Minnows pack a punch

Chocolate consumption is up, customers pack the aisles of discount supermarkets Aldi and Lidl, and Domino’s Pizza has reported a huge jump in sales. Not every business, it seems, is feeling the downside of the credit crunch.

And in the design world, while consultancies such as Dream Design & Architecture and product design group Pearson Matthews hit the headlines as they teeter on the brink of bankruptcy, having seen their clients go bust, other groups are reporting a growth in new business and rising profits.

For smaller consultancies with low overheads and no fear of diversification, the credit crunch is presenting a swathe of opportunities as major clients, concerned about the bottom line, start to commission away from the bigger groups.

‘We’re picking up jobs that might have gone to higher places than before,’ says John McFaul, founder of Chichester- and Bristol-based McFaul. The group employs eight people and recently won the contract to design a new website for Nokia Interactive – exactly the sort of job that might traditionally have gone to a big advertising agency.

McFaul says, ‘A lot of this is down to money – obviously, we’re cheaper than an ad agency. But we’ve been working around ad agencies for a long time, so we know how they operate, and we decided it was time to bite the bullet and take on that sort of work ourselves.’

McFaul has a tradition of diversification, having started out as an illustration agency and branched out from there into graphic design, branding and motion graphics. Such willingness to try new things seems to be helping some consultancies survive in this turbulent economic climate.

Glasgow-based graphic design consultancy Traffic, which traditionally focused on print work and employs four designers, is another group that has reaped the benefits of diversification.

Traffic creative director Scott Witham says, ‘We’re seeing a jump in non-printed literature and a reduction in print runs. One of our biggest clients dropped printed literature entirely to go with PDFs on environmentally produced memory sticks.’

He adds, ‘For us, design fees are now outweighing print fees. Whereas previously the split was probably 75 per cent in favour of print fees, now it’s 75 per cent in favourof design fees.

‘The jobs are cheaper, but we’re getting more of them. Our turnover has stayed the same from 2007 to 2008 – but there is less going out of the door, which means our overheads are lower.’

Traffic, like McFaul, has managed to take advantage of clients commissioning in a more creative way. Witham says, ‘The shift in emphasis means we have to think smarter and come up with the same goods cheaper. There is the same amount of work out there for those who can adapt.’

Leicester-based consultancy Stocks Taylor Benson is one group that is openly taking advantage of the credit crunch – sending out a promotional mailer asking potential clients ‘Can you afford London agencies?’.

STB managing director Joe Bakowski says, ‘We want to tell clients they can have design that’s just as good, without the London overheads.’

Bakowski says STB has adopted this strategy as clients become more careful about their spending. He adds, ‘Every single design consultancy is seeing clients thinking a lot more before jumping. There has been a definite shift towards value in the past six months or so.’

Franco Bonadio, who is chief executive of Identica, which is part of the global network Cossette Communication Group and has offices in London and Moscow, agrees. He says the larger groups are having to rein in costs as clients begin to tighten their belts.

He says, ‘Certainly, clients are more worried about fees – what premium brand isn’t cutting costs? We have had to look really carefully and ensure we are as commercial as we can be – we are normally a little more value-added.’

But he says that more established groups have three clear advantages over smaller consultancies: ‘confidence, reassurance, experience’. He adds, ‘These are the things you have to leverage as a bigger group. Bigger groups can also turn up the volume in terms of resources.’

But is this what clients are looking for in the current market? Scot Bendall, founder of London-based graphics group La Boca, which employs four full-time staff, draws a clear analogy between smaller design consultancies and budget supermarkets that are profiting from the credit crunch.

He says, ‘I think the smaller boutique consultancies are a bit like the Aldis of the design world: fewer staff, harder to find, not as wide a selection and slightly grubbier premises in undesirable areas. But, in general, they are excellent value for money.

‘I think clients are becoming much less embarrassed about being seen in a smaller consultancy and are realising that certain products are actually a lot tastier than the more expensive alternatives.’

Top tips for small businesses

Financial flexibility – don’t keep all your eggs in one basket

Focus on your USPs – work hard to get lucky

Plan ahead – failing to plan is planning to fail

Manage your costs – do something different

Seek professional advice – don’t be afraid to ask for help

Source: Federation of Small Businesses and ASC Finance for Business