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Nants ingonyama bagithi baba!
For those of you who don’t recognize it, that is the first line of one of the most famous songs from The Lion King: “Circle of Life”. First, sorry that you’ll now have it stuck in your head for the remainder of the day. Second, remember it. Hold it dear to you, because things are cyclical and like it or not, we just have to deal with that. Recession, unfortunately, is one of these things, and while we can’t avoid it, we can be more prepared. Here are some tips on recession-proofing your agency, as wise as if they were spoken by Mufasa himself (perhaps they were…).
What Impact Can a Recession Have on Your Agency?
Generally speaking, you can’t really predict when a recession will come with any great accuracy, since many unforeseen circumstances will affect when one will strike next. They are a reality of the economic system in which we live, and your agency must plan accordingly.
During a recession, your agency (like pretty much every other business) will experience a reduced cash flow due to a reduced demand as the other businesses you service feel the squeeze. This, of course, has some pretty serious ramifications, and due to the national (or global) impact of most recessions, the chances are your clients and employees will be hit from all sides. So can you recession-proof your agency? Well, although there is no way to completely protect you and your staff, there are some ways to cushion your agency to ensure you make it through (and it doesn’t involve smearing fruit pulp on your head, although it couldn’t hurt).
1. Don’t Stop Marketing
A common piece of advice for how to recession-proof your business is to cut costs. It can be tempting to reduce or completely cut the marketing budget during tough times, but we’ve got one word for you: DON’T. If people don’t hear about your agency, they can’t actually become customers, so you’ll be shooting yourself in the foot. Of course, you can explore cheaper channels such as social media instead of full-blown campaigns, but marketing should always be maintained.
2. Increase Your Customer Base
Too often, agencies and many other businesses rely on a handful of big contracts. This is always a dangerous position to be in, but especially so during an economic downturn, since losing one or two clients could put you out of business. Before it gets to that point, put time and energy into generating leads, landing new clients, and building a larger base you can rely on in the leaner times. This means that even if several clients leave, you’ll still be fine.
3. Create Crisis Plans
Come up with various contingency plans. What happens if you suffer a sudden and significant drop in sales? What happens if the sector you service is hit particularly hard? What happens if your employees’ lives are affected by the recession outside of your agency?
Coming up with answers to as many of these questions as possible before you need them is key to weathering out any inbound storm. Try coming up with a list of “What ifs,” even it makes you seem like a worrier. Scar may be the bad guy, but he had it right when he said “Be prepared”.
4. Think Global
The last recession was worldwide, so there was little chance of avoiding it. But expanding your agency to other countries can help you weather out more localized busts – which can and do hit countries, states, or even individual cities. If you expand into new territories, it’s import that your back-end software is able to cope with this. Take Productive’s multicurrency feature – it enables you to deal with anyone, anywhere by accepting all currencies, and the ability to translate in-app documents to any language.
5. Watch Your Cash Flow
Tips on recession-proofing your business often include some form of heightened money management – and for good reason. It’s important to stay on top of your invoices and outgoings, and always check receivables. Keep an eye on any accounts that don’t pay promptly as nipping this in the bud early could save you the stress of being out of pocket further down the line. Making projections for the weeks to come is not only helpful but also 100% necessary in order to stay on top of your cash flow. If you regularly update and compare projections and actual figures, it can act as an early warning system for when sales start to slow or incoming cash begins to drop off.
6. Think About Diversifying
Offering a range of services is generally a good idea, since if one loses popularity you still have others to fall back on. This can become increasingly important during a recession, since clients may simultaneously cut back on certain expenditure (paid-for Twitter accounts, for example), and if this is all your agency offers, you won’t survive. That said, never lose sight of your core competencies – diversifying just for the sake of it is asking for trouble.
7. Lock in Financing Now
You’ve looked for a job before, right? You know the age-old adage that the best time to find a job is when you already have one? Well, the same goes for financing. It can be damn-near impossible to find it during the down times, so find it now. Of course, make sure to be careful about what you commit to, since you don’t want to be locked into something that will negatively impact you down the road. Getting a line of credit for your business with fixed rates while the rates are low, and that only charges you for amounts spent, could be a lifesaver during leaner times.
8. Look for Where You Can Reduce Overheads
It seems like one of the most obvious tips on recession-proofing your agency, but looking at how you can reduce your outgoings now could be the difference between boom and bust. Making cuts to costs could come in the form of allowing remote working to reduce the cost of office space, or entirely automating some processes to improve efficiency. Layoffs should be a last resort as they tend to have many, many negative repercussions (a better option is careful hiring in the first place).
Recessions are unavoidable and simply part of the economic cycle. But by sticking to these tips and figuring out some more agency-specific plans, you can learn how to recession-proof your agency and keep it moving through the circle of life.