Economic crises are no fun. Every creative entrepreneur will be affected differently by the coming downturn, but our industry as a whole is going to get hit hard. We probably won’t feel the worst of the pain for a few weeks or months (unless most of your clients are in the hospitality, travel, or food service industries—in which case, your projects may already be getting canceled).
But regardless of our client bases, the ripple effects of shutting down the economy is going to be felt for years. After 9/11 it took almost three years for business to return to normal, and after the 2008 financial crisis, it was about eighteen months before things started leveling out. And keep in mind, the creative marketplace is a lagging industry in a recovery. We’ll be among the last to see our businesses rebound when the recovery starts to gain traction. That’s because all our clients will have a lot of financial catching up to do, before they revive their marketing budgets to pre-crisis levels.
The Upside to a Crisis
And while none of us like trouble and trials, there are some positive effects that come from the pain of a crisis. Without exception, every crisis I’ve endured over the decades has strengthened my companies, and we were always more profitable on the other side than we were before. Pain can be clarifying, it will expose weak spots, and it forces us to become more lean and efficient. And this kind of rigour sets us up to be even more profitable when a turn around comes. And it will come, “Trouble don’t last always.”
So as we’re grinding it out over the next few months or years, here are some positive things to keep in mind.
- After downturns, the demand for creative services spikes. Companies can put off their marketing spending for a while, but eventually they will need to catch back up. And so the market will surge, once the turn around begins.
- There will be less competition. Sadly, in serious crises like this, some practices will shut down. Typically 15-30% of creative professionals will be forced to close up shop during serious crises like this. But if you can make it through, there will be more opportunity, with fewer available resources. Which means…
- Budgets will go up. Because of the law of supply and demand, all that opportunity will come with a price premium, as demand for services increases, before a new supply of creative entrepreneurs rise up to meet it.
- Your margins will be even higher than they are today. In order to survive the next few years you’re going to have to get scrappy. You’re going to have to find efficiencies. You’re going to have to do more for less. And while that will be rough, when things turn around, and prices increase, all the efficiencies you’ll have developed will enable you to capture more profit on those projects.
The Post 9-11 Profits
After 9/11 my firm had to learn how to survive on very few projects, all of which came with budgets at least half what they were before. But we strenuously evaluated our process, and our systems, and eked out a meager profit over those lean years. When the budgets went back up, we were prepared to respond and began earning close to 50% profit margins on all our work.
How Not to Waste This Crisis
So while you’re hunkering down, when you have downtime, which you will have, consider some of the ways you can use that downtime to position yourself for a great rebound.
- Get your financials and especially your cash flow in order (see last week’s article).
- Review and revise your proposal templates.
- Review your terms of service (make sure clients affirm that they will be billed for all client service time, including emails communication, answering questions, estimating, etc.).
- Adopt, or fine tune your project management system. A well-utilized system will help you maximize efficiency—which you’re going to need now more than ever.
- Review your time data. Keeping time data is only useful if you mine its insights. Analyzing this data will help you find more ways to increase efficiency.
- If you don’t have time data, adopt a platform and start.
- Maintain consistency in your marketing plan (don’t start a new desperate push campaign).
- Stock up some content for your content strategy, or if you don’t have one, start thinking about that strategy.
- Evaluate expenses and reduce spending where possible.
Don’t Worry, Be Productive
This is going to be hard, but don’t be anxious. Anxiety never benefits anyone. Instead, plan to make the most of this time. Set some priorities for your downtime now, so that as soon as you have some you’ll be ready to put it to maximum use. We never voluntarily sign up for conditions like this, but if we embrace all that life throws at us, and learn what we can from our experiences, we’ll be better off on the other side.