How You Can Prepare for More Uncertainty Ahead and Protect Your Agency - Part 1
Since the new Presidential administration, it has been a wild ride for the economy. Here’s how you can prepare for more uncertainty ahead and protect your agency.
Expect uncertain times for at least the next quarter or two. This is the first of two articles which share our thoughts for being prepared to handle the storm.
We’re once again experiencing a high level of uncertainty as we did back in the 2008 recession and at the start of the pandemic. The stock market has dropped dramatically in recent days. Large multinational companies are unsure about tariffs. Consumers continue to face stubborn inflation.
It’s definitely not the best business environment for your clients which means your agency may have a tougher path to revenue growth in 2025. This article provides information on what we think owners of marketing communications agencies should be doing to manage their firms during this uncertainty.
Our first piece of advice – Don’t panic.
Remain steady in your thinking and planning. However, don’t be a wild-eyed optimist either. Most agency owners have been through tough times before and their brands have bounced back with time.
It’s highly likely that agencies will rebound from today’s difficulties as well. Believe in the strength and history of your brand. Try to view the current situation as dispassionately as possible before making decisions,
Ensure that you have a sufficient line of credit in place with your bank and maintain good relationships with your banker and landlord.
Tiered financial steps you should take now.
Here are some steps to take in order of severity to help you buy time before a recovery begins.
Cut non-people costs first:
Reduce the number of licenses to subscription services.
Go through your agency budget line item by line item with the goal of reducing overhead costs by 3-5% without touching staff.
Talk to your banker and request their help with any loan payments you’re making for the next 90 days while you figure out your path forward. See if these loan payments can be added to the end of the loan.
If you have office leases, do the same with your landlord. Request a hold of 90 days on your rent and (again) determine if that amount can be added back to the end of the lease.
If you need to reduce people costs, here are five strategies for doing so:
Reduce freelance costs and move that work to your current staff.
Request that your senior team reduce salaries by 10-15% but have the agency pay that money back once the economy and the agency recover.
Let attrition run its course. As staff members resign, don’t replace them until times get better
Ask staff if any are interested in taking some unpaid time off. You might be surprised that new mothers or fathers might want to spend more time at home. Others might feel that the additional time away could allow them to take the trip of a lifetime.
Delay raises and perhaps promotions until agency revenue stabilizes.
Finally, as a “last resort” strategy: If you must reduce headcount, protect your brand proposition by holding onto the highest quality mid-level and senior leaders possible. These people are the agency’s brand proposition and have a huge amount of institutional knowledge. If necessary, tap into your line of credit to retain these people.
Importantly, as we’ve stated before in our thought pieces, agencies should develop a pricing model and the financial processes needed to manage that model to deliver an operating margin of 25%. If you enter uncertain financial times with a high margin and follow the strategies noted above, you should be able to survive in any economy.
To sum up, the tiers of protection outlined above are:
A high margin helps you to withstand revenue losses and still be profitable.
Reduce non-people costs.
Reduce salaries for senior team, freeze raises/promotions, ask staff to take voluntary time off and let attrition help by not replacing departures.
Reduce headcount if needed.
Use your line of credit.
If you must let people go, here’s how you should do it.
Rip the band-aid off all at once. Make all layoffs at the same time… and cut more deeply than you feel you should. This will protect against ultimately having to make multiple rounds of layoffs. That is a culture killer.
Share with staff the reasons for the downsizing. Make it clear this is a tough but necessary solution. Then show them your confidence in the future and ask their help in turning things around.
Your decisiveness and leadership are key to the remaining staff shrugging of a morale downer and becoming determined to not only survive but prosper once again during trying times.
Nine other steps to help you through uncertain times.
These are:
Strengthen your client relationships.
Sharpen your agency’s brand proposition.
Increase your marketing efforts immediately.
Make sure your senior team is working the sales process.
Upgrade talent (since uncertainty can actually help you do this).
Adopt and faithfully execute best practices including Client Engagement Letter and Billing.
Tighten up financial management.
Ensure a strong relationship with your banker.
Remember that uncertain times present opportunities for your agency as well as challenges.
Now let’s get into the details of the first three steps. (Steps 4-9 will be discussed next week.)
1. Preparation should start with your client relationships.
Building strong relationships with your clients can help your agency overcome possible performance-related issues which might become particularly troublesome during difficult times.
Execute a client feedback survey as soon as possible to learn the unvarnished truth about what your clients really think about your firm. It includes:
The overall value you’re providing to them.
Any concerns or unmet needs.
Areas of the agency’s performance which should be improved.
Uncovering any other threats to the relationship before it’s too late.
Identifying opportunities for growing the account.
If your clients are looking to add talent, can you help them in their searches? Helping clients in recruiting for needed positions is always a good way to strengthen the client/agency relationship (while adding potential allies and “friends of the agency” to the client’s organization).
Meet with your account leaders to ensure that each account is being served as efficiently as possible. Brainstorm new ways of further enhancing operational efficiency. Also make sure that client budgets are being spent in full and you’re not leaving income on the table.
Finally, don’t discount or give away work even if recessionary pressures appear. This will only cheapen how clients perceive you.
2. Sharpen your brand proposition so it’s ultra-competitive.
Work hard and quickly to make sure your agency has the most powerful positioning possible. The agency’s knowledge, expertise and services have probably evolved over time. Is your positioning taking maximum advantage of what you can offer to clients today? Dig deeply to identify your core competitive advantage, articulate it clearly and then leverage it to its fullest.
Here are just a few more ways to become “super competitive” and forge productively forward regardless of what the economy may throw at you:
Structure your positioning, people and processes for specific types of prospects.
Develop proven methodologies which help you deliver better results for clients than your competitors can.
Support your positioning with compelling bios for your key people and well-written (and brief) case studies.
Keep your website and capabilities presentation updated, relevant, attention-grabbing and persuasive at all times.
Monitor your key competitors’ activities to be sure you can equal or exceed their offerings.
3. Dial up your marketing TODAY.
A recession can actually provide opportunities to grow the business and increase market share for agencies which are prepared to take advantage of them.
Here’s how to be one of those agencies:
As discussed above, ensure that your positioning and messaging are as compelling as possible… and provide prospects with the proof of your super competitiveness.
Identify recession-proof prospects (such as health care) and aggressively pursue them.
Revitalize or launch a prospect-specific marketing plan. Name names. Go after them proactively with value-added content, thought leadership and insights into their businesses and brands.
Follow up with prospects who, by visiting your website, have expressed potential interest in your firm. Subscribe to a service such as WebVisitor (there are others too) to learn who these visitors are with their e-mail addresses. Then reach them with a tightly targeted social media campaign.
Take a fresh (and critical) look at your website’s vitally important SEO. Is it effectively directing desirable prospects to your site? Or is it too self-referential so you’re basically talking to yourself? Google changes its rules all the time. Don’t be left out in the cold.
These actions will also foster a self-confident, future-facing “New business state-of-mind” throughout your agency.
Summing up so far… with more recommendations coming soon.
Based on our experience, we believe that the thoughts and recommendations provided above will help agency owners withstand and ultimately overcome just about anything that the economy and uncertain times may bring.
In our mailing next week, we’ll provide the details for steps 4-9. So please stay tuned.
We’re here to help you prosper.
Prosper Group exists to help the owners of independent marketing and communications agencies achieve their ambitions and maximize the value of their life's work.
Our team of former agency leaders and owners focus their deep experience on implementing proven proprietary methodologies across our three practices of agency performance, owner exit planning and M&A transactions in order to drive owner and agency success.
To learn more about us, please visit our Services page. .
