This happens fairly frequently, actually, and in my experience this comes down to a couple things.
First, the more technical point.
Given the way search engine algorithms change so frequently, quite often a site that had been lagging behind will suddenly be rewarded for something about the way it’s designed. Because there are only so many spots in a search engine’s results per page, naturally any time a site moves up something else has to move down.
As Google spokespeople often point out, sites losing rankings isn’t necessarily that they are being penalized, but more that other sites are now seen as more credible than they were. Often owners of sites that rank well will become comfortable with their dominion, which in any kind of competitive space makes room for being surprised.
Part of successful SEO campaigns usually involves grey-hat techniques, meaning some tactics that aren’t completely what are defined as white hat, by the book stuff, but also not so overtly designed to game the system as black hat techniques that can get you removed from Google’s index. The trade off is fairly quick results with relatively low risk, but there is always a risk that a tactic you’ve used will become something Google either penalizes or, at the very least, rewards less than it used to.
Either of those scenarios can cause a decline in rankings that is totally fixable.
The other less technical explanation is one I’ve seen many times over the years.
You might be in an industry where not many of your competitors is really leveraging web marketing. As a result it’s fairly easy to dominate the search rankings for awhile. But even people that aren’t actively doing SEO will do searches from time to time just to see where they rank.
If they keep seeing one business in particular kicking their butt, in the case you, it can spur them on to finally get serious and either start doing SEO in earnest or hire someone. It can take several months for that to happen, so it will look like one month you were dominating and the next your rankings went down a bit.
As I mentioned above on the previous point, any time one website’s rankings improve another’s must decline. It’s not always that you’ve done something wrong or are being penalized, but simply that a competitor that previously had weak rankings is actually getting in the game.
Aside continuing to churn out solid, well-optimized content, acquiring more backlinks is a good way to combat this. Once a competitor starts gaining authority, one of the best ways to stay ahead is to build links (and thus, authority).