The first half of 2009 is almost over. You are behind on your numbers with only 6 months to make them up. If you are going to have any chance of making them you are going to need to act decisively now.
Depending on how far you are behind or should I rather say, how optimistic your original forecast was it may already be too late. However, if you act decisively now you still have the opportunity to deliver the best year possible given the current circumstances.
My suggestion is that you adopt a strategy of both resource optimization and revenue growth. Neither one on their own is likely to help save you now.
Reduce variable costs. When it comes to looking for cost savings you can only do so much with your variable costs. Yes it makes sense to reduce travel costs, limit conference attendance etc. and every penny counts. Go ahead and do what you can but just know it will not be the silver bullet to solve the crisis.
Review fixed costs/compensation. To make a significant difference in fixed cost overheads usually means having to cut at the most senior level in order to achieve any significant savings. Removing 4 junior positions usually just does not cut it. And, in most instances, they are probably the individuals who are most billable and actually getting the work out the door. Consider what you need to have versus what is nice to have. Can you outsource it cheaper when needed, or is it core to the agency? Look at each individual’s billable rate and consider the balance between billable and un-billable. Be honest with yourself.
Look at both agency profitability and separate client profitability. In many instances I am sure that you will find that you have a client or two that you make no money on. They suck up resources and in some instances decimate the morale within the team that services them. What would it look like without them? I personally have had a couple of instances where we made more money without them. This is the time for those tough decisions.
Optimize agency resource allocation. In line with looking at client profitability reassess your internal process and resource allocation. Can you afford three creative teams tackling one assignment? When you brief a writer do you give them a specific number of hours to do the job in? Meetings burn up an incredible amount of time, are you using them effectively? Are you letting the urgent overwhelm the important? This is a time to optimize in every area of the agency.
Existing client focus. In this situation existing clients are in essence your “Holy Grail”. You cannot afford to lose them or have a reduction in revenue, so make sure you are focused on both keeping them and growing their account. Proactivity, agility and focus are what are required. New revenue from them is easier to get and less expensive to develop.
Strategic new business prospecting. If by June you still do not have a robust new business prospect pipeline you are unlikely to benefit from the revenue of any new business wins this year. It takes at least 6 months to fill the pipeline and most pitches take about three months to complete all the stages. Wins are likely to come late in the year.
Also keep in mind the effect of new business Strain! Taking too aggressive a new business approach in this year will further exacerbate your current year’s numbers. It may help set up 2010 for you; the question is if you do not make this year’s numbers will you survive to 2010? The irony is that it is in this type of situation that I see many agencies panic and chase any new business that comes through the door. Avoid the temptation!
Be selective, make sure you have a good chance of winning, pitch against a budget, allocate the team to win not the one available, and pitch to win. That requires that you pitch less to win more.