How independent agencies can make the best of trying times
Date: June 24, 2020|
Gartner describes Winning in the Turns, as a set of behaviors that are exhibited consistently by companies that accelerate their performance during and following periods of high uncertainty.
There is a lot being said about the current economic situation and the impact on advertising and marketing spends. As everybody braces for the hard realities of decline in marketing spends, here is a guide for independent agencies (actually for all agencies) and companies in the media sector that will help you not only survive but also thrive in the present situation.
Cash is your oxygen
Everybody knows this but very few actually understand this. Cash is the actual money you have as of today in your bank, it is not the receivables in your statement or future projections your team has given you. Once you accept this, everything will become a lot easier to plan and execute.
Every penny actually counts. Plan your next 6 months based on how much cash is left, if you are true to this, then your entire survival plan will write itself. This will force you to take decisions that are hard and ruthless, it will be tough but these are the times when you as a leader cannot run away from being the bad person.
Much easier said than done. Indian companies in particular are very bad at this and especially the advertising sector. Since the majority of the costs are people costs, you hate doing this. Here again your only barometer for now should be how much cash you have in the bank. It’s better to cut costs now than to shut shop soon.
The biggest secret of cutting costs is not the amount of expenditure you cut back but how fast you implement it. Time is literally money here. Earlier the call, more number of days you gift your company to survive. It’s as simple as that. Also speedy decisions will ensure more numbers of people will be protected. This is also the time to renegotiate your fixed costs – rent, IT, consultants.
Talk to your suppliers and vendor partners, give them a sense of how you are here to stay and need their support during this time. I’ve always found it to be the best way to negotiate. If work from home has worked for you, relook at the need for expensive overheads. One boon from the lockdown has been the savings on travel costs. This would have also told you how much wasteful travel was happening before. Continue with strict clampdown on travel and other non-essential expenditure.
Focus on Collections
If cash is your oxygen, this is your ventilator ; you have to keep it going. You will face lots of challenges here, as some of your clients will also tighten their purse strings. The best way to have an effective collections program is to assign one businessperson to be responsible for this along with the finance team.
A relationship matters during such times and the client facing person has to leverage that. Have a daily collections monitor, this should include data on collections, reminders sent, escalation alerts. Bring in the discipline of everyday follow up, do not worry that it will upset your clients, remember it’s your hard earned money and the client has already received the services. There are a lot of ways to add value to your clients, funding them is definitely not one.
By this I’m in no way suggesting shoot off legal notices to your clients, but start by knowing your legal rights. This will help you to understand where you stand and how you can leverage it for your business.
Let me give you one such example. Our government brought in a rule sometime back to protect MSMEs from delayed payments, this rule states that a delayed payment for no reason can actually come with a severe consequence (read imprisonment) for the CFO of the defaulting company. This is a very powerful tool.
Register your company as a MSME (you can do it online, zero hassle) and just send a casual update to the finance department of your erring client that you are now a MSME and in the next mail update them on the government ruling on delayed payments.
It works in most cases, without getting into any legal tangle. The point I’m making here is that being aware of your legal rights will help you build a stronger organisation.
Know your Banker
By far your most important partner during this time. Have a direct relationship with your bank, do not delegate this. Be honest and open and appraise them on your business every month. Ask them to educate you on all the credit options available for your company.
As many of you know the finance minister recently announced collateral free loans for MSMEs with repayment moratorium for 1 year. The government guarantees the loan. Make full use of this, do not make the mistake of assuming this is not for you.
Ask your banker to provide all information. You will be surprised on how useful this will be for your organisation.
It’s very easy to get sucked into in this entire survival process, do not lose track of your sales. New business is the antibodies your organisation needs right now. Go after that prospect that you always had in mind, make a call to lapsed clients, grind your network for leads.
Every client is looking to optimize be it better costs, better talent, and new services. Take full advantage of this situation and just put your organisation out there, the more time you invest in new business development right now the better your chances to thrive during tough times.
Never underestimate the power of empathy. Now more than ever is the time to build a kinder world around you. A simple message checking on somebody’s health, building more patience than before on operational issues, encouraging, complimenting, and thanking somebody.Each of these gestures is worth infinite times more now. Make it a part of who you are not some fake image campaign. Do what you can do for your circle of influence and see how truly infectious this is.
Most of you will have clients who have cut your fees or paused their work, respond to them and assure them that you are with them during these tough times and will go out of your way to ensure deliveries won’t falter due to reduced fees (remember you are expecting the same of our vendor partners). Showing empathy is a sure shot way to make your relationship with your employees and clients much stronger.
You are in the business of communication anyway. Communicate like never before with your employees, vendors, clients and industry peers. Remember you are not the only one facing these tough times.
The whole world is fighting this battle. Now is the time for more engagement with your employees most of whom you would have not met for months now. Look for positive news, however small and amplify it.Get people engaged in online recreational activities, start new initiatives. The power of human beings to come out all guns blazing during tough times is amazing, it’s for you as a leader to unleash it.