It’s nearly a month since the EU referendum result. One month of extreme political and economic change. Many consultancy owners are concerned about how revenues and profitability may be impacted; how successfully their businesses may continue to trade and perform.
It’s worth remembering the design sector has been growing at well above the rate of the UK economy, and the quality and effectiveness of our offer is world-renowned. If we pick between the worry and uncertainty, what opportunities and positives can our industry take forwards? How can we pro-actively face these challenging times?
“Here’s what we always advise in times of turbulence,” suggests Shan Preddy of PREDDY&CO and author of How to Run a Successful Design Business, “One: Turn up the heat immediately on the satisfaction, retention and development of current and recent clients. They are the easiest, quickest and best source of future business. Two: Check over your vision, values, goals, business strategy, finances, product quality and marketing programmes. Perfect? If not, work on them. Three: Invest heavily in your team members by giving them expert internal and external coaching and training. With the right knowledge, skills and capabilities they will perform at their best and support you fully.” And Preddy adds: “Doing these three things now will protect you from bad, and prepare you for good times ahead, whatever the eventual impact of the referendum result.”
Jack O’Hern of accountancy firm Wright Vigar supports this message when he says: “If your market is going to be affected, then appropriate contingency planning ahead of falling sales or rising costs is the duty of a responsible management team, but avoid talking oneself into acting too quickly.”
Reasons to be cheerful
“Life must go on,” says business advisor Ian Cochrane, Chairman of Ticegroup. “There will be opportunities for positive thinking design consultancies to help their clients to grow and thrive in this new trading environment.” Measures are being put in place to stave off recession and boost the economy, and Cochrane flags that there are at least three reasons to be cheerful:
1. Borrowing should be easier moving forward and interest rates are likely to remain low for the foreseeable future. This will enable agencies to invest in staff, learning and technology to accelerate growth.
2. Corporation tax may go down which will not only attract inward investment to the UK but automatically increase post tax earnings and the valuation of design businesses.
3. The weaker sterling exchange rate will boost overseas sales potential.
“Agencies have a real opportunity to build and prepare their businesses ready for a possible trade sale in 3-5 years’ time,” Cochrane says.
On consultancies’ financial concerns, accountant Green and Purple’s managing director, Peter Carter also has some good news. Design businesses which are service providers to the EU with few overhead costs in those markets, are in fact beautifully placed – they are now more competitive than a supplier in their client’s home country.
“Any piece of work you quote in GBP now is worth the same to you as it was, but costs your clients less, because of the pound’s weakness, which will probably recover slowly but not for quite some time. If you already have any foreign-denominated retainers: happy days, they’re worth more to you than they were last month,” says Carter.
Peter also flags that during the last few downturns we have seen a gradual shift where advertising and marketing spend is being seen as a recovery tool, rather than a discretionary nice-to-have, so consultancies aren’t getting “switched off” in a downturn – at least no more than other essentials like people and property costs. “Hold your nerve when quoting and tendering,” he advises, “you shouldn’t need to drop your prices to undercut ‘local’ competitors, and the UK has long had the edge in terms of sharp and effective design.”
The long game
“There is a long way to go until we are clear again on our working relationship with our European friends,” says design industry expert Kate Blandford of Kate Blandford Consulting. “Stay calm, keep up those friendships, continue to do your extraordinary work, building healthy commercial futures for your clients’ brands.”
It’s a sentiment echoed by business development consultant, Catherine Allison of Master the Art: “Surely now, more than ever, agency CEOs need to project positivity, ensure agency staff remain confident and engaged, invest in their personal development and train them to represent the agency in the best possible way? Only then will they be best placed to convert those new business opportunities that do come their way.”
So in these extraordinary days, months and years ahead, this will be the time to really master your messaging to your clients on the value you can bring to their business; the ROI and commercial growth they can expect to see from investing in design. As the DBA’s chief executive Deborah Dawton says: “UK design is world leading. Our industry’s proven ability to drive both business and economic growth has not changed, nor has the quality and effectiveness of our offer. UK design is a potent business asset and a sound commercial investment.”
It is our time to design a better future for business, government and society. The opportunity is there.