Is Your Agency a Few Phone Calls From Closing Shop?

How to Optimize Your Shop for Lean Times

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Darryl Ohrt
Darryl Ohrt
Four calls from being out of business. That's how a colleague summed up the plight of many smaller agencies. Or the agency business in general. We've seen some fantastic, talented, historic agencies shut their doors this year. Big and small. How can we better prepare ourselves to weather the storm if one or two or three clients pull out?

This is something we're constantly learning, growing and building toward. We have yet to meet any agency that's found the ultimate secret, but there are some generally smart things we've discovered, implemented or seen in place at other agencies across the country:

Work business development, 24/7. Sell your firm even when times are awesome. This allows you to be more selective of clients during boom times, and guarantee a more regular flow of work during slow times. Because sales cycles are longer than ever, the sooner you begin the process the better.

Always be building your agency brand. It's not enough to just do great work. That alone won't keep your agency in business because many agencies do great work. Sure, there are exceptions, but generally speaking, you've got to build your brand continuously, and not rely on the chance that future clients will notice your current work. (C'mon. We tell our clients this all the time. Practice what we preach!)

Grow with cash. It's easy to buy new computers with every Apple press conference, outfit your agency in the most stellar space and gear possible, and give employees company cars. Plenty of firms built themselves up in this manner by borrowing and leasing their way into newness. When current business supports the lease payment this is great, but when things go bust, everything goes with it. If you purchase equipment, space or other capital expenditures with profits while business is good, you'll never regret the purchases (or have payments to make) when a slow-down arrives. The fewer long-term financial commitments that exist, the stronger your position to weather the downturn.

Don't just have one or two major clients. That's basic business, and you do that by having a mix between large and small clients. To that end, don't turn your nose at smaller business opportunities. We try and look at our smaller clients as the mortar that holds the bricks of the client base together. We do our best never to turn down work unless it's inappropriate for our firm, and treat small clients like they're our most important clients. When you lose one large client, it's nice to have the stability of ten smaller ones to catch you from falling.

Plan for the worst. Assume it's going to happen. The more you're prepared for the worst case scenario, the better you'll be.

Position for success. People like to do business with brands and companies that exude success. You can structure your company so that you're more likely to have a positive story than a negative one. If you're setup for flexibility, people expect you to flex. Have a fat agency, obese with salaries? Then it's news the minute you downsize or issue pay cuts. It's far better to run lean, leverage freelance and strategic partnerships, and keep pay tight. When times are great, share the wealth. That's the kind of news you want people shouting to the world -- rather than "Agency X just issued a 10% pay cut."

While all of this might seem obvious, sometimes we tend to overlook the basics. What steps have you taken at your agency, to minimize your risk and stick around for the long haul?

Darryl Ohrt is a former punk rocker, the founder of creative agency Plaid and chief contributor to the greatest blog in all of the land, BrandFlakesForBreakfast. While his business card says he's "band manager" for the agency, Darryl prefers to call himself an internetologist. Darryl knows just enough to be dangerous. He's on the internet right now, playing, investigating and exploring. Watch out.
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