The unavoidable slowdown.
Inevitably, your business will experience slow seasons. Between deadlines, downturns and vacations, every industry has its ups and down.
Therefore, it’s important to think ahead and make sure your creative firm has the slow seasons covered.
HERE IT COMES
Kids are going back to school, so we all know we are entering the last 90 work days left in the year. For me, this is always my reminder to prepare for the slow season that typically follows the Christmas holiday. If you make the decision to manage that coming slow season right now, there is enough time to influence the future and therefore avoid panic when it hits.
The trick to being prepared isn’t really a trick, it’s simply being proactive. You can make a simple projection today looking ahead at the next 4 months, factoring in your current burn rate and projected revenue. When you create that projection, you will begin to know what your expected cash margin needs to be. From there, some basic financial modeling should motivate you to figure out smart and productive changes that can – or should – be made to your expenses, in order to maximize your return.
TRICK #1: DON’T SIMPLY PROJECT MORE REVENUE
Yes, there are some sales strategies you can implement to increase revenue like marketing automation and reinforcing good sales pipeline habits (if you aren’t already practicing these techniques, check out our blogs and attend one of our upcoming events to learn more.)
That said, many owners depend strictly on increased sales (which may or may not materialize) to solve their cash issues when there are other considerations that need to be made if you are going to remain healthy and viable as a business. Take a look at what your revenue is this year and begin to make a plan if you were to continue to only earn your monthly average.
To many companies miss the opportunity to make themselves strong by not making a realistic plan.
TRICK #2: Get into a cash position
By holding on to cash at year end. You can develop your own cash reserves to cover overhead expenses related to running the business while keeping disruptions to your company culture to a minimum. Prepare now to set aside cash into a separate account that will be reserved for the slow season. Put a portion of your current earnings into that account with the mindset that “it’s already spent”.
I have had clients win accounts after to new year they didn’t think was possible, but their cash position made their company health and pitch ability stronger than their competition. And a new client in January is one that keeps coming back all year long.
In addition to cash receipts, your accounts receivable management at the end of year can help with your cash on hand as well as provide tax benefits if coordinated with your accountant and end of year filing.
TRICK #3: Secure Retainer work
Many firms in our industry will claim reflexively, “Our clients won’t let us do that!” but you should make it your goal to seek out opportunities for monthly retainer engagements.
It is the responsibility of the business owner to determine the solution, not the client.
– Tim Thompson
Determine what benefits – and tradeoffs – retainer work will mean to your clients and approach them with your carefully measured yet clever solutions.
TRICK #4: Review your employees
Even with cash reserves, your best protection for future revenue is to remove unnecessary expenses. And we all know that employees are by far the most costly expense for firms in our industry. Therefore, we advise our clients to do a employee review.
Your review does not need to direct or in-person, you and your leadership can review the employees and provide honest assessment. When doing the review, take into account the current position, responsibilities, costs and expected multiple of return. Write out your review for your own records and be honest in your assessment. And when the time comes to meet with the employee, you can refer to your records.
Employee reviews are one of the most important routines of the business owner. Don’t neglect it.
- Don’t make the decision too late
- Consider year-end bonuses
- Consider appropriate layoffs and cash for severances
- Keep the A+ employees but not the poor performers: your team is the heart of your business’ health
Trick #5: Don’t Lie to yourself
A realistic look at your situation can help you create a plan and solve problems before they get started.
- Run your Business Reports and keep track on what was expected and your current situation.
- Adjust your goals and projections to line up with the most probable coming reality.
- Remember that not all good people are good employees.
- You must plan for your future with every dollar you spend. If you don’t take care of tomorrow, no one else will.