Riding out the recession.

(The following blog entry was originally posted on Blogger on 02/27/10)

It was bound to catch up to us sooner or later. That ugly "R word" that evokes fear in the hearts and minds of corporate employees and their agencies. After weathering the volatile workflow and cashflow of 2009, a.k.a. The Year of Lowered Expectations, my business partner and I are now seeing the recession's teeth. And they look long and sharp and a little yellow.

So what is a small ad agency/design group to do? Well, the answer is get proactive. But first, let me share with you some of the things that happen in a recession - things we've experienced first-hand that educate us about how clients respond to something of this magnitude.

One thing is for sure: employees are worried. We took some of our clients (all of whom are marketers with varying degrees of age and experience) out to lunch in January and found them all feeling the sting of the economic slowdown as their customers are cutting back. Marketing budgets have been downsized. Perks and bonus have been reduced or eliminated. 401K contributions have been halted in some instances. Business travel is out - except for maybe the VPs. No holiday parties or lunches. Employees' contributions to healthcare plans are increasing. They didn't come right out and say it, but I'd presume it's pretty stressful and hurting morale. It's making an already difficult corporate job that much harder. And this is hard to hear from our clients.

Then there's the job loss factor. Many of our clients/contacts have been laid off and when that happens, we lose business. We often don't know where they've landed, or if we do, they often have an ad agency or list of contractors that are already in place. So their hands are tied. Some of them have decided to go back to school and either get an advanced degree or get retrained. I would speculate that others, many of which are women, have decided it's time to start a family and hope by the time the kids hit kindergarten, the economy will have restarted its engines.

So what's a small company like ours to do? Funny you should ask. As you may have read in a previous blog of mine, 2009 actually ended well for our company. Projects came fairly fast in the last quarter, and it allowed us to fill in some missing months of 401K contributions and to buy some new Macs. It looked as is if the grip on budgets was starting to loosen. But now we're back to treading water. We know we're covered for a couple months from a cashflow perspective, but beyond that, it's anybody's guess. Which means this: It's now time to take action or face the consequences.

For us, the issue is the industry in which we get the majority of our jobs. Most of our business comes from the magazine publishing industry. That indsutry is reeling from the recession -- subscribers are cancelling their subscriptions and newsstand sales are down. Nobody wants to drop $5 on a magazine AND another $5 on a latte. It's an easy choice. Magazines don't give you a withdrawal headache if don't get it by 9am. Plus, whatever content they're subscribing to can probably be found online anyway. Adversity breeds alternatives. (I think the iPad and iBooks Store is going to help revive it, but that device is going to need 4-5 years to mature, the way MP3 Players and the iPod did.)

Again, the proactive thing: it's become clearer and clearer that we've got to diversify our client roster. But before we can hit the streets running, we've had to update our antique website and marketing materials, revamp our rate card, freshen-up our positioning statement and marketable skills, and then go back out there, armed. But I'm prepared for frustration. New business development usually does not yield instant RFPs. It'll take time to populate.

Our sales plan is fairly simple. Dig around on the internet, cull email addresses and phone numbers from potential clients' websites and write them a new business inquiry email - what's the worst that can happen? It doesn't get answered. Move on. We're emailing old contacts like crazy. We're requesting connections on LinkedIn. I just built us a profile on Guru.com (I don't think it'll yield much, but you never know). We're looking into Google's AdWords. We created PDFs of our portfolio for distribution. And we've even done some cold calling. And let me tell you, if you never had respect for the folks in sales at your company, try cold calling a lead. It's humbling.

That's our approach to the recession as of this writing. We keep thinking, work hard and the clients will come. Or return, as it were. The overwhelming majority of our clients have come from referrals but now we know we can't rely on that as much. The game's changed at least for now. It's really tough out there, but I know we'll learn from it. A nasty recession can be an eloquent teacher.