A key challenge in any agency is the sheer reliance on the clients that spend the most with you. It might be your biggest 1, 2 or 10 clients, but their overall percentage of your total revenue completely dwarfs the rest of your client base.
Then one of them decides to leave or massively reduce their scope with you…..ARGHHH now what?
It’s easy to panic and to start making redundancies straight away, but take a step back first before you make any rash decisions and work through the following steps…
#1 Look at your forecasted costs
Having a financial forecast in place will help you to easily see your forecasted costs over the next few months. With the client leaving is there anything you can remove (such as tools specific to that client) to ease the burden?
Are there any other ‘quick wins’ that you can act now to push on with a leaner agency?
#2 Look at your revenue forecast
What work have you already had confirmed from other clients in the next few months? Can you bring any of this forward now that your big client is leaving to ensure you get paid quicker from your other clients?
When you take out the outgoing client from your revenue forecast how does that leave your profit against your target? Identify the new shortfall in £’s and then look to everything that you have proposed but unconfirmed to plug the gap.
#3 Look at your existing clients
Beyond your current revenue forecast look at who you’re already working with. Can you find any further revenue opportunities with these clients? If so get on the phone to these clients and turn opportunities into potential revenue!
#4 Plan scenarios
You’ve now got the magic number of additional revenue needed to offset against the client leaving or reducing scope. Now let’s plan some scenarios. The standard plan would be to have 3 eventualities; good, acceptable and bad.
In each case identify both the additional revenue required AND costs to cut to ensure you keep to your targets; so, for example, the ‘bad’ scenario would all likelihood mean you’re nowhere near your revenue targets and costs would need to be cut significantly. Set a deadline for when decisions need to be made and then get your team converting those opportunities identified in the steps above
I need help… What next?
If you’re already a MAP client and don’t have Forecasts in place, speak to your MAP FD today.
If you’re not a MAP client yet, give us a call on 0161 711 0810 and we can share with you what a properly structured Revenue Forecast should look like for your agency.