinner, and competition is everywhere.
Modern funnels need depth.
This is done mainly through what I call “content architecture”. The idea is to create a moat around a business at various stages in the customer lifecycle that educate, re-educate, and re-engage customers and prospects.
When a successful company puts out videos on YouTube or Reels on Instagram or sends frequent emails, it isn’t garnish. It’s a way to reinforce their brand positioning while attracting new prospects.
This is Kevin Kelly’s 1,000 True Fans idea in action.
3. Design for multiple touches, not one-shot conversions
One-touch thinking is a holdover from easier times.
In 2026, the buyer’s journey is very convoluted.
Intent is non-linear, buyers are exercising optionality and many buying decisions are deferred.
Someone who engaged 9 months ago may be ready to buy only now.
Someone who bought 2 years ago might be in a mood/state to buy again.
You’ll never be able to take advantage of that if you don’t have multiple touch points that engage people where they are.
4. Maximize revenue per lead before chasing more leads
When acquisition is expensive, every lead needs to contribute a higher dollar amount per lead.
Tactically speaking, that could mean:
- Upsells
- Cross-sells
- Down-sells
- Bundles
- Secondary offers
- Longer customer journeys
- Capitalizing on “micro moments”
This isn’t done in a manipulative way, but in a thoughtful, value-aligned way.
If a lead only has one chance to convert, your unit economics are fragile.
If a lead has multiple paths to convert and reconvert, your economics stabilize.
5. Reduce friction as much as possible
Friction is invisible until it’s expensive.
In a high-cost world, small points of friction quietly destroy ROI.
If your business is unnecessarily high friction, then you will bleed conversions.
Reducing friction doesn’t feel exciting or sexy.
But it’s easily one of the highest-leverage activities a business can undertake when margins are tight.
6. Accept that efficiency is the growth strategy now
This is the hardest mental shift for businesses to make.
For a long time, efficiency was framed as defensive.
Something you focused on when growth slowed.
Something you worried about during downturns.
Something you tightened up after you had already scaled.
Growth, on the other hand, was framed as expansion. More leads. More traffic. More spend. More headcount.
This no longer holds.
Efficiency is no longer about cutting for survival, it’s about creating leverage.
Businesses that:
- Plug leaks instead of replacing them
- Extend LTV instead of chasing volume
- Tighten systems instead of adding complexity
- Increase funnel depth instead of impressions
- Reduce waste instead of increasing spend
End up in a fundamentally different position than their competitors.
This is where margin quietly re-enters the picture.
Margin creates optionality.
Optionality is what allows a business to choose its moves instead of reacting to pressure.
The irony is that efficiency doesn’t feel like growth when you’re doing it.
This is why the winners of the next phase won’t necessarily look like high-growth companies on the surface.
But the economics will work.
And in a world where costs are rising and forgiveness is gone, working economics beat aggressive expansion every time.
Simply put: the math has to math.
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These are my thoughts on how marketing can contribute to better unit economics for business. I appreciate you for reading this far if you did.
I’m curious, what are your thoughts on this concept? If you’re a small business owner, I especially want to hear from you and how you’re dealing with the economic headwinds that we’ve all been feeling recently.