Is your company financially savvy?
Have a look through these clever tips on where to focus your energy and attention to guide you through the tough UK market during a recession.
The MyCake blog tells you about how to manage the financial side of your creative business simply and easily. There are also tips on using the MyCake online toolkit for book-keeping and benchmarking which can be found on here - MyCake: Online Financial toolkit.
1. Know your client base
You need to nurture good sources of income:
- 80% of your business usually comes from 20% of your clients ... do you know which ones?
- who pays at your best rate and who pays on time?
- are these the clients who take up your best time, or does a number of small project do that?
2. Don't forget the small stuff
If you've been growing your business in good times, you'll have had your eye on the big prize projects but if these are not happening fast enough you need to go back and take a look at the smaller stuff that you may feel you'd outgrown. It is safe territory where you've built up reputation and trust.
3. Do some safe stuff
You'll sleep better at night if you have some bread and butter income underpinning your business. As a guide, this should cover your fixed costs each month, eg. rent, rates and utilities but not wages.
4. Ask for work
Are you missing out on work simply because you aren't asking for it? Commissioners, brands and the other major players still need content. There are ways of phrasing this that sound less desperate "are there projects on your to do list that we should be talking about?"
5. Add value
If you are under pressure to make compromises on price, don't drop your daily rate but do over deliver. Look at ways you can offer more value that don't cost you anything more than your time.
6. Employ the best you can afford
People are 100% the hardest thing to get right and the most important for your business. Raise the bar of who you want to work for you. If you cannot afford the best then consider hiring the best for one or two days a week instead of full time - you benefit more in the long run.
7. Cash flow is king
Bad cash flow kills quicker than poor profitability. Share some of the burden by negotiating with your suppliers for better prices and longer credit terms. Identify your key suppliers and know how important you are to them before you negotiate. Also look at supporting your suppliers and build a long term relationship to help you both get through the tough times.
8. Keep visible
Don't hibernate and hope to survive. In a recession people can easily assume you've gone. Make sure you find a way to keep some marketing budget and it will put you in a stronger position as you emerge from the downturn.
9. Investment isn't dead
You can still find investment conversations in this market - don't assume the window is closed for new deals, it's just different. Venture capitalists have funds they need to invest if they are to make the returns they've offered, so they need deal flow. Get out there and start having conversations.
10. Invest in ideas
If you are not working at capacity then split the team between client work, pitching for new work and developing new ideas. R&D investment now will put you in a stronger position for winning business.
11. Take risks
A recession is a good time to get rid of old fashioned ways and try new things, for example cross platform working can be cheaper and the pressure of high expectation is off a little. It is also important to be doing something new - your clients can no longer afford to be followers or they lose business too.
12. Get tough
Planning for bad times in advance helps you make tough decisions objectively rather than getting caught up in the emotion and security of keeping a vision going. It's never too late to plan. Know your worst case scenario and work out the minimum you need to keep going. Then make it worse still, assume 30% less income and 20% more cost and see how bad that is.