Managing an agency through the COVID-19 crisis - PRCA taskforce

The PRCA has launched an international taskforce of 50+ volunteers to help support members managing their businesses during the crisis.

Advisors will provide impartial and practical advice during 30-minute confidential consultations. If you need help please use this form and the team at the PRCA will connect you with someone with appropriate skills.

This is the fourth time that I’ve experienced a downturn running an agency. The dot com crash, 911 and the financial crash in 2008 all left scars in my career. I’ve been fortunate to be coached by some brilliant people along the way. Here’s what I’ve learnt.

Plan and act now

We’re starting to understand the nature and shape of the COVID-19 crisis. It’s likely the world will be locked down through the summer. Thereafter there’ll be a slow return to work, followed by a long climb out of recession. Tear up your 2020 financial forecast and plan for these market conditions.

Stick close to clients

Support clients as their needs change as they trade through the crisis. The relationships you forge will last a lifetime. If you work in bricks and mortar retail, hospitality, travel or tourism that likely means scaling back activity and planning for post-lockdown. Food delivery, restaurants and wholesale business are retooling their supply chain and shifting online. The public sector has shifted over to public health and information.

Cashflow

Businesses fail because they run out of cash. It’s why the balance sheet is such an important instrument in assessing the health of a business. You should be running a daily pipeline and cashflow forecast. Have candid conversations with your bank, clients and suppliers. Please be true to your values and treat people kindly and honestly. Everyone is facing the same challenges.

Discretionary and variable costs

Scrutinise all discretionary and variable costs. That doesn’t mean necessarily cutting costs, but it does mean nailing them down. You can’t afford any surprises to hit your cashflow. Obvious costs to cut during the COVID-19 crisis are entertainment, any cost related to running an office and third party services that can be delivered in-house.

Staff costs

Agencies aren’t complicated businesses apart from one factor: your intellectual property logs on in the morning and logs off at the end of every day. In a good market staff costs should run at 50 to 60% of fee income; overhead is 15 to 25%; and the balance is profit.

If you need to reduce staff costs consider the government’s furlough scheme. Think about the shape of the team that you’ll need in Q4 2020 and 2021 to grow once we’re the other side of the crisis.

Government support

The government has a range of schemes in place to support liquidity, debt financing, and staff costs. They’re been slow to get off the ground with information and delivery is patchy but they reflect a massive switch in government policy. Investigate your options and grab any help you can.

Long term commitments

Costs such as debt and rent are fixed however if they are the difference between trading and going bust have the conversation about payment terms or reductions. Deals negotiated six to 12 months ago look very different in the current market. You’ll need to be transparent about your financial results and forecast.

Reframing products and services

A feature of the COVID-19 crisis is organisations reframing their products and services. Educational providers have gone online, wholesalers are selling direct to the public, and manufacturers have retooled production to make safety equipment. In the PR agency business this could mean focusing on research, creating new types of content or using new channels to communicate with publics.

Market wisely

Events have gone virtual. Social media channels are saturated. Inboxes are backed up. Promote your services wisely. In an agency that almost certainly means promoting your intellectual property and putting your best practitioners forward on your owned and social channels.

Hold your nerve

Make a plan and act on it. Positive thinking goes a long way.