This advice is based very much on experience. Only two years ago, I was about to close my digital agency. I had been forced to let six staff go and it was down to just me and one other.
Fortunately, we signed a key client at the last minute and the company was saved. I have since built the company up from two staff and no income to twenty staff and an almost seven figure turnover. So, here are tips to help you ensure your business can weather tough times, as told by Anthony Main, the founder of The Distance.
All industries go through waves, often unexpectedly, and you need to be able to brace against them as best as possible. This often simply means supporting drops in revenue with a cache of finance for rainy days. Aim for at least three months break-even in the bank for comfort.
Tip: Don’t spend all your profit – keep some back to help you ride and survive the rough times. Softening the impact of risks allows you to take more of them.
Economics and politics
Whilst the UK’s decision to Brexit had a huge impact on us, it was going to be a 50:50 decision either way, which meant we should have been better prepared.
Tip: Keep up-to-date. Don’t be ignorant to wider scale events that might have a future impact, such as a change in governments, price of raw materials, etc.
Data is vital
Track as much as you can about the operational side of your business. You ideally need to create a data dashboard and update it at least monthly, so you can compare to previous months or years, looking for any trends which might raise a flag.
Tip: By understanding the numbers in your own business you can spot problems early, and develop solutions by using hard data – not guesswork.
Watch the competition
Our early impact in the space made us naively confident in our market share and we hadn’t realised how many competitors, like us, had grown to the same degree. No longer did we have the first pick of the inbound leads; we had to work harder to reap the rewards.
Tip: Always keep an eye on the competition and ensure you are staying ahead of them, not slipping behind. Don’t neglect your peripheral vision.
Secret Shop your competitors
It is SO important to know what the competition is doing, from their inbound process to their offering and the quality of the documentation in between.
Tip: Create a dummy project and subtly go through the ropes of testing them out. Find out what they do well (integrate it into your process) and discover where they are weak (ensure you don’t do the same). Learn from mistakes without even making them yourself.
Understand market pricing
An important aspect of your competitor analysis is to understand both their pricing and how customers will perceive yours. They may want to know your rate to compare costs, so make sure you align with your market, even if you expect your quote to be much larger than your neighbour’s.
Tip: Get clear on your own pricing and that of your competitors.
Before our turn around we had an ambiguous company, offering both eCommerce and mobile apps, with no crossover customers. This didn’t work, so we divided the business to individually focus our marketing on clear customer propositions.
Tip: Find your niche and stick to it. Make sure all your marketing communicates your expertise in that niche, and don’t be tempted to try to be everything to everyone. A Jack of all trades is a master of none.
Take your time to employ; we did and it has really helped us flourish, but equally learnt from similar poor judgements. Surround yourself with trustworthy staff and give them as much autonomy as possible.
Tip: Build a great team around you by waiting to employ the right people – taking on the wrong people can be time-consuming and costly, whereas the right team will help ensure the business thrives.
As a creative agency, we are stereotyped with a certain culture and we embrace it. Flexible working; monthly company catch ups (in the pub); bi-weekly retrospectives; internal Slack comms. All of this adds to the reasons that our staff are so committed to supporting each other to deliver great projects for our customers.
Tip: Develop a company culture that suits your business and your team. Work isn’t just about productivity – it’s also about enjoying what you do and giving you a reason to get up in the morning.
Never stop marketing
We had become too comfortable with the quality of our inbound leads and had previously (Google) ranked really well, and complacency set in as a result. We didn’t monitor the rankings as closely as we needed to, and so we simply slipped off the face of the web without realising.
Tip: It’s important to keep marketing, even when times are bad – you can’t build a business if no one is finding it and the leads aren’t coming in. Visibility is key.
Too many businesses fail as fast as they start and it’s very important to look for signs that things aren’t as they should be. We were too busy being busy to have one eye open on the market and the local economy. Don’t be as naive as I was; having confidence in your product and service can only protect you against so many things, some you simply have no control over, so be prepared!
More on recovering from business failure and having a contingency plan.