How to help your agency weather the storm – some advice to my younger self

As I sit here in lockdown, having just founded my own agency, as poor as my timing might have been, I’ve actually found myself feeling incredibly grateful that all I have to worry about is generating enough income to pay my mortgage and keep my kids in ice-cream and fortnite battle passes. I know that those running agencies will be having a much more stressful and difficult time.

As someone who has spent the last 17 years in Board level roles in three different agencies, I wanted to write something that might help my younger self, the one that had never run an agency, and who was blissfully unaware of some of the discussions going on in the boardroom. What should and could I do to help my company, my colleagues and my clients through the impending economic downturn and safeguard my own job in the process.

But first, what is the real state of the market. Its always difficult to know as few agency heads like admitting that business isn’t great, but having had range of conversations with people at different public affairs and corporate comms agencies, it is clear that there has already been a significant impact on revenue and a huge impact on the new business pipeline and confidence generally. Different agencies are exposed differently depending on their client base and mix between retained and project work, but my overwhelming sense is that whilst core retained revenue is largely holding up, projects have been put on hold and discussions about future work and new projects are few and far between. As if someone literally pressed the pause button.

So how does the agency business model cope with this and what discussions are happening in agency boardrooms across the country?

The agency businesses model is generally pretty straightforward. The majority of your costs are fixed (rent, business rates etc), the largest variable cost you have (normally somewhere between 45 – 70% of all costs) is your wage bill. As your people are essentially your product, when demand for your product reduces suddenly – what do you do?

The ideal position to be in is that you have enough contracted income to cover your costs on a rolling monthly basis and have at least six months of costs in cash in the bank. This gives you some breathing space to work with, whilst the market settles.

Agencies will immediately go into overdrive on cost control, pausing investment and stopping all unnecessary spending, getting tough on expenses, and on subscriptions and anything non rechargeable to the client. There will be a relentless focus on credit control, making sure all outstanding invoices are paid and reducing any potential liabilities or bad debts. You need a health check of your projected revenue – you will look at every prospect and every client, the contracts, client servicing levels and build a detailed picture of best- and worst-case scenarios. Make sure you know what sort of financial position your agency is in.

It is clear that some agencies have utilised the Government furlough scheme to reduce costs, and whilst this is a sensible way to protect the business in the short term, furloughed consultants pose challenges for maintaining client servicing and client profitability and creates huge stress and uncertainty for staff.

For those consultants still working, here are 10 ways to help your agency during this crisis:

1)     Understand what is going on with your clients – properly understand the impact of this crisis on their business/organisation. How does this impact what you are doing for them? How can your agency help (both your individual contact/team and the wider organisation). Show the client you have understood their new challenges.

2)     Adapt your service offering, build goodwill, overdeliver. Bring in other colleagues if the client needs change, work as an agency team. If you must reduce your account hours to give to someone else because it is the right thing for the client, then do it. Have a conversation with your line manager to explain why this will ensure client satisfaction and retention

3)     Ask yourself, what is my value to my agency – how much revenue am I supporting (it should be about 3x your salary every month). If you are working under capacity speak up. Ask what needs doing, suggest things that will support future business development or better client retention, make yourself useful.

4)     Know how much your clients pay and whether they have paid, offer to help chase any outstanding payments (if appropriate).

5)     Stop spending – set an example think about every cost you incur on behalf of the company, show your seniors that you are conscious of the need to reduce costs – however small

6)     Co-operate with any cost-cutting measures- think about what you really need to do your job and what you can do without, understand that reducing spending in any way is really about saving jobs, be understanding of some of the employee benefits that might be withdrawn. 

7)     Be upbeat – keeping team morale up is one of the ways you can really help. Those people who are positive influences in the workplace, not only feel happier and make others feel good, but are more valued too. No one likes an energy sapper however brilliant and clever they are.

8)     Spot opportunities, even in dark times there are opportunities for both clients and your agency. Think creatively – suggest ideas, go the extra mile. It will be noticed.

9)     Be as productive as you can be – things are going to get pretty rocky for a while, so keep the energy up, meet your deadlines, deliver client ready work and try not to get into a slump.

10)  Build your network – we might be locked down – but that doesn’t mean you can’t still meet new people, reconnect with old contacts and build your own professional profile. Whatever happens next it will stand you in good stead.