Forewarned is forearmed

A number of sources agree that we could be heading for world recession by the end of the millennium. Tim Rich offers a few words of advice on how best to prepare.

The Millennium Investment Corporation predicts a global recession, starting late 1999. The corporation, a US investment firm that analyses opportunities created by the century change on 1 January 2000 (less than two years away and ticking), explained its views to business leaders and government representatives at a seminar in Chicago last December. The failure to move systems into place could cause widespread disruption and act as a catalyst for world recession.

Before you start fiddling with the clock on your Macintosh, I should say this piece is neither about the date change nor the millennium. It is about the pressing need for British design companies to prepare for recession. It is, of course, in the interest of organisations such as The Millennium Investment Corporation to terrify companies with tales of impending economic Armageddon – advice is cheap if your very survival appears to be on the line. But they are not alone in identifying choppy waters ahead. Conversations I’ve had with three design companies – a literature consultancy, a branding specialist and a large corporate identity consultancy – have revealed that they are all being urged by financial advisors to ready themselves for tighter times. ETA: about 20 months. The advisors – including a respected international accountancy firm – did not focus on particular triggers, such as century date change or the Far East; they are following a more general most likely scenario prediction based on economic forecasting and experience.

Is this scaremongering or rock solid advice? Like asking an American if you can borrow his rubber, merely mentioning the R-word in the design business can cause consternation and offence. One designer I attempted to quiz on the subject rolled his eyes and asked why I couldn’t be happy with things as they were. For me, economics is a foreign land full of wiry-haired Tefal people uttering alien formulae, so I won’t venture an opinion on the likelihood of the R-word showing its grisly face before 2000. I am interested, however, in the manner in which design businesses react to the possibility of its impending return. The three I mentioned – who insist on anonymity – are taking it very seriously indeed. The directors of two of the companies were working at one of the highest profile casualties of the last downturn and are sensitive to the traumas such collapse can bring. The directors of the third are businessmen first and foremost; they view their alertness to the situation with a certain starched-cuff pride.

But exactly how do you prepare a design business for recession? Obviously, there are different criteria for different companies. Basic responses might include introducing greater flexibility (including more freelances) through to strict financial control systems (like getting those bastard clients to pay on time). Others will need to look hard at the geographical and disciplinary nature of their client base, and the value of international offices. One factor often forgotten is positioning. When the going gets tough many designers forget the principles of branding and strategy they’ve been proclaiming with such gusto. Building a strong brand can’t be done overnight, as the design community never tires of telling the world. Recession often means increased use of advertising (page rates are lower), rampant free-pitching, more consultancies prepared to work for cornflakes and established players maximising their cash reserves: your brand will be put to the test.

Proving you can deliver real benefits will become more important. Even today, potential clients want more statistical evidence and effectiveness stories. Look at the growing influence of The Design Effectiveness Awards. It is now able to attract coverage in the national, financial and business press because the design industry has – at last – found a way to communicate the value of its activities to the business community. This impacts on the most important R-word factor – developing the relationship you have with existing clients. Hungry competitors will be prepared to tempt them with cheaper, faster or different approaches. It’s vital that they understand why you’re so good for them – a value that can only be backed up by proof of effectiveness, not a symphony of chest-beating and an ornate luncheon.

In truth, preparing for recession means doing everything you should do as a design business in the good times (but never quite get round to). Strict systems, flexible working practices, considered investments, a clearly defined company brand and a bond with every good client – five fundamentals that should be in place whatever the state of the economy.

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