Taking care of business

You can’t beat the credit crunch, but you can prepare for it by adhering to sensible business practices, says
Tom Foulkes

Speaking to a very well-read friend of mine, I learned of a lovely little word – aporia.

Meaning ‘to be in two minds about where to start, or what to say’. Timely that I should hear of this word as I wrote this column, and when the world is dealing with the current economic crisis.

It still isn’t clear how painful the market conditions are going to be, or how long they might last. And it doesn’t matter who you ask – be it one of the many financial experts driving black cabs around the West End, or one of the many market analysts interviewed on breakfast TV each morning. Every opinion is different.

One thing that is consistent is the gloomy outlook. I haven’t heard anyone yet say it might be over by Christmas, or that it’s not as bad as it looks.

I was asked recently how consultancies can beat the credit crunch. My answer is that you can’t. Trying to beat it will be futile. Unless you have the Government’s wealth, all you can do is prepare for it. But the question remains, what are we preparing for? That leaves you back in the black cab with the East Ender opining his views on the Scandinavian bail-out of the 1990s and what we can learn from the Great Depression of 1929.

Well then, where do I start, and what do I say? I have concluded that all we can rely on is good business.

So, I would suggest you focus on three main things.

First, communication. Most things in life can be improved through better and more effective communication – indeed, the design industry is built on that premise.

So, is it a case of ‘the cobbler’s children go the worst shod’? Does the relationship between client and consultancy often suffer from such poor communication? Whatever the reason for it, your clients are real human beings, so treat them as such. Explain that you are looking for ways to prepare for more difficult times.

Now is the time to speak to your clients and emphasise the importance of them to your business – always a nice sentiment for your client to hear, but this is no time for mere sycophancy. No. This time you need to emphasise how your business operates and the responsibility your clients have. Explain the position your business is in financially. If it’s good, explain that you want to keep it that way and see if there are ways to streamline current processes for their (and your) benefit – and in doing so, emphasise your payment terms. If it’s not so good, explain this to your clients – it won’t be easy, but it’ll be a lot easier than your clients having to negotiate with the liquidators.

Show you have the situation under control and a plan is in place, and show your clients where they fit in this plan. Organise regular meetings – I would suggest monthly meetings and a review of the work in progress. Use these to build a stronger relationship with your clients.

Second, administration. It’s unglamorous, but focus on it.

Ensure that the whole expense/purchase order/invoice dynamic is in order. Keep an eye on your payment terms, and make sure the balance between your debtors and creditors doesn’t put your company in jeopardy.

Once this is done, take it to your bank and do a show and tell. Banks are probably the institutions whose outlooks will change the most – they will be more risk-averse and much more aggressive in how they protect their interests. A bank manager who understands and has confidence in your business will be an absolutely priceless asset in the coming months or years. Agree how often they would like to see you and if they are ambivalent, insist on quarterly catch-ups.

And third, the work. Now is the time, more than ever, to invest all of your efforts in creating the best work you ever have. Brilliant, effective design that fulfils, and even excels, clients’ briefs and expectations will ensure that your value to you them will increase. In turn, this might lead to new briefs, and certainly a more secure income stream. Over the past couple of weeks, I’ve spoken to many friends and colleagues at client companies all over the UK. The story is consistent: marketing budgets are being scrutinised – not necessarily reduced, but scrutinised. So do all you can to convince your clients that what you do should be seen as an investment in, not a cost to, their businesses.

The good news is that, having been asked to judge this year’s Design Week Awards and the recent DBA Design Effectiveness Awards, I know the industry is raising the bar ever higher. From what I have seen, I am confident the industry will show that, when times are tough, continued investment by clients in design is crucial to everyone’s future.

Areas To Focus On

Communication – make sure your clients know your financial position and that things are under control. Tell them how important they are to your business

Administration – stay on top of expenses and invoices. Adhere to payment terms and keep your bank informed at every step of the way

Work – create the best work that you can. It could lead to new briefs, and clients will continue to see you as an investment rather than a cost


Tom Foulkes is head of development marketing, retail, at Land Securities

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Comments
  • nicola November 30, -0001 at 12:00 am

    Just a quick note on words.
    I don’t see how a bank can be ‘ambivalent’ why would they feel mixed emotions about your business. I think the word you were looking for here is indifferent.

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