The current Covid19 pandemic is like nothing we have witnessed before. Besides the humanitarian costs, it seems fairly certain that the rest of the year will see a marked economic slump, if not a recession.
What should creative businesses be doing to survive tough times? In the very first THC Meetup, Meeta Malhotra shared her learnings from steering Ray+Keshavan, a design and branding studio where she was a partner, through the recession of 2009.
The hour long webinar was attended by creative businesses of all sizes – from industry leading ones to smaller firms and freelancers. There were more questions than could be answered in the 1.45 hours and particularly gratifying was the spontaneous interaction over the chat channel between members of the audience.
As someone put it, ‘it was a safe space to chat and a relief to know that other members of the community were facing the same challenges’.
Here are some takeaways, if you didn’t make it to the session.
Start With The Money
When things look as uncertain as they do right now, it is best to prepare for the worst. If things turn out better than your worst case scenario, you can always find a use for the extra cash.
1. Analyse your receivables
Most creative service businesses rely largely on receivables for cash flow. It is too early in the game to start deploying reserves. Given that several companies have already invoked the force majeure clause to suspend payments, assume that you are not going to collect 100% of what is owed to you, or at the very least it may be delayed. Have frank conversations with clients to understand what you can collect
2. Create a financial model
Based on the quality of your receivables, understand the reserves you need for 6-9 months of runway. Arrive at the costs that will help this model to work
3. Cut costs to make your model work
There is no way around this. Do this all in the most transparent, collaborative manner, after discussions with your team. Make them understand that you are all in this together and these measures are temporary.
Call Your Clients
The most important thing you can do right now is reach out to all your existing clients proactively. This is not a ‘sales’ call. Just reconnect and check how they are doing. Most creative businesses have a ‘project to project’ mindset. This is the time to shrug that off.
Prepare a Business Development Strategy
Most creative businesses have a ‘fast or feast’ strategy. They do a little business development, projects come in and then the entire team is so busy with project delivery that all marketing efforts cease – until the next crunch. Times of crisis need a much more thought-through, sustained business development strategy.
Ask Yourself Uncomfortable Questions
When times are uncertain, clients typically want partners that offer either ‘safe harbour’ or ‘innovation’. What do you stand for, as a creative firm? What have you changed about your offering in the last few years? Do your communication interfaces accurately reflect your thinking and capabilities?
Put your own perceptions aside and get honest opinions from clients and peers. As Jeff Bezos famously said, ‘Your brand is what people say about you when you are not in the room.’
One of the attendees asked this thought-provoking question : “What will a post-Covid world look like for the creative industry?”
Meeta’s answer: “I honestly don’t know but I am certain that the post-Covid world will not be complacent. It will be a world that will understand that our problems cannot be solved only with scale or force or capital. More than ever before, the post Covid world will need creators and creative solutions. Position yourself as someone who can help businesses through tumultuous times”