RECESSION PROOF Your Agency in 2024!

I coached more than 50 creative business owners through the global covid-19 pandemic and some of them went from having zero projects to having one of their best years in business simply by following these three key principles so in this video I'm going to first talk about what these principles are and why they're important at a high level and then I'm going to break them down into a step-by-step process that you can actually Implement in your business so that you not only survive the next recession but you are able to thrive so let's get into it if you want to make your agency Recession Proof or your creative business Recession Proof there are first of all three key principles that you not only need to understand but you need to also embed in your business so let's look at them from a high level and these really are kind of in the order of importance first one is that security is an inside job and what I mean by this is if you look at some of the most successful businesses and some of the most successful entrepreneurs who I've had the privilege of not only spending time with but actually being mentored by they very rarely are influenced by external circumstances so it doesn't really matter matter what is going on externally they create their sense of security and certainty internally and this is a really big determining Factor about the kind of results that people get in their business when things start declining in the economy and now you can actually see this in other aspects of life so if you've ever seen a paramedic going to an accident or somebody having a heart attack what you'll notice is that they are always really calm they are very rarely rushing around looking flustered one of the reasons for that is because they need to control their internal World they need to be calm and they need to make sure that they're not making decisions rashly or based on fear they're not letting that kind of Primal part of the brain take over because that is when typically we make mistakes and we make decisions based out of fear rather than from a place of calm and abundance and so I'm going to talk you through a model to ensure that you can control your internal State because this is one of the most important things when stuff starts happening externally whether it's you lose a client whether it's uh you don't get paid on time someone in your team gets sick whatever it is there are inevitable challenges that are going to come about when you run a creative Studio or an agency and so it's really important to have the tool set and the mindset to be able to create that security and that certainty internally in spite of what is going on externally the second key principle that we need to really embed in our creative business if we're going to thrive during a recession is that we need to take our creative services from a nice to have to a need to have unfortunately when the economy starts to move into a recession creative services are often one of the first things to get cut and the main reason for that is because a lot of businesses don't understand the True Value so we as creative business owners it's our responsibility to communicate that value to our clients and show them why our services are a need to have not just a nice to have the third and final principle is that cash is King now this is something that I was taught very early on in my career and one of my early mentors had this saying that revenue is Vanity profit is sanity but cash is King and I have unfortunately seen this in a lot of creative businesses that sometimes even had to shut their doors despite the fact that they had clients that they were owed money they didn't have enough cash in their business to pay their team to pay their suppliers and they therefore had to shut their business so we've got to look at ways to make sure that we have enough cash and that the cash flow in our creative business is strong let's look at these principles in a little bit more detail and let's take them from this kind of highlevel concept down to a practical stepbystep implementation of how you can make sure that you implement these in your creative business so how do we have a sense of security and calm when everything's going on in the outside and it feels a bit crazy or things aren't going our way and I talk a lot to my clients about this idea this kind of cycle of scarcity that I see a lot of people in and so the first thing we need to do is we need to become really aware of how this pattern plays out and so in my experience this is what typically happens there is a stimulus or an input and so let's use losing a client as an example right so we lose a client that's the that's the stimulus that's what happens we then feel a certain way about that and that could be you know it could be Panic could be overwhelm it's usually quite a negative emotion and then what we do is we respond in a certain way and so typically what I see creative Studio owners do when they lose clients is they then basically find whatever work they can to replace that client and often times that is non ideal clients that is work that they kind of no deep down isn't really what they want to be doing but they take it on because they're in this mode of kind of panic and fear and scarcity and so the response is we say maybe yes to work that we should be saying no to right and as a result we are then trapped in this kind of cycle of bad fit clients who maybe treat us like workers rather than Partners who are kind of pixel pushers and they you know constantly micromanage us maybe they don't pay us what we really want to be paid and eventually this if left unchecked leads to burnout right and so this is what I call this the cycle of scarcity and we get really stuck in it so the question is how do we break this how do we go from internal certainty or scarcity to abundance and how do we actually create a emotional state that's going to serve us and that's going to actually allow us to get more of what we want when I'm working with my clients if I actually look at this right here between the stimulus and the emotion is usually a belief or a story right so what we want to become aware of is what is the internal dialogue what is the thing that goes on in our head when something happens and for most people that is a very quick process which is often subconscious so it feels like you get the email from the client saying we can't carry on anymore and it feels like that straight away triggers an emotion but actually if you slow it down what you will notice is that when you read that email there is a story there's an internal narrative that goes with that stimulus okay so the first part is actually starting to become aware of what is the belief or the story that we have when something happens externally and so for example in the case of losing a client we might say oh my God you know that was a really big client we're not going to be able to pay our team it means that if we lost this client we're potentially going to lose some of our other clients there's no work out there and this kind of story continues and that's really what creates this feeling of panic and so one of the first things that I get my clients to do is just become aware of this to the point where they can be objective about their thoughts now saying it out loud to someone and actually taking that narrative from in your head to out of your mouth or writing it down on a piece of paper is one of the easiest ways to get that objectivity and what we want to do is essentially just challenge this belief or Story and there's a woman called Byron Katy if you Google her and she has a thing called the four questions these are really really powerful questions but the essence of the work that Byron KY calls it is that we want to just ask ourselves is there another option to this like does it actually mean this what is story and what is fact so the first part is getting an awareness of what that kind of story or that internal narrative is and then the second part is being able to challenge that so I always like to imagine that I'm in a court of law and someone has brought this accusation to me and they say well you lost this client and so therefore that means that you're not going to be able to pay your staff it means that you're not going to be able to win projects this big it means that the rest of your clients are going to drop out and I actually write this down and imagine somebody's saying that to me in a court and I say is there anything that the defendant might say to that may they be able to challenge some of those assumptions or those beliefs and so it's really about kind of getting that objectivity what else could it mean and so I've actually got a few few stories one of my clients is an animation studio in the UK and during the pandemic they lost one of their biggest clients that they had and they went through this exact process and one of the reasons that we started working together was because they wanted better clients they wanted to charge more money they wanted to pick and choose the kind of work that they were doing and they were really stuck in this cycle of not being able to do that when their biggest client left it created space for them to really sit back and build a strategy around finding higher value clients and communicating the value of what they did and they were one of our case studies where they actually had one of the best years they've ever had they increased their rates by over 30% because they were allowed to do that because that other client left and so it enabled them to actually raise their rates and then when they started talking to other clients they pitch their new rates so they said to me at one point I actually think that this client dropping out was one of the best things that ever happened to us now they were only able to say that in hindsight but if they caught this belief and this story at the time then it might have changed how they felt from say Panic right they might not have been panicked they might have felt relief right so they then felt relieved so then the response wasn't to rush out and get any old project the response was to sit down and create a strategy of how we going to get a client that will replace this one but they will be better and they will pay us more and as a result that is exactly what they did right so the next time a client dropped out or next time something happened they were able to control their emotional state internally which therefore changed the response which therefore changed the result and so it all starts with our interpretation of that particular stimulus or that particular event and one kind of final metaphor that I like to use is that people get in this cycle of scarcity and they using so much energy I remember once I was in Australia I was on Bondi Beach and for anyone who's ever been to Bondi Beach they'll know that the currents are really strong you got to be really careful about where you swim and I remember watching this guy get rescued because he was stuck in this rip tide and he was trying really really hard to to swim against it to swim back back to Shore and this Rip Tide was trying to take him out to sea and so the Lifeguard came out and one of the things that he was doing he was saying swim with the he was shouting to this guy swim with the tide swim this way don't try and come back to shore cuz this guy was using so much energy thinking that he had to try and get back to shore but actually if he had just let that rip tide take him it would have taken him out and then back around to the other side of the beach and he basically would have had to use no energy in order to do that and so sometimes we're so busy panicking we're so busy in this cycle trying to keep our head above water trying to swim against the tide really what we need to do is we need to step back and just kind of see where this situation is taking us and what opportunities it is creating and that all starts internally it all starts with the mindset if you don't have this peace the other two things that I'm about to share with you will not work and any strategy that anybody gives you won't help you because you are so focused on the negative and you are in the scarcity mindset rather than the abundance mindset so that's the big idea number one and that's how we actually apply it to our business so maybe just practice like journaling is a great exercise that I love just practice noticing what thoughts are coming up in your head what's the story when this situation happens what is a story that I'm telling myself how am I feeling where do I notice that in my body how am I responding am I making this decision based on fear and scarcity or I making this decision based on abundance and opportunity right and so that's really one of the key things that I've noticed hanging out with entrepreneurs that have seven multiple seven sometimes eight fig businesses is that they interpret those negative things that happen to them in a totally different way to most people and they see opportunity in every single Challenge and so they're controlling their internal world first and the external world then follows so security and certainty is an inside job let's look at number two this is a much more practical tangible principle that we use with our clients so in most cases this is kind of how it looks for businesses right when a recession comes there's like this hierarchy of needs you might have heard of maslo hierarchy of needs before this is kind of what I see as the the business needs so it's always going to be things like payroll that are the most important things to those businesses right they're thinking how do we pay our suppliers how do we pay our team that's usually going to be number one then we're going to think about sales and marketing like how do we get more sales in the door um how's our sales team performing then we're going to they're probably going to think about you know how are our clients feeling right now are they happy with the service that we're providing are our clients going to stay with us and then right at the top of the pyramid the things that are the kind of nice to have are creative services and that's how you know reality is that that's how most businesses your clients think about creative services so our job and what we need to do especially when there's a recession coming these are the first things to get cut so things usually get cut in this kind of order obviously people very quickly we've seen some big businesses recently lay off stuff but when I say payroll and expenses their main concern is can we make payroll and if they can't then they need to lay off some people right that's kind of how most businesses think about their finances and things when stuff's going wrong so how do we take creative services and move them closer to the bottom of the pyramid so that they become a need to have not just a nice to have and this diagram is the simplest way that I can explain how to do this see the problem is most creative studios are way too focused on the services that they offer and so when things start to go south when they lose clients or when they're not getting the traction they want in the market what they tend to do is just talk more about what they do they think okay if we refresh our website then hopefully it'll change how we're perceived by our clients and more people want to work with us or if we had these projects to our portfolio and we start posting about our portfolio and telling everyone all the great work we're doing then we'll attract more clients well I ran a creative studio for several years and when I first started that studio it was around 2012 and we're just kind of coming out of a recession so I was in quite a good place to to start that but even then those tactics and those strategies only work to a certain extent and in my experience they don't work at all when the recession is coming when there's a downturn and the reason is because when people are in that fear mindset or when people are really concerned about how they're going to make payroll and the sales and marketing they are focused on themselves they're not focused on what somebody else is doing so if we want to make this a need to have rather than a nice to have we have to meet them where they currently are so rather than talking about our services we want to talk about the clients or potential clients symptoms what are they experiencing right now what's actually going on in their world we have to meet them where they are so that they actually pay attention and they actually realize how what we are offering is related to the things that are keeping them up at night I'm going to use a couple of examples one recently from one of our clients who's a branding studio so firstly let's look at branding as an example and then I'll talk about a web design agency that we worked with The Branding Studio before we started working with them was very very focused on the importance of branding brand Sprints they used to talk about all of the case studies that they've seen and used and it was okay it was working to a certain extent they had a few clients here and there but really they weren't getting the level of inquiries that they wanted and so one of the things that we changed was we got really clear on what was the symptom that their idle client was experiencing and so in this case the symptom that their idle client was experiencing was that they were having performance issues in their marketing and so what that meant on a very kind of like granular level was that they were spending the same amount of money on their marketing campaigns but they weren't getting the same results that they were 12 18 months ago and so the actual symptom was spending money on marketing campaigns but not seeing the same Roi that you did 12 to 18 months ago and the more you can articulate this in your ideal client's language the more you're going to get their attention and the more they're actually going to listen to you and so this is really important one of the ways that you can establish what these symptoms are is just to have as many conversations as possible and so one of the things that I say to our clients is that Clarity comes from conversations and so the more conversations you can have the better you're going to be at articulating what they're currently experiencing and meeting them where they are so step one what is the symptom and in this case it was that they were spending money on their marketing campaigns but they weren't seeing the ROI then we've got the Assumption and again the more you can articulate this from your client's perspective the better it will be in this case the Assumption was kind of along the lines of maybe we need to change our targeting right so it was maybe we need to spend more it's just you know like advertising costs more right now or perhaps we need to change who we're targeting and so by listing their thoughts their thinking or their assumptions what it does is it really allows you to get in their world and it allows them to feel like you see them and so listing out what they might be thinking are the reasons for these symptoms is really powerful right so this is what you're experiencing this is probably why you think you're experiencing that and then the next bit this is kind of the key where we move from nice to have to need to have is it's then our job to articulate what the real problem is and so we can use case studies we can use stories right and so in this branding example the client of ours said something like you know it might work if you spend more money on Advertising but really all you're doing is reaching more people the problem in our experience of working with businesses like you is that people just aren't remembering the brand there's nothing memorable enough so you're spending money to get in front of people but everyone else is spending money to get in front of those people so they're seeing hundreds maybe thousands of adverts every single week and your brand isn't memorable enough like you aren't creating consistent messaging and consistent branding that sticks in their mind so you're spending all this money on ads but you're not actually creating a lasting impression you're not building that relationship with your audience right so we're now explaining it from our perspective but only since we've really described the symptoms and the assumptions then finally we're going to about talk about solution but we're not going to say hey branding is the solution right we're actually going to talk about what is the the how so like how do you actually do that and in this case this client had a framework that they used in order to make people's branding more memorable so things like word marks and things like taglines and things like that so they used those examples they said the solution is to create Assets in your business that are repeatable and that are catchy that people will remember you by and they actually just gave examples of that so they almost gave like their best thinking away for free like here's what you need to do here's how McDonald's do it here's how Nike do it here's how some of our clients have done it here's the solution and so this part is important because if you just say oh the solution is branding then it feels sales it was like oh yeah that's convenient here's your problem and the solution is to pay us a bunch of money to help you Rebrand and this is where most people go wrong when they're creating content is that they think that they need to hold their best ideas and their best thinking to themselves but the reason I've called this the light bulb formula is because it's about creating insights for your clients it's about creating those light bulb moments those aha moments where they go oh I hadn't thought about that in this way and this is really one of the best ways that we found to take your creative services from a nice to have to a need to have because they've gone from thinking oh these people make cool looking logos or they help people with their brand guidelines to actually they help people like us with the things that we're struggling with with this particular process that we don't understand and so it positions you as a problem solver as a partner as an exp expert rather than just as a worker as a service provider this is the kind of framework that we use with creative agencies to help them move from a nice to have to a need to have and these are the four parts and they go in that order hence why there's a little arrow going this way so you always have to meet them where they are what are the symptoms they're currently experiencing why do they think they have those symptoms why do they actually have those symptoms so now this is from your perspective and case studies and stories and it doesn't even have to be case studies of your clients it could be like I use the example of Nik or any big Brands if you're a branding agency and then how do you actually fix it so what is the things that they are doing well educate them about the importance of taglines word marks logos like what does a logo really do that's the education piece where it clicks in people's brain and they get that light bulb moment and when they have that lightball moment they then see you as the expert and there's a great quote that I always try and remember which is when you can articulate someone's problems better than they can they subconsciously give you permission to solve them and a shorter way of saying that is you move from worker to partner so let me just give you one more example of this and then I'll talk about the last key idea around cash and we will bring this whole thing together so I said I was going to use an example of a web agency and the reason I'm doing this is because we actually had this experience with one of our clients recently and so the web agency basically identified that their ideal clients were really really struggling to get traction on social media that was like one of their big pain points and the way that was showing up as a symptom is that they were posting a lot of content but they were getting very low engagement now you might think okay cool how's a web design agency going to solve that problem well the Assumption was that they needed High engagement to create clients their assumption was that they needed lots of followers really high engagement because that's what brands were doing and that's what created customers so they talked about hey you think you need a big audience you think you need really high engagement but what about if there was a way to sign high value clients with a small audience and only a low number of Engagement or touch points now all of a sudden oh you've got my attention because you've challenged some of these thinking you've challenge some of these assumptions and so what they pointed out was the problem wasn't that they didn't have a lot of Engagement like that was something they potentially could fix but what about if getting more engagement wasn't actually going to get them to the end point which was getting more clients and so what this web agency identified was that they didn't have enough call to actions in their content so for the right people they didn't know what to do next if they enjoyed the content but more importantly when they brought them to the call to action it was just taking them to their generic website and there was so much content on there they didn't know where to start and so one of the solutions that they showed was an example of a client they had worked with where they had some very specific content and for each piece of content they had a dedicated landing page that was related to that content so when somebody clicked on that content there was a link to find out more and download an asset or there was a particular thing that they wanted that client to do and so in this case they showed them how they could still sign clients with content that got low engagement from a small audience and then they were positioned as a expert and a need to have because it was solving the actual problem that their ideal clients had I hope that makes sense I know it's a little bit of a longer process but this is really the key to moving your creative services from a nice to have to a need to have so let's look at the the final point which is this idea that cash is King now this is the kind of process that I see most creative agencies going through they raise an invoice with their clients and very often even before that invoice is paid they're paying their team they're paying suppliers they're paying their taxes you know unexpected tax bills and then at the very end they're paying their founder and so often times when I speak to founders of creative agencies or creative Studios they're feeling pretty burnt out they're feeling pretty discouraged because they're taking a salary maybe from the business depending on what's left over at the end of each month maybe that salary isn't as high as they want maybe they're telling themselves when they get to a certain point then they will start taking that salary but I just want to flip some of these ideas on their head head so the first key thing that we need to understand is that you cannot pay bills with invoices so we need to take control of how cash flows into the business so it's not enough just to raise an invoice and then give clients net 30 days or net 60 days or whatever it is on your invoices we must manage our cash flow and we must have very specific payment terms that mean that we can actually have cash to pay these people before the work sometimes is even done or we get to control when that cash comes into the business so there's a few things that we do on a very practical level one of the books I love recommending people is profit first by Mike mallwitz and the reason I love this book is because it's changed not only my business but also it's changed our client businesses we've had Studios go from almost having to shut down because they had an unexpected tax bill and spending hours on the phone negotiating with the IRS or hmrc in the UK trying to get a payment plan so that they can keep their doors open because they had this unexpected tax bill you know all the way from that to having a big cash buffer knowing exactly how much they owed knowing exactly how much they were going to get paid that month and knowing exactly what their cash position was for the next 3 to 6 months one of the books that really helped them to do that one of the systems that we help people to implement is profit first now I won't go too much into that right now because that is a whole subject in itself but what I do want to talk about is these four key things which have been pivotal in getting cash into creative agency's business so the first thing is f what I call a fast payment discount now I'm not a big advocate of giving discounts unless you get something very valuable in return from that client and so the only time I really Advocate giving discounts is when we get some cash up front so for example let's say your clients have a net 30-day payment term so you raise that invoice and they pay you within 30 days you can offer them a discount if they either pay more up front or if they pay that faster so if you pay within 7 days we will give you a discount now this is really important because the faster you get paid the faster cash comes into your business a the faster you can get to work but B the more security you have you want to try and get as much cash up front as possible right so the fast payment discount is a way to really get some of that cash up front and make sure that cash is coming into the business specifically before you actually start the work so I know a lot of people take deposits and things like that that's fine but you can even offer people upfront payment discounts so if they wanted to pay for the whole project upfront you could maybe give them even more of a discount and so you get that cash and if you're being really cheeky and you want to implement this strategy all you do is you add a 10 to 15% margin on top of your existing prices when you add that so actually it just kind of evens out the second strategy or tactic really that we've used that's worked really well for our clients is expiring proposals and so this is the idea that when you send a quote or a proposal or an invoice it has a certain time period on it which needs to be paid and the second thing I've put expiring invoices here but this is actually supposed to be uh expiring proposals so this is a really strong tactic that has got a lot of cash into people's businesses and actually got a lot of project over the line so the idea of this is quite simple it's when you send a proposal to somebody rather than there just being an infinite time when they can move forward you actually say that this proposal is valid for a certain amount of days so this proposal's pricing and features and everything expires in a certain time period And then after that it will be requoted and usually I will suggest that those prices will increase so this is the price for now and then in 7 104 however many days that you want to create that time period for you then create a different proposal at a new price this is actually worked very well for a lot of our clients the third thing is payment Gateway so things like stripe go cardless now not every client will be happy to do this but the more established that you become and the better relationship you have with your clients the easier this is and so rather than sending an invoice and then waiting to get paid so you kind of don't really have control it's actually better to use some kind of payment processor where yes they might take some fees but you have control of when that payment is taken and so that gets taken automatically from their bank account rather than you having to chase invoices and again this has been a bit of a a game Cher for our clients and then the final one is just really clear payment term so when you start working with a client just make sure that they're really clear on when those payment terms are and what happens if they miss that payment are there additional fees does the project get put on pause I know as creative sometimes we don't want to rock the boat we don't want to challenge our clients too much because we're just grateful to have that project but this is where I see most creative agencies become unstuck having really clear payment terms is important and one of the things that I encourage our clients to do is to get paid based on deliverables not based on a approval I've seen it so many times that clients are waiting to get paid or sorry studios are waiting to get paid by their clients because the client hasn't signed off on something or they have these amends and the can's just getting kicked down the road so one of the things that we change is we say to clients the payment is made when the assets are delivered and you have X amount of time or x amount of revisions or amends or whatever the next part and so the idea is that you get paid when that work is delivered and then the client has a specific amount of time if they want revisions or amends but you've been paid and your team have been paid upfront based on the delivery of what was promised not based on the approval from the client and again these small tweaks can make a huge difference to cash flow so when it comes to having more cash in the bank this really is the four things that have the most impact for our clients so just to summarize these points that we talked through the first is that security is an inside job it's all about controlling your internal State and understanding how you're interpreting the external events that happen to you the second thing is that we want to use the light bulb formula to take our creative services from a nice to have to a need to have and the way that we do that is by meeting our prospective clients where they are showing that we really understand what they're struggling with what their challenges are what their assumptions are and then really uncovering the key problem and presenting the solution giving all of our best ideas away for free and then finally we want to make sure that there's enough cash in the bank we want to create a cash buffer ideally and we want to use a system such as profit first to ensure that we get paid and we're not waiting on our clients to pay us and so here is a kind of agency proof routine that we encourage our clients to follow this is something that creative agencies see a lot of benefit on if they do consistently so I've put priming here priming is a word that I actually took from Tony Robbins this is the idea that every day we are controlling our internal State we are practicing controlling our internal State and that could be things like breath work it could be visualizations Imagining the kind of business that we want to have but it all starts with how we think it all starts with our internal State and so having some kind of routine preferably daily that really primes you for the day ahead is really really important the second thing is consistent content creation or messaging with your ideal clients so whether that's putting out a post or whether that's as simple as reaching out to somebody on LinkedIn and saying hey I've been having some conversations and I've noticed that these kind of businesses are struggling with these kind of things does that resonate with you at all or by the way I'm showing creative business owners how to generate leads even if they have a small follower base and low engagement on their social media would you be interested in hearing more so it's about consistently putting those messages out there whether it's one: one whether it's content whether it's through Partnerships and ensuring that what you're talking about is not just your services it's the symptoms that your ideal clients are currently experiencing and then finally having some kind of system like a cash reconciliation System payment processing for us I sit down with my financial director every Friday we run through our cash position we want run through what's in what pots because we're using the profit first system and we're really looking at this on a weekly sometimes even daily basis to know exactly where we are what our cash position is what our Runway is how much tax we currently owe do we have enough money in the account for that tax what's coming up in terms of expenses and this is just something that we get used to looking at on a weekly basis so that there's no nasty surprises I hope you found these principles and these strategies useful if you did then please don't forget to subscribe to this awesome Channel and if you are looking for some help growing your creative Studio and thriving in the next recession there's a link below to find out a little bit more about how we could work together my name is Matt essome and I hope you enjoyed this video speak soon