“May you live in interesting times,” goes the Chinese curse.
I’ve lived through two previous recessions as an entrepreneur and what we are experiencing right now is not a recession—it is an economic crisis. The recession is what comes next after things stabilize. I’ve written previously about Selling Into a Recession, and while much of the guidance applies, some of it does not. For many businesses today any dollar is a good dollar. Step one is survival. After that, step two is to adjust to the new midterm reality. Step three is to prepare for the new long term reality. I’ll walk you through each step below but first let’s talk about you.
Am I Going to Be Okay?
This is the question on many minds these days. The answer is No, you are not going to be okay. You are going to be spectacular.
Moments like this are why you make the big bucks. This is entrepreneurship at its ugly, beautiful best. The decisions are all yours. You cannot control the world around you but you can control how you respond, how you lead, how you lift others and—if your business survives—you may well be facing the opportunity of a lifetime as the entire world goes on sale. You became an entrepreneur in part because you wanted the freedom to call your own shots, to answer to no one. Well, it’s all you now, baby, and if you’re honest with yourself you wouldn’t have it any other way. Who else would you trust to lead you through this moment? Exactly.
So let’s just agree that the goal is not to be okay, the goal is to be a spectacular leader, entrepreneur and human being. Beyond that, let the chips fall where they may. Your job is to shine. On the other side of this people are going to thank you for modeling leadership at a time when it was most needed. And they will thank you no matter the outcome. The physiology of leadership is calm presence. Say those words to yourself every morning and throughout the day as necessary. Calm Presence. That’s you. Own it.
Okay, let’s get through this in three steps.
Step One: Survival
First let me address the few of you who are reading this thinking that I am overreacting. This crisis is hitting creative and marketing firms differently. Some are seeing only a small blip in client spend or minor inconvenience in working conditions. Some are seeing deep but random cuts. But many firms are seeing the majority of their clients cease all spending. There are thousands of firms out there that will not survive the next few months.
Businesses tend to die from a combination of stress and shock. The stress is an ongoing pervasive issue like poor positioning, poor management, an owner with health or marital problems—anything that sees the firm run suboptimally for an extended period of time. This current crisis is the shock: a quick and brutal punch to the gut at a time when the body cannot withstand it.
Your first goal is to survive the shock.
Survival starts with running different scenarios of reduced revenue and cutting costs to match the scenario. What will you do if revenue goes to X? What about .5X? If you haven’t already, make your plan for what you will do at each scenario or trigger point. When the time comes, just follow the plan. If you don’t make these decisions in advance of the trigger you will find it emotionally taxing, even debilitating to have to decide when to act. Deciding now lets you get through all the emotions quickly, in advance, so you can act when you need to.
Last week David C. Baker and I recorded a 2Bobs podcast episode on when and how to right-size your firm. (It’s due to drop next Wednesday but we’re looking at releasing it sooner than that if we can.) David is an excellent source of management guidance during these times. Follow him on Twitter and sign up to receive his emails. I’ll deal with the sales/revenue issues here.
Securing Revenue in the Short Term
Talk to Your Clients
You need to be talking to every one of your clients. How are they doing? How can you help? Focus on the relationship ahead of the revenue. What can you do for them? Plus, if bad news is coming you want as much visibility into it as possible.
Do you have a client that is about to cut spending even though they really should not? Can you help by extending them more favourable payment terms? Good clients sometimes need help and terms are an underused tool. Helping to smooth out their expenses might make all the difference and the gesture itself is an investment in the relationship.
Offer Discounts for Advance Payment
Do you have new client projects that you would usually bill over time where it makes sense to offer a discount for that client to pay up front? Some clients might be as concerned about cashflow as you are but others are unaffected or prepared for moments like this with stockpiles of cash. They have that cash for reasons like this: everything is on sale for those with cash. What deals can you offer such clients to get you through step one: survival?
Get Cheap Credit Now
Many governments have responded by cutting interest rates to near zero and making statements of support for small businesses. Consider getting access to as much cheap credit as you can. How you use that credit I will leave to you and your financial advisors, but when things stabilize for you much of the world may still be on sale and you may be emboldened to invest.
Step Two: Adjust to the New Midterm Reality
It’s looking like global travel is going to be significantly impaired for 2-12 months. Other constraints (working from home, few public gatherings, etc.) will also remain in place over this timeframe. These impediments may mean the services you sold are no longer going to be valued by the markets you served. You may need to respond to this temporarily adjusted new reality.
Explore the Adjacencies
Consider pivoting either the services you offer or the markets you serve. It doesn’t necessarily mean abandoning either forever—they may come back—just understand that after the first few weeks of this crisis there will be a new adjusted reality for a few months (not years but perhaps up to a year) and you may need to shape your business to fit it. Start looking for adjacencies in both services and markets where opportunity may be less impaired. It’s easier to offer new services to existing clients than it is to go find new clients for existing services, so your primary focus should be on how the needs of your current clients are changing.
Rethink Your Value and Pricing
Many firms get locked into delivering their services a certain way or at a certain standard, even when many of their clients would prefer to accept less and save some money. Now is a good time to look at your client base and ask if you are bundling into your service offering things that drive the cost up but the client does not value.
Ask your clients what they value most about what you do for them and what they value least. Right-size the service delivery more in line with what the client wants to pay for and less driven by any vain idea of “this is how we always do things here.”
Be Open to a New Business Model
It’s possible you are running a business that would be better served by a different business model entirely. Be open to no longer being an “agency” if you can deliver more value as a consulting, teaching, training, software or product company. I’ve seen lots of good business ideas crushed as their owners tried to squeeze them into a fee-for-service model. By looking for adjacencies and adjusting to what the client values most you may find there’s a better way to deliver. Be open to it.
Once you’re stabilized at this new equilibrium start preparing for the long term.
Step Three: Adjust to the New Long Term Reality
Nobody knows what the new long term reality will be after we are through this but my guess is it will look a lot like the old reality. We are a social species. When we feel it’s okay to travel again we will travel with a vengeance. We will once again celebrate opportunities to convene in groups. We will relish going to work in an office and having disintermediated human interaction. We will shake hands again, hug and kiss. And we will be prepared for the next epidemic, knowing how to shut it down before it gets to a global pandemic.
New Winners and Losers
Here’s what will be different. The competitive landscape will have changed. Some of the old winners will be losers and new winners will come out of nowhere. Any person or business who went into this crisis with lots of cash will be significantly better off than they were before. What do you want to buy? Businesses? Talent? Competitors? Buildings? It is all on sale or about to go on sale. If you don’t have cash but you do secure cheap credit and you have the stomach for it you can still make calculated investments at the bottom.
If you don’t have cash and are averse to borrowing to invest, consider looking for opportunities to take equity in the right client. In flush times most clients would prefer to pay in cash, but in trying times they might prefer equity. You might also take equity in a competitor or partner firm in exchange for helping them ride out the rough times.
Cut Expenses, Not Investments
When you cut costs in step one did you save the expensive car or club membership and sacrifice an expensive but high calibre team member? Did you impair your ability to grow in the future? Did you alienate clients or talent through desperate, mercenary or underhanded tactics? Your place in the new reality is likely to be heavily influenced by how you handled the transition of the first two steps. Maintain your integrity and cut investments in the future last because you do not want to survive the crisis only to find yourself effectively starting over again. You want to come rocketing out of this when the economy turns good.
Decide to Win
There is always opportunity in volatility. Make it a goal to come out of this crisis and recession and into the new long term reality positioned to win. That goal in itself will shift your mindset from defense to offense, from negative to positive. Make yourself a promise: you will be better off after this. Look further ahead than the rest of the market and make a bet on your prediction of that future. In the words of Goethe, “Boldness has genius, power and magic in it.”
How Things Have Changed at Win Without Pitching
While we have cancelled three public workshops we had scheduled between April and October, 2020 and we won’t be travelling to deliver onsite training until it is responsible to do so, we continue to deliver all of our training curriculum (positioning, lead gen, selling, pricing & negotiating) via our remote training programs in private and group formats. If you want to know more about any of these services, or you have any questions for me, feel free to reach out.
Best of luck in the interesting times ahead.