Vasu Majumdar, Senior Advisor in our Corporate Finance team here at Fortus shares the dos and don'ts of a solid ...
INSIDE THE MINDS OF AGENCY LEADERS
9 March 2023
HEAPS OF INSIGHT.
Let’s turn to our attention to the main headlines from our latest Pulse Survey, commissioned in partnership with our friends at The Alliance of Independent Agencies…
If you missed it, here’s a reminder of what we discovered last time.
TOP LINE STAGNATION
We asked a bumper crop of agency business owners whether their revenue had increased, decreased, or stayed the same in the last 6 months…
Just under half of respondents (42%) didn’t see a difference, 29% said it’d increased, and the remaining 29% said revenue took a nosedive.
When it comes to budgets, a massive 63% told us theirs are being slashed, and whatever budget they do have is being reduced by <10%. Naturally many business owners are quick to reign in as much spending as possible in preparation for weathering an economic storm, but how and where do you decide to make the cuts?
To help neutralise impacts of budget cuts, inflationary pressures and the cost-of-living crisis, agencies have made the decision to increase the prices of their services (73%). Inflation’s had the biggest negative impact on the balance sheet (81%), but thankfully agencies haven’t experienced significant cashflow issues overall (84%).
STEMMING THE DEBT FLOW
The majority of survey participants shared that their debtor days stayed the same (56%) over the past 6 months, but 30% said they’re increasing.
It’s an awkward situation to have to remind clients to pay for the work they’ve received, but stacking up overdue invoices can put an unwelcomed plug in the cash flow. It appears tactics need to be employed to get those bills paid on time moving forward.
A GOOD PROBLEM’S A PROBLEM
Why are agencies ‘sometimes’ turning down pitch opportunities (72%)?
You could argue it’s a good problem to have, but a quarter of agency owners said the reason for turning these down is that their ‘pitch lists are far too big’. Perhaps they’ve been more choosy when it comes to the pitches they’re fully committing to invest in.
This reason was closely followed by having ‘no budget’ (24%).
When agencies are short on resource, which is often the case, they’re reaching out to freelancers to help with projects (49%).
As revealed in all of our Pulse Surveys to date, agency leaders are feeling optimistic and confident for the upcoming quarter and beyond (68%). However, for the next quarter specifically, their key actions will be to build cash reserves (36%) and diversify lead gen sources (40%) in attempt to protect their agency throughout the recession.
RETAINING TALENT THROUGH COST-OF-LIVING CRISIS
62% shared that they’ve brought new talent onboard (62%) to meet rising demand, and to retain talent at all levels they’re paying their staff more (79%)… 5-10% more.
Elevated salaries aside, agency leaders are going above and beyond for their staff in response to inflationary pressures and the cost-of-living crisis – they’re handing out one-off payments to their people to help ease the squeeze (22%).
Just over half of respondents said they’re planning on paying bonuses and/or profit shares this year, too.
IMPORTANCE OF ALLIES
“United we stand, divided we fall.”
There really is strength in numbers.
With ever-changing consumer behaviours and expectations, an increasing pressure to deliver growth, as well as budget cuts and inflation thrown into the mix, agency leaders are turning to each other for support.
It’s evident businesses are finding it harder to succeed with siloed strategies – and that’s why being a member of The Alliance of Independent Agencies is hugely beneficial. As a proud partner, we work together to deliver webinars, masterclass events, and advice on a range of agency ownership topics.
The insight we gather from our quarterly Pulse Surveys helps inform our future events, so for that we’re grateful for those agency owners who’ve taken the time to answer our questions.
ARE YOU A MEMBER?
We’re proud to be working in collaboration with The Alliance of Independent Agencies to deliver webinars, masterclass events, thought leadership, and advice on a range of agency ownership topics – and more. If you’d like to know more about our partnership, or would like to become a member, reach out to Rob Quinn.