2023: Five ways to emerge stronger
DBA Expert, Jeremy Paterson looks at what your business can do now to prepare for, weather and even thrive during the anticipated economic slump ahead. Are you ready?
2022 was an interesting year. The road back from lockdown was filled with positivity as we emerged into a world where social mixing was encouraged again, and money flowed based on accumulated savings from the previous eighteen months. But dark clouds were gathering on the horizon. Inflation and interest rates were creeping up and the impact of Brexit and staffing shortages squeezed agency models. During the year the spectre of uncertainty gained ground, putting a slow brake on client spend and subsequent decision making.
For me, this was a precarious time for some design agencies. The lack of certainty delayed decisions not only related to client sign-off on projects, but also on internal investment, the updating of skills and propositions, and maybe even around prudent decisions to cut back. The lack of clarity on the future meant issues remain unsolved, amplifying the potential for these to negatively impact.
This mood of uncertainty shifted towards the end of the year as the mixed economic picture changed to be one of greater certainty. Economic contraction was here and with it a need for pro-action to take our businesses through to the other side, to make the most of the opportunities ahead as well as preparing for the worst.
While last week’s news about November’s 0.1% GDP growth was heartening, economists predict a recession is still on the cards. With that in mind, here’s what you can do to prepare for, weather and even thrive during the anticipated slump ahead:
1. Refresh your proposition
View the start of a recessionary period as a line in the sand – what’s worked before may not work again. Use the time to recut your proposition and the way you communicate it, so that it will appeal to today’s brand/ client mindset. Maybe consider an evolution which is more serious, less frivolous and more aware of customer spending power and client budget. Remember, many argue brands which invest in brand led initiatives during challenging economic times emerge stronger, so this doesn’t always mean clients will spend less, but any spend is likely to be different.
2. Invest in your core team
Regardless of the economic situation some rules don’t change. People remain the beating heart of any business and you’ll need to retain your best. Invest in their training to ensure they remain upskilled and motivated, ready to deliver the promises of your new proposition. And be prepared to reward for good results and achievement.
For those who are not performing to the level expected, introduce clear performance management programmes so individuals are crystal clear on expectations. Stay close to them, provide clear support and encourage them to succeed.
If your trading situation necessitates team cuts which are unavoidable, make decisions clearly, legally and communicate them with compassion, tact and empathy. Well-managed exits have a positive impact on your internal and external facing employer brand in the short and longer term.
You are going to need your team to be on side and fully behind your plans. Be open with them about the headwinds ahead, the plans you have set and communicate progress frequently, consistently and openly. Don’t be afraid to be honest about the challenges as well as celebrating the successes.
3. Redefine new business and client relationships
The phrase “what’s got you here, won’t get you there” is as resonant in challenging times as it is in more positive ones. Using your reinvigorated proposition, select your prospecting targets through a new lens. Consider which sectors and brands are likely to thrive during recessionary times – low cost, non-premium and immediate gratification areas are good starting points for tactical campaigns, as are premium brands which need to retain awareness and communicate their purpose.
For your existing clients, don’t automatically assume they will stop spending on the same services and outputs as they have done previously. Engineer face time, speak to them directly about their own plans to reset in 2023, and of course be armed with services and skills which can deliver solutions for their new ambitions.
It may be a cliché but never more so than in a recession is it imperative every single person in your team adopts the mantra that new business is everyone’s business. Work with your teams to explain exactly what this means on multiple levels – it’s as much about ideas as it is about new introductions.
4. Sharpen up your finances
The rough ride ahead will require confident decision making which draws on transparency. If you don’t have full visibility on plans and performance, now is the time for action.
Forecast and cost monitoring – create a realistic forecast which you monitor religiously. Don’t wait for quarterly or month end to get a view. And make active positive and negative decisions using the data in front of you. Be rigid to your income recognition policies, making sure you are not artificially inflating short-term numbers by over recognising income or delaying costs, which stores up issues down the line.
Raw P&L and balance sheets can make it hard to spot emerging positive or negative trends in your business so develop a simple and consistent set of metrics and measurements, such as a staff cost vs GP ratio, to see how your business is performing and evolving.
Cashflow – Pressured cashflow is one of the biggest threats to a business so focus on pro-active credit control. Collect your outstanding invoices as soon as possible and manage payments sensibly by negotiating longer credit periods. Be mindful that other businesses are likely to be employing similar tactics for their own benefit too.
Communication is key whether collecting revenue or managing payments. Check invoices are received, accurate and scheduled for payment on due dates. If you have to manage payment dates, a proactive call buys time and builds trust so long as you are good to your word.
5. Remember your values
Recession will pass and more comfortable times will return. While survival is critical be wary of compromising the core motivations for setting up your business in the first place, or the principles and values that define you, for short term gain. A compromise on culture, a founding principle or a societal commitment will echo way beyond a recessionary period.
In conclusion, set out with a positive mindset by seeing recession as an opportunity – the vast majority of well managed businesses will survive, and the lucky will thrive. Do what you need to do confidently, do it now and you’ll weather any approaching storm as well as possible.
Put your professional development on the agenda now.
From New Business to Leadership and much more, take a look at the range of training courses we’ve got coming up. Online and bitesize in format and delivered by expert trainers, DBA workshops have been specifically developed to enable those working in design to move themselves and their business forward in 2023. Find out more and book your place here.