Economic Downturn Readiness
In various conversations with other owners, our Austin Agency owners masterminds and our own work at Kith, I get this feeling as we look into the second half of 2023 No one is really sure what the feeling is - it just doesn't feel good. What I learned and now understand much better post 2008 and the ups and downs of COVID is the importance of being prepared for economic downturns. While I certainly cannot predict the future there are proactive steps owners of creative professional services firms can take to navigate potential challenges in the second half of 2023. And honestly they are good hygiene year round.
Here are some key ideas and to-dos to consider:
1. Build a Rainy Day Fund: Start setting aside a portion of your profits to create a financial buffer. Having a reserve fund can help you weather unexpected financial setbacks and provide stability during an economic downturn. The old saw is to have 3-6 months of operating revenue stashed away. Adding an extra month or two is always a good idea.
2. Diversify Your Client Base: Relying heavily on a few key clients can be risky during uncertain times. Invest in diversifying your client portfolio by actively seeking new leads and perhaps expanding your target market. Explore innovative strategies to attract clients from different industries or geographical locations. As a part of a mid-year planning meeting with your leadership, host an expansion summit asking - “thinking about the three things we do better than anyone else - who else that we are not serving - could benefit / help / serve?
3. Review and Update Sales Materials: Take a close look at your sales materials, including brochures, presentations, and website content. Ensure they effectively communicate your unique value proposition and showcase how your services can address the specific needs of potential clients, even in challenging economic conditions.
4. Strengthen Client Relationships: This is probably already #1 on your todos. Prioritize building strong relationships with your existing clients. Engage in regular communication, demonstrate your commitment to their success, and offer additional value-added services that align with their evolving needs. Loyal clients are more likely to stick with you during economic downturns. For your niche, create a thought piece akin to this post - for clients as they consider economic slowdown - focus on your core competencies and unique skills as areas to highlight.
5. Assess and Optimize Costs: Conduct a thorough review of your business expenses and identify areas where cost optimization is possible. Look for ways to streamline operations, negotiate better deals with suppliers, and eliminate any unnecessary expenditures. This will help improve your financial resilience.
6. Innovate and Adapt: Explore new ways to innovate and adapt your services to meet the changing demands of the market. ChatGPT, SEO algorithm changes, 2024 elections, Paris Olympics, America's Cup (see a great list of predictions and trends here), Consider developing new service offerings, leveraging emerging technologies, or adopting alternative business models that align with the evolving needs of your target audience.
7. Enhance Marketing and Branding Efforts: Invest in your marketing and branding activities to increase visibility and attract potential clients. Develop a comprehensive marketing strategy that includes a mix of online and offline channels, such as social media marketing, content creation, networking events, and industry partnerships.
8. Stay Informed and Seek Expert Advice: Stay updated on industry trends, market forecasts, and economic indicators that may impact your business. Consider seeking advice from industry experts or business consultants who can provide valuable insights and guidance during uncertain times. We love a good mastermind - host a lunch / breakfast with others in your space / region and share.
9. Focus on Talent Development: Invest in the professional development of your team members. By enhancing their skills and knowledge, you can ensure they are equipped to handle changing client demands and contribute to the growth and success of your firm.
10. Prioritize Your Well-being: As a business owner, it's crucial to take care of your well-being during challenging times. Practice self-care, maintain a healthy work-life balance, and seek support from peers, mentors, or business communities to navigate any stress or uncertainty. You may be forced to make very tough decisions - your battery banks need to full and backs at hand.
If we are in store for an economic downturn in 2023 / early 2024, it's all about being proactive and adaptable. So, why not give these ideas and to-dos a shot? They'll help your firm stay strong and successful, no matter what the economy throws at you.
