Many businesses failed to prepare for the economic impact of covid-19 and subsequently went under as the economy began to shrink. As is often the case, small businesses felt the biggest impact, and it’s highlighted how critical it is to have a resilient business.
A recession is never good news but by having a plan firmly in place, you can set your business up to not only survive, but also thrive.
Here are some simple tips to ensure you come out of an economic downturn in the best way possible.
1. Increase Your Financial Intelligence
Preparation starts with awareness. As an agency owner, you should make it a habit to check your financials every day. You need to have an in-depth understanding of your financial position to create a feasible plan for a future economic downturn.
It’s a good idea to track Key Performance Indicators (KPIs) to understand what spending generates the greatest return on investment, and what’s wasted cash. Knowing which costs are providing the most value will allow you to make quick decisions and prune your business when necessary.
2. Minimise Costs
It’s always good practice to run a lean cost base as an agency; tempting though it might be to commit to prime office space, or to finance a new refit when times are good, they can quickly come back to haunt you when cash isn’t coming in, but you’re committed to paying it out.
Perhaps most importantly as an agency, you want to make sure you can continue paying your staff to keep the skills and expertise they bring to the business. Having to let them go to make ends meet in the short term can be catastrophic to the long-term success of your agency.
A good way to keep staff commitments under control day to day is to only ever recruit in line with your capacity plan and to use freelancers where necessary to plug short-term capacity gaps.
3. Improve Your Credit Score
It’s difficult to secure a loan during a recession and you’ll need an excellent credit score. The problem is that it’s pretty difficult to improve your rating when things are taking a turn for the worse. Start working on your credit score now to put yourself in the best possible position should you need a loan to keep your agency afloat.
Don’t limit your efforts solely to your business; it’s worth making sure your personal credit score is as high as possible, too.
Here are some simple ways to improve your credit score:
Pay your bills on time
Reduce existing debts as much as possible
Regularly check for fraudulent activity
Use a credit card and pay it off each month
4. Continue To Focus on Marketing
Marketing matters more than ever in a recession, however counterintuitive it may seem. You might be tempted to slash your marketing budget to the ground, but it could prove fatal. You must maintain some brand awareness and let your customers know that you’re still around to serve them. Don’t let them forget about you!
Change your marketing messaging to show the value you can provide them at this point, in the context of a recession. Analyse previous campaigns and assess which ones worked best. You may be able to give up a few practices that aren’t serving you, but ensure that you continue to concentrate on those providing a good ROI for your agency.
5. Retention Of Existing Clients
During a recession, your existing clients are more valuable than ever. It’s great to maintain a market presence, but prioritise client retention over new client acquisition. Not only do repeat customers tend to spend more, but they also help to drive customer acquisition by recommending your services to their network. Look after the people who look after you.
Email check-ins and social media engagement are great ways of taking care of your existing clients. Make them feel valued and appreciated, and they’ll keep on coming back. Beyond that, work on gaining an insight into customer experience so that you can continue to provide an excellent service, even as times change.
Preparing for a recession doesn’t have to be complicated. The sooner you take action, the better you’ll be able to safeguard your agency. We can’t control when the economy will dip, but we can be prepared for when it does.
When you’re ready …
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