Don’t Panic: 6 Business Strategies for the Era of COVID
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By Guest Contributor Emily Cohen
To state the obvious, the next few months will be difficult and will involve some tough decisions, smart thinking, thoughtful planning and a good degree of reasonable risk. But what we shouldn’t do is panic.
I’ve developed and curated a list of six strategies that will help you avoid making poor decisions that sacrifice your business as well as our industry’s long-term sustainability and health in exchange for short-term gains.
Financial forecasting. Hopefully, you’ve followed the rule of thumb where you saved at least three to six months of overhead for times like these. You always should keep track of your financial picture at all moments, both during the good and bad times. One tool in your financial arsenal is a financial forecasting document that includes your firm’s expected receivables organized monthly and by the date you expect to receive payments (not the invoice date). This document should include both contracted income as well as any income from your new business pipeline that has a high probability of closing/winning. It should also list and compare these monthly projected receivables against your firm’s fixed monthly overhead. The findings from this forecasting tool will help your firm make difficult decisions—based on sound and objective financial criteria rather than more emotionally or reactively based ones—a little bit easier. You can download a wonderful example of this in a case study by Sheri L Koetting, chief strategist and co-founder of MSLK, in an excerpt from my book, Brutally Honesty. (Click here for the PDF.)
Client Checkups. Check-in with your current contracted clients. Inquire if their plans have changed, and, if so, how? Ask them how you can help them during this time. Perhaps you can offer them a discounted fee if they pay the full fee in advance or, if you can afford it, a more rolled-out and incremental payment plan? Try to be flexible so that you can retain the work you already have. That said, don’t simply lower your fee without getting something in return just to pay the bills.
Debt. Don’t take on additional debt. I’m a big proponent of debt-free business and lifestyle, beyond having a mortgage and perhaps a line of credit. Especially during difficult economic climates, avoid borrowing from friends and family, your personal or business credit card, or taking on a business loan.
Staffing. The first mistake many firm owners make is to stop taking a salary themselves, rather than making smarter—albeit harder—staffing changes that really need to be made. The first step is to continue to take a salary, but make sure it’s reasonable and realistic and that your salary is not lower than the next highest-paid employee. While I understand it’s hard to let go of people on your team, you have to protect your business’s future. Taking on debt or unprofitable work so that you can pay people you can’t afford hurts your firm in the long run and increases your debt. Instead, consider reducing everyone’s salaries and hours as a stop-gap measure. Ultimately, you may have to lay people off. In thinking of who to lay off, don’t focus on those that make the most money but rather on those that contribute the least to your company overall or can easily be replaced with freelance talent. Don’t do this by email but in-person, with kindness and empathy, so you can preserve relationships. Whenever you lay off or fire an employee, you should also consult an employment lawyer to cover all your bases.
Marketing and New Business. Don’t use your limited funds to design or produce a unique marketing brochure or premium or any other “cool” handout. Beautifully designed “stuff” will not get you new business or build relationships and are not worth the financial investment. Instead, and most importantly, use your downtime to focus on reconnecting with everyone you know and say hello/check-in. Don’t try to get new business, just reconnect and remind them you are here now and in the future. This is a habit that you should embrace and continue to do during any cycle of your business. You should also reach out and introduce yourself to new people. My book includes additional insights into how and why you need to always focus on relationship-building. While it’s rare to see immediate results, it’s a long-term investment in the future health of your business. Don’t ever stop building new relationships. Continue to stay in touch with everyone you know and, during these trying times, double your efforts in this area since you will most likely have a bit more time on your hands.
Business Vision. Keep on track with your firm’s vision, positioning and plans you have for your business. Don’t sacrifice who you want to be, who you want to work for, how you price, or what your terms are simply to pay the bills or keep your staff busy. Once you sacrifice who you are, it will take years to get back on track. Similarly, don’t take on work that will be unprofitable just to pay the bills and don’t lower your pricing and other standards you may have. Here’s why—
Right after 9/11, prices plummeted and as an industry, we didn’t push back. We lowered our prices in fear and under pressure and our industry has never recovered. If we do this again, we will have continued to lower our standards and hurt ourselves as well as the industry overall.
Your existing client relationships would be unlikely to bounce back to the terms and pricing you had before. Once you’ve sacrificed your values, it’s hard to regain control.
Your capabilities deck will eventually be dominated by work that may be outside the type of work you want to do and are great at (i.e., your positioning). If you do work outside of your positioning or do work that you don’t want to show, you’ll end up only featuring work from the past in your capability deck and website, thus risking showing outdated and irrelevant images once business picks back up.
If you do choose to take on clients simply to pay the bills, try to be smart about how much you are willing to sacrifice. You may lower your fees, but perhaps you also deliver fewer concepts/revisions or you don’t sacrifice your terms (e.g., usage rights and the right to use the work for self-promotion). If you do take some projects that are outside your positioning, make sure they represent no more than 25% of your workload. And, when you do take on these clients, you should be ready and willing to fire them when the economy recovers, which it will.
Ultimately, you should continue to be kind and generous to your clients, staff and vendors, but not to the level that will have a long-term impact on your business and in situations where you are making all the sacrifices without any gains.
The following are two great resources developed by my colleagues that are also extremely helpful. We all have different voices and may share similar strategies (with a few differences, of course) so, take a look—
The Coronavirus and Your Firm by David C. Baker
Three Steps for Surviving and Thriving in a Crisis by Blair Enns, Win Without Pitching
A brutally honest consultant, Emily Cohen has been honored to consult and work with many leading design firms across the country. Through these experiences, she has developed, tested and curated key business insights and strategies that have helped firms become more effective, profitable and fun to work at. Emily conducts strategic business planning retreats and provides confidential, best-practice insights and advice on staff-, client- and process-management strategies. She loves sharing her expertise through speaking engagements, guest posts, her courses on LinkedIn Learning/Lynda.com and Skillshare, her industry activism and, most recently, in her new business book for creatives, Brutally Honest: No-bullshit business strategies to evolve your creative business.